2023 -- H 5902 SUBSTITUTE A AS AMENDED

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO LABOR AND LABOR RELATIONS -- PAYMENT OF WAGES

     

     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:

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     SECTION 1. Sections 28-14-1, 28-14-17, 28-14-19, and 28-14-19.1 of the General Laws

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in Chapter 28-14 entitled "Payment of Wages" are hereby amended to read as follows:

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     28-14-1. Definitions.

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     Whenever used in this chapter, except where the context clearly indicates otherwise:

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     (1) “Construction industry” means the business of constructing, reconstructing, altering,

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maintaining, moving, rehabilitating, repairing, renovating, or demolition of any building, structure,

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or improvement to the excavation of or other development or improvement to land, highways, or

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other real property.

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     (2) “Department” means the department of labor and training.

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     (1)(3) “Director” means the director of the department of labor and training or his or her

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duly authorized representative.

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     (2)(4) “Employee” means any person suffered or permitted to work by an employer, except

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that independent contractors or subcontractors shall not be considered employees.

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     (3)(5) “Employer” means any individual, firm, partnership, association, joint stock

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company, trust, corporation, receiver, or other like officer appointed by a court of this state, and

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any agent or officer of any of the previously mentioned classes, employing any person in this state.

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     (4)(6) “Wages” means all amounts at which the labor or service rendered is recompensed,

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whether the amount is fixed or ascertained on a time, task, piece, commission basis, or other method

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of calculating the amount.

 

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     28-14-17. Penalty for violations.

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     (a) Except as otherwise provided for in this chapter, any Any employer who or that violates

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or fails to comply with any of the provisions of this chapter shall be guilty of a misdemeanor, and

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upon conviction of the misdemeanor, the employer shall be punished by a fine of not less than four

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hundred dollars ($400) for each separate offense, or by imprisonment of up to one year, or by both

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fine and imprisonment. Each day pay period of failure to pay wages due an employee at the time

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specified in this chapter shall constitute a separate and distinct civil violation, separate and apart

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from any criminal violation provided for in subsection (b) of this section violation.

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     (b) Any employer who knowingly and willfully violates §§ 28-14-2, 28-14-4, or 28-14-6

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of this chapter shall be guilty of a felony if the actual value of the wages due to an employee exceeds

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one thousand five hundred dollars ($1,500), and upon a plea or conviction thereof, shall be deemed

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to have committed a felony and shall be imprisoned by a term not exceeding three (3) years, or by

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a fine not exceeding five thousand dollars ($5,000), or both. In calculating the value of wages due

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to an employee, the total amount of all wages due the employee, in U.S. dollars, shall be included

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in the calculation.

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     (b)(c) Any employer found guilty of violations of this chapter who or that does not pay

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wages and fines within thirty (30) days of a final decision and after notification by the department

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of labor and training, may have the employer’s business license revoked by the state of Rhode

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Island until the employer pays such wages and fines in full or enters into a payment agreement with

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which the employer stays in compliance.

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     28-14-19. Enforcement powers and duties of director of labor and training.

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     (a) It shall be the duty of the director to ensure compliance with the provisions of this

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chapter and chapter 12 of this title. The director, or his or her designee, may investigate any

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violations thereof, institute or cause to be instituted actions for the collection of wages, and institute

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action for penalties or other relief as provided for within and pursuant to those chapters. The

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director, or his or her authorized representatives, are empowered to hold hearings and he or she

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shall cooperate with any employee in the enforcement of a claim against his or her employer in any

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case whenever, in his or her opinion, the claim is just and valid.

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     (b) Upon receipt of a complaint or conducting an inspection under applicable law, the

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director, or his or her appropriate departmental designee, is authorized to investigate to determine

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compliance with this chapter and chapter 12 of this title. The director or designee shall forward all

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complaints to the investigatory team within the department of labor and training who shall conduct

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the initial screening, investigation, and field audits, as set forth in § 28-14-19.1.

