2023 -- H 5902 SUBSTITUTE A AS AMENDED | |
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LC001272/SUB A/4 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2023 | |
____________ | |
A N A C T | |
RELATING TO LABOR AND LABOR RELATIONS -- PAYMENT OF WAGES | |
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Introduced By: Representatives Craven, Caldwell, Bennett, and Morales | |
Date Introduced: March 01, 2023 | |
Referred To: House Judiciary | |
(Attorney General) | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Sections 28-14-1, 28-14-17, 28-14-19, and 28-14-19.1 of the General Laws |
2 | in Chapter 28-14 entitled "Payment of Wages" are hereby amended to read as follows: |
3 | 28-14-1. Definitions. |
4 | Whenever used in this chapter, except where the context clearly indicates otherwise: |
5 | (1) “Construction industry” means the business of constructing, reconstructing, altering, |
6 | maintaining, moving, rehabilitating, repairing, renovating, or demolition of any building, structure, |
7 | or improvement to the excavation of or other development or improvement to land, highways, or |
8 | other real property. |
9 | (2) “Department” means the department of labor and training. |
10 | (1)(3) “Director” means the director of the department of labor and training or his or her |
11 | duly authorized representative. |
12 | (2)(4) “Employee” means any person suffered or permitted to work by an employer, except |
13 | that independent contractors or subcontractors shall not be considered employees. |
14 | (3)(5) “Employer” means any individual, firm, partnership, association, joint stock |
15 | company, trust, corporation, receiver, or other like officer appointed by a court of this state, and |
16 | any agent or officer of any of the previously mentioned classes, employing any person in this state. |
17 | (4)(6) “Wages” means all amounts at which the labor or service rendered is recompensed, |
18 | whether the amount is fixed or ascertained on a time, task, piece, commission basis, or other method |
19 | of calculating the amount. |
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1 | 28-14-17. Penalty for violations. |
2 | (a) Except as otherwise provided for in this chapter, any Any employer who or that violates |
3 | or fails to comply with any of the provisions of this chapter shall be guilty of a misdemeanor, and |
4 | upon conviction of the misdemeanor, the employer shall be punished by a fine of not less than four |
5 | hundred dollars ($400) for each separate offense, or by imprisonment of up to one year, or by both |
6 | fine and imprisonment. Each day pay period of failure to pay wages due an employee at the time |
7 | specified in this chapter shall constitute a separate and distinct civil violation, separate and apart |
8 | from any criminal violation provided for in subsection (b) of this section violation. |
9 | (b) Any employer who knowingly and willfully violates §§ 28-14-2, 28-14-4, or 28-14-6 |
10 | of this chapter shall be guilty of a felony if the actual value of the wages due to an employee exceeds |
11 | one thousand five hundred dollars ($1,500), and upon a plea or conviction thereof, shall be deemed |
12 | to have committed a felony and shall be imprisoned by a term not exceeding three (3) years, or by |
13 | a fine not exceeding five thousand dollars ($5,000), or both. In calculating the value of wages due |
14 | to an employee, the total amount of all wages due the employee, in U.S. dollars, shall be included |
15 | in the calculation. |
16 | (b)(c) Any employer found guilty of violations of this chapter who or that does not pay |
17 | wages and fines within thirty (30) days of a final decision and after notification by the department |
18 | of labor and training, may have the employer’s business license revoked by the state of Rhode |
19 | Island until the employer pays such wages and fines in full or enters into a payment agreement with |
20 | which the employer stays in compliance. |
21 | 28-14-19. Enforcement powers and duties of director of labor and training. |
22 | (a) It shall be the duty of the director to ensure compliance with the provisions of this |
23 | chapter and chapter 12 of this title. The director, or his or her designee, may investigate any |
24 | violations thereof, institute or cause to be instituted actions for the collection of wages, and institute |
25 | action for penalties or other relief as provided for within and pursuant to those chapters. The |
26 | director, or his or her authorized representatives, are empowered to hold hearings and he or she |
27 | shall cooperate with any employee in the enforcement of a claim against his or her employer in any |
28 | case whenever, in his or her opinion, the claim is just and valid. |
29 | (b) Upon receipt of a complaint or conducting an inspection under applicable law, the |
30 | director, or his or her appropriate departmental designee, is authorized to investigate to determine |
31 | compliance with this chapter and chapter 12 of this title. The director or designee shall forward all |
32 | complaints to the investigatory team within the department of labor and training who shall conduct |
33 | the initial screening, investigation, and field audits, as set forth in § 28-14-19.1. |
34 | (c) With respect to all complaints deemed just and valid by the investigatory team, the |
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1 | director, or his or her designee, shall order a hearing thereon at a time and place to be specified, |
2 | and shall give notice thereof, together with a copy of the complaint or the purpose thereof, or a |
3 | statement of the facts disclosed upon investigation, which notice shall be served personally or by |
