2014 -- S 3035 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT - UNDERGROUND ECONOMY

AND EMPLOYEE MISCLASSIFICATION ACT

     Introduced By: Senators McCaffrey, Goodwin, DaPonte, Ruggerio, and Miller

     Date Introduced: May 28, 2014

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapter:

CHAPTER 155

UNDERGROUND ECONOMY AND EMPLOYEE MISCLASSIFICATION ACT

     42-155-1. Short Title. -- This chapter shall be known as the "Underground Economy and

Employee Misclassification Act".

     42-155-2. Declaration of purpose. -- (a) The general assembly finds and declares that

this state's economy, its workers and its businesses are harmed by the existence of an illegal

underground economy in which individuals and businesses conceal their activities from

government licensing, regulatory and taxing authorities. The underground economy, and in

particular, the practice of employee misclassification:

     (1) Exploits vulnerable workers and deprives them of legal benefits and protections;

     (2) Gives unlawful businesses an unfair competitive advantage over lawful businesses by

illegally driving down violators' taxes, wages, and other overhead costs;

     (3) Defrauds the government of substantial tax revenues; and

     (4) Harms consumers who suffer at the hands of unlicensed businesses that fail to

maintain minimum levels of skills and knowledge.

     (b) The creation of a task force has proven to be an effective mechanism for enhancing

interagency cooperation, information sharing, and the prosecution of violators.

     42-155-3. Task Force. -- (a) There is hereby established a task force on the underground

economy and employee misclassification. The task force shall consist of the following members

or their designees:

     (1) The director of labor and training, or designee;

     (2) The tax administrator, or designee;

     (3) The director of business regulations, or designee;

     (4) The head of the workforce regulation and safety division, or designee;

     (5) The attorney general, or designee;

     (6) The commissioner of the department of public safety, or designee; and

     (7) The chief judge of the workers' compensation court, or designee.

     (b) The director of labor and training shall chair the task force.

     42-155-4. Duties and Responsibilities. -- The task force shall:

     (1) Coordinate joint efforts to combat the underground economy and employee

misclassification;

     (2) Foster voluntary compliance with the law by educating business owners and

employees about applicable requirements;

     (3) Conduct joint, targeted investigations and enforcement actions against violators;

     (4) Protect the health, safety and benefit rights of workers; and

     (5) Restore competitive equality for law-abiding businesses.

     42-155-5. Sharing of Information. -- Notwithstanding any other law or regulation to the

contrary, the task force shall facilitate timely information sharing between and among task force

members, including the establishment of protocols by which participating agencies will advise or

refer to other agencies matters of potential investigative interest.

     44-155-6. Annual Report.-- No later than March 15, 2015, and every March 15

thereafter, the task force shall submit a report to the governor and the chairpersons of the house

finance committee and senate finance committee summarizing the task force's activities during

the preceding year. The report shall, without limitation:

     (1) Describe the task force's efforts and accomplishments during the year;

     (2) Identify any administrative or legal barriers impeding the more effective operation of

the task force, including any barriers to information sharing or joint action; and propose

appropriate administrative, legislative, or regulatory changes to strengthen the task force's

operations and enforcement efforts and reduce or eliminate any barriers to those efforts.

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     SECTION 2. The act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT - UNDERGROUND ECONOMY

AND EMPLOYEE MISCLASSIFICATION ACT

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     This act would establish a task force to investigate and seek out underground economy

and employee misclassification. The task force would foster voluntary compliance with the law

by educating business owners and employees about applicable requirements concerning

classification of employees.

     The act would take effect upon passage.

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