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     (c) With respect to all complaints deemed just and valid by the investigatory team, the

 

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director, or his or her designee, shall order a hearing thereon at a time and place to be specified,

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and shall give notice thereof, together with a copy of the complaint or the purpose thereof, or a

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statement of the facts disclosed upon investigation, which notice shall be served personally or by

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mail on any person, business, corporation, or entity of any kind affected thereby. The hearing shall

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be scheduled within thirty (30) days of service of a formal complaint as provided herein. The

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person, business, corporation, or entity shall have an opportunity to be heard in respect to the

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matters complained of at the time and place specified in the notice. The hearing shall be conducted

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by the director or his or her designee. The hearing officer in the hearing shall be deemed to be

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acting in a judicial capacity, and shall have the right to issue subpoenas, administer oaths, and

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examine witnesses. The enforcement of a subpoena issued under this section shall be regulated by

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Rhode Island civil practice law and rules. The hearing shall be expeditiously conducted and upon

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such hearing the hearing officer shall determine the issues raised thereon and shall make a

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determination and enter an order within thirty (30) days of the close of the hearing, and forthwith

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serve a copy of the order, with a notice of the filing thereof, upon the parties to the proceeding,

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personally or by mail. The order shall dismiss the complaint or direct payment of any wages and/or

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benefits found to be due and/or award such other appropriate relief or penalties authorized under

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this chapter and chapter 12 of this title, and the order may direct payment of reasonable attorney’s

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fees and costs to the complaining party. Interest at the rate of twelve percent (12%) per annum shall

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be awarded in the order from the date of the nonpayment to the date of payment.

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     (d) The order shall also require payment of a further sum as a civil penalty in an amount

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up to two (2) times the total wages and/or benefits found to be due, exclusive of interest, which

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shall be shared equally between the department and the aggrieved party. In determining the amount

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of any penalty to impose, the director, or his or her designee, shall consider the size of the

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employer’s business, the good faith of the employer, the gravity of the violation, the previous

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violations, and whether or not the violation was an innocent mistake or willful.

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     (e) The director may institute any action to recover unpaid wages or other compensation or

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obtain relief as provided under this section with or without the consent of the employee or

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employees affected.

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     (f) No agreement between the employee and employer to work for less than the applicable

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wage and/or benefit rate or to otherwise work under and/or conditions in violation of applicable

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law is a defense to an action brought pursuant to this section.

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     (g) The director shall notify the contractors’ registration board of any order issued or any

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determination hereunder that an employer has violated this chapter, chapter 12 of this title, or

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chapter 13 of title 37. The director shall notify the tax administrator of any determination hereunder

 

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that may affect liability for an employer’s payment of wages and/or payroll taxes.

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     28-14-19.1. Misclassification of employees.

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     (a) The misclassification of a worker whether performing work as a natural person,

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business, corporation, or entity of any kind, as an independent contractor when the worker should

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be considered and paid as an employee shall be considered a violation of this chapter.

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     (b) In addition to any other relief to which any department or an aggrieved party may be

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entitled for such a violation, the employer shall be liable for a civil penalty in an amount not less

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than one thousand five hundred dollars ($1,500) and not greater than three thousand dollars

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($3,000) for each misclassified employee for a first offense and up to five thousand dollars ($5,000)

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for each misclassified employee for any subsequent offense, which shall be shared equally between

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the department and the aggrieved party.

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     (b) Upon receipt by the department of a complaint alleging misclassification of a worker

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pursuant this section, the department shall undertake an investigation using the factors consistent

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with federal regulations found in the Fair Labor Standards Act.

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     (1) The department shall assign an investigatory team within the department to investigate

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and screen all complaints for general analysis and validity.

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     (2) As part of their investigation, the department's investigatory team may conduct field

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audits of businesses to ascertain validity of complaints. In conducting these audits, the department's

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investigatory team may investigate exclusively or with the assistance of the task force as established

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pursuant to chapter 156 of title 42.

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     (3)(i) The investigatory team shall make a determination as to whether it finds the

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complaint to be just and valid, or not, and shall report those findings to the director or his/her

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designee. In instances where the department's investigatory team deems a complaint is just and

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valid, and so reports, the alleged civil violation shall be adjudicated pursuant to the provisions of §

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28-14-19 and this section.

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     (ii) In addition, in the event the investigatory team determines that an employer has

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misclassified an employee, the investigatory team shall report the matter to the director or designee

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with a recommendation that the matter be referred to the department of the attorney general for

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criminal prosecution. The investigatory team may include any specific, documented extenuating

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circumstances that the investigatory team believes would mitigate against a criminal prosecution.