4 | mail on any person, business, corporation, or entity of any kind affected thereby. The hearing shall |
5 | be scheduled within thirty (30) days of service of a formal complaint as provided herein. The |
6 | person, business, corporation, or entity shall have an opportunity to be heard in respect to the |
7 | matters complained of at the time and place specified in the notice. The hearing shall be conducted |
8 | by the director or his or her designee. The hearing officer in the hearing shall be deemed to be |
9 | acting in a judicial capacity, and shall have the right to issue subpoenas, administer oaths, and |
10 | examine witnesses. The enforcement of a subpoena issued under this section shall be regulated by |
11 | Rhode Island civil practice law and rules. The hearing shall be expeditiously conducted and upon |
12 | such hearing the hearing officer shall determine the issues raised thereon and shall make a |
13 | determination and enter an order within thirty (30) days of the close of the hearing, and forthwith |
14 | serve a copy of the order, with a notice of the filing thereof, upon the parties to the proceeding, |
15 | personally or by mail. The order shall dismiss the complaint or direct payment of any wages and/or |
16 | benefits found to be due and/or award such other appropriate relief or penalties authorized under |
17 | this chapter and chapter 12 of this title, and the order may direct payment of reasonable attorney’s |
18 | fees and costs to the complaining party. Interest at the rate of twelve percent (12%) per annum shall |
19 | be awarded in the order from the date of the nonpayment to the date of payment. |
20 | (d) The order shall also require payment of a further sum as a civil penalty in an amount |
21 | up to two (2) times the total wages and/or benefits found to be due, exclusive of interest, which |
22 | shall be shared equally between the department and the aggrieved party. In determining the amount |
23 | of any penalty to impose, the director, or his or her designee, shall consider the size of the |
24 | employer’s business, the good faith of the employer, the gravity of the violation, the previous |
25 | violations, and whether or not the violation was an innocent mistake or willful. |
26 | (e) The director may institute any action to recover unpaid wages or other compensation or |
27 | obtain relief as provided under this section with or without the consent of the employee or |
28 | employees affected. |
29 | (f) No agreement between the employee and employer to work for less than the applicable |
30 | wage and/or benefit rate or to otherwise work under and/or conditions in violation of applicable |
31 | law is a defense to an action brought pursuant to this section. |
32 | (g) The director shall notify the contractors’ registration board of any order issued or any |
33 | determination hereunder that an employer has violated this chapter, chapter 12 of this title, or |
34 | chapter 13 of title 37. The director shall notify the tax administrator of any determination hereunder |
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1 | that may affect liability for an employer’s payment of wages and/or payroll taxes. |
2 | 28-14-19.1. Misclassification of employees. |
3 | (a) The misclassification of a worker whether performing work as a natural person, |
4 | business, corporation, or entity of any kind, as an independent contractor when the worker should |
5 | be considered and paid as an employee shall be considered a violation of this chapter. |
6 | (b) In addition to any other relief to which any department or an aggrieved party may be |
7 | entitled for such a violation, the employer shall be liable for a civil penalty in an amount not less |
8 | than one thousand five hundred dollars ($1,500) and not greater than three thousand dollars |
9 | ($3,000) for each misclassified employee for a first offense and up to five thousand dollars ($5,000) |
10 | for each misclassified employee for any subsequent offense, which shall be shared equally between |
11 | the department and the aggrieved party. |
12 | (b) Upon receipt by the department of a complaint alleging misclassification of a worker |
13 | pursuant this section, the department shall undertake an investigation using the factors consistent |
14 | with federal regulations found in the Fair Labor Standards Act. |
15 | (1) The department shall assign an investigatory team within the department to investigate |
16 | and screen all complaints for general analysis and validity. |
17 | (2) As part of their investigation, the department's investigatory team may conduct field |
18 | audits of businesses to ascertain validity of complaints. In conducting these audits, the department's |
19 | investigatory team may investigate exclusively or with the assistance of the task force as established |
20 | pursuant to chapter 156 of title 42. |
21 | (3)(i) The investigatory team shall make a determination as to whether it finds the |
22 | complaint to be just and valid, or not, and shall report those findings to the director or his/her |
23 | designee. In instances where the department's investigatory team deems a complaint is just and |
24 | valid, and so reports, the alleged civil violation shall be adjudicated pursuant to the provisions of § |
25 | 28-14-19 and this section. |
26 | (ii) In addition, in the event the investigatory team determines that an employer has |
27 | misclassified an employee, the investigatory team shall report the matter to the director or designee |
28 | with a recommendation that the matter be referred to the department of the attorney general for |
29 | criminal prosecution. The investigatory team may include any specific, documented extenuating |
30 | circumstances that the investigatory team believes would mitigate against a criminal prosecution. |
31 | The director or designee shall review the investigatory team's findings and consider its |
32 | recommendations. The director or designee shall forward the matter to the department of the |
33 | attorney general along with the director's or designee's recommendations as to whether to prosecute |
34 | the matter criminally or not, along with any specific, documented extenuating circumstances that |
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1 | the director or designee believes would mitigate against a criminal prosecution. |
2 | (iii) (A) If the director or designee receives information indicating that any person has |
3 | violated this chapter, the director or designee may investigate the matter and issue an order to show |
4 | cause why the person should not be found in violation of this chapter. |
5 | (B) A person served with an order to show cause shall have a period of twenty (20) days |
6 | from the date the order is served to file an answer in writing. |
7 | (C) If the person fails to file a timely and adequate answer to the order to show cause, the |
8 | director or designee may, following notice and hearing, do any of the following: |
9 | (I) Petition a court of competent jurisdiction to issue a stop-work order as provided in this |
10 | section; or |
11 | (II) Immediately assess penalties as provided for in this section. |
12 | (D) If, subsequent to issuing an order to show cause under this section, the director or |
13 | designee finds probable cause that an employer has committed a criminal violation of this chapter, |
14 | the director or designee shall refer the matter to the department of the attorney general for |
15 | investigation or impose administrative penalties provided for under this section. |
16 | (E) A party that does not meet the definition of an "employer" in § 28-14-1, but which |
17 | party intentionally contracts with an employer knowing the employer intends to misclassify |
18 | employees in violation of this chapter, shall be subject to the same penalties, remedies or other |
19 | actions as the employer found to be in violation of this chapter. |
20 | (iv) Provided, the decision whether to prosecute a violation of this section as a criminal |
21 | matter shall be made by the attorney general. In making this decision, the attorney general shall |
22 | review and consider all recommendations and materials forwarded by the director or designee |
23 | pursuant to this section. |
24 | (c) In determining the amount of any penalty imposed under this section, the director, or |
25 | his or her designee, shall consider the size of the employer’s business; the good faith of the |
26 | employer; the gravity of the violation; the history of previous violations; and whether or not the |
27 | violation was an innocent mistake or willful. |
28 | (d) A civil violation of this section may be adjudicated under § 28-14-19 and consolidated |
29 | with any labor standards violation or under §§ 37-13-14.1 and 37-13-15 and consolidated with any |
30 | prevailing wage violation. |
31 | (e) A violation of this section may be brought or adjudicated by any division of the |
32 | department of labor and training. |
33 | (f) The department shall notify the contractors’ registration board and the tax administrator |
34 | of any violation of this section. |
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1 | (g) In addition to any other relief to which the department or an aggrieved party may be |
2 | entitled for such a violation, the employer shall be liable for a civil penalty in an amount not less |
3 | than one thousand five hundred dollars ($1,500) and not greater than three thousand dollars |
4 | ($3,000) for each misclassified employee for a first offense and up to five thousand dollars ($5,000) |
5 | for each misclassified employee for any subsequent offense, which shall be shared equally between |
6 | the department and the aggrieved party. |
7 | (h) As it relates to the construction industry, all provisions of § 28-14-19.1 shall apply. |
8 | (i) Any employer who knowingly and willfully violates this section regarding |
9 | misclassification of an employee in the construction industry shall be subject to the following |
10 | penalties: |
11 | (1) Where the value does not exceed one thousand five hundred dollars ($1,500), upon a |
12 | plea or a conviction, shall be guilty of a misdemeanor and be subject to imprisonment for a term |
13 | not exceeding one year, or a fine of up to one thousand dollars ($1,000), or both; |
14 | (2)(i) Any employer who knowingly and willfully violates this section after having been |
15 | previously adjudicated for a violation either by plea or conviction of this section and where the |
16 | value exceeds one thousand five hundred dollars ($1,500) shall be guilty of a felony and sentenced |
17 | to a term of imprisonment not to exceed three (3) years, or a fine of not more than five thousand |
18 | dollars ($5,000) or both. |
19 | (j)(1) The director of the department of labor and training shall, on or before December 31, |
20 | 2024, and annually thereafter on or before December 31, file a report (the "report") with the |
21 | governor, the speaker of the house, and the president of the senate. This report shall provide |
22 | information on the status, progress, and recommendations, if any, as well as the information and |
23 | data set forth in § 28-14-19.1(i)(2), regarding the legislative initiatives set forth in this chapter. |
24 | (2) The data included in the report required by this subsection of this section shall include, |