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The director or designee shall review the investigatory team's findings and consider its

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recommendations. The director or designee shall forward the matter to the department of the

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attorney general along with the director's or designee's recommendations as to whether to prosecute

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the matter criminally or not, along with any specific, documented extenuating circumstances that

 

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the director or designee believes would mitigate against a criminal prosecution.

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     (iii) (A) If the director or designee receives information indicating that any person has

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violated this chapter, the director or designee may investigate the matter and issue an order to show

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cause why the person should not be found in violation of this chapter.

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     (B) A person served with an order to show cause shall have a period of twenty (20) days

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from the date the order is served to file an answer in writing.

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     (C) If the person fails to file a timely and adequate answer to the order to show cause, the

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director or designee may, following notice and hearing, do any of the following:

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     (I) Petition a court of competent jurisdiction to issue a stop-work order as provided in this

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section; or

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     (II) Immediately assess penalties as provided for in this section.

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     (D) If, subsequent to issuing an order to show cause under this section, the director or

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designee finds probable cause that an employer has committed a criminal violation of this chapter,

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the director or designee shall refer the matter to the department of the attorney general for

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investigation or impose administrative penalties provided for under this section.

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     (E) A party that does not meet the definition of an "employer" in § 28-14-1, but which

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party intentionally contracts with an employer knowing the employer intends to misclassify

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employees in violation of this chapter, shall be subject to the same penalties, remedies or other

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actions as the employer found to be in violation of this chapter.

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     (iv) Provided, the decision whether to prosecute a violation of this section as a criminal

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matter shall be made by the attorney general. In making this decision, the attorney general shall

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review and consider all recommendations and materials forwarded by the director or designee

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pursuant to this section.

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     (c) In determining the amount of any penalty imposed under this section, the director, or

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his or her designee, shall consider the size of the employer’s business; the good faith of the

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employer; the gravity of the violation; the history of previous violations; and whether or not the

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violation was an innocent mistake or willful.

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     (d) A civil violation of this section may be adjudicated under § 28-14-19 and consolidated

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with any labor standards violation or under §§ 37-13-14.1 and 37-13-15 and consolidated with any

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prevailing wage violation.

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     (e) A violation of this section may be brought or adjudicated by any division of the

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department of labor and training.

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     (f) The department shall notify the contractors’ registration board and the tax administrator

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of any violation of this section.

 

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     (g) In addition to any other relief to which the department or an aggrieved party may be

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entitled for such a violation, the employer shall be liable for a civil penalty in an amount not less

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than one thousand five hundred dollars ($1,500) and not greater than three thousand dollars

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($3,000) for each misclassified employee for a first offense and up to five thousand dollars ($5,000)

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for each misclassified employee for any subsequent offense, which shall be shared equally between

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the department and the aggrieved party.

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     (h) As it relates to the construction industry, all provisions of § 28-14-19.1 shall apply.

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     (i) Any employer who knowingly and willfully violates this section regarding

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misclassification of an employee in the construction industry shall be subject to the following

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penalties:

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     (1) Where the value does not exceed one thousand five hundred dollars ($1,500), upon a

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plea or a conviction, shall be guilty of a misdemeanor and be subject to imprisonment for a term

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not exceeding one year, or a fine of up to one thousand dollars ($1,000), or both;

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     (2)(i) Any employer who knowingly and willfully violates this section after having been

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previously adjudicated for a violation either by plea or conviction of this section and where the

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value exceeds one thousand five hundred dollars ($1,500) shall be guilty of a felony and sentenced

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to a term of imprisonment not to exceed three (3) years, or a fine of not more than five thousand

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dollars ($5,000) or both.

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     (j)(1) The director of the department of labor and training shall, on or before December 31,

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2024, and annually thereafter on or before December 31, file a report (the "report") with the

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governor, the speaker of the house, and the president of the senate. This report shall provide

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information on the status, progress, and recommendations, if any, as well as the information and

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data set forth in § 28-14-19.1(i)(2), regarding the legislative initiatives set forth in this chapter.

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     (2) The data included in the report required by this subsection of this section shall include,

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but not be limited to, the following for the time period covered by the report:

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     (i) Number of complaints filed with the department for wage theft and misclassification of

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employees ("complaints");

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     (ii) Number