25 | but not be limited to, the following for the time period covered by the report: |
26 | (i) Number of complaints filed with the department for wage theft and misclassification of |
27 | employees ("complaints"); |
28 | (ii) Number of complaints found by the department to be actionable; |
29 | (iii) Number of complaints referred by the department to the department of the attorney |
30 | general; |
31 | (iv) Number of complaints that are handled administratively or civilly by the department |
32 | of labor and training, both the aggregate number and also disaggregated by the resolution or |
33 | outcome of those complaints, including those settled, dismissed for finding no violation, |
34 | adjudicated, and, if appealed, the results of those appeals, as well as the number of pending matters; |
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1 | and |
2 | (v) Of the complaints referred to the department of the attorney general, a disaggregation |
3 | of the complaints by resolution or outcome of those complaints, including those settled, dismissed |
4 | for finding no violation, adjudicated, and, if appealed, the results of those appeals, as well as the |
5 | number of pending matters. The department of the attorney general shall assist the department of |
6 | labor and training in obtaining this data. |
7 | (k) The attorney general shall, on or before December 31, 2024, and annually thereafter on |
8 | or before December 31, file a report (the "attorney general report") with the governor, the speaker |
9 | of the house, and the president of the senate. The data included in the attorney general report |
10 | required by this subsection of this section shall include, but not be limited to, the following for the |
11 | time period covered by the attorney general report: |
12 | (1) The number of complaints referred to the attorney general for wage theft and |
13 | misclassification of employees ("wage theft complaints"); |
14 | (2) The number of civil and criminal wage theft complaints filed by the attorney general |
15 | for and arising out of wage theft and misclassification of employees; |
16 | (3) A disaggregation of the wage theft complaints by resolution or outcome of those wage |
17 | theft complaints, including those handled by plea agreement, by conviction, by a finding of not |
18 | guilty, or other disposition; |
19 | (4) The number of such cases that are appealed, and the results of those appeals which have |
20 | reached disposition; |
21 | (5) The number of cases pending both before the trial court and on appeal; and |
22 | (6) Such other information, findings, and recommendations as the attorney general |
23 | determines to be appropriate to address the legislative initiatives set forth in this chapter. |
24 | SECTION 2. Section 42-156-4 of the General Laws in Chapter 42-156 entitled |
25 | "Underground Economy and Employee Misclassification Act" is hereby amended to read as |
26 | follows: |
27 | 42-156-4. Duties and responsibilities. |
28 | (a) The Task Force shall coordinate joint efforts to combat the underground economy and |
29 | employee misclassification. The Task Force shall: |
30 | (a)(1) Foster voluntary compliance with the law by educating business owners and |
31 | employees about applicable requirements; |
32 | (b)(2) Protect the health, safety and benefit rights of workers; and |
33 | (c)(3) Restore competitive equality for law-abiding businesses.; and |
34 | (4) Identify industries and geographic areas where evidence shows workers are most likely |
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1 | to be mistakenly or deliberately misclassified or are victims of wage theft and engage in proactive |
2 | and particular efforts, including but not limited to pro-active enforcement strategies, to reach those |
3 | sectors where workers are least likely to report such violations. |
4 | (b) In addition to the duties and responsibilities set forth in subsection (a) of this section, |
5 | the task force, working with the department of labor and training, shall institute an information |
6 | campaign to educate the public, including but not limited to business owners, employers, and |
7 | employees, regarding the changes in state law regarding payment of wages and in particular the |
8 | new and enhanced civil and criminal penalties established in §§ 28-14-17, 28-14-19, and 28-14- |
9 | 19.1, which changes are set to be in effect January 1, 2024. |
10 | SECTION 3. Section 1 of this act shall take effect on January 1, 2024. The remaining |
11 | sections of this act shall take effect upon passage. |
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EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO LABOR AND LABOR RELATIONS -- PAYMENT OF WAGES | |
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1 | This act would provide for misdemeanor and felony penalties as it relates to wage theft. |
2 | This act would also require the Department of Labor and Training to use the Fair Labor and |
3 | Standards Act as it relates to a determination of misclassification of employees. It would provide |
4 | for a stop work order as it relates to misclassification and would require annual reporting by the |
5 | Department of Attorney General and the Department of Labor and Training. As it relates to the |
6 | construction industry, it provides for enhanced criminal penalties and provides for a felony where |
7 | an employer has misclassified an employee. |
8 | Section 1 of this act would take effect on January 1, 2024. The remaining sections of this |
9 | act would take effect upon passage. |
10 | This act would take effect upon passage. |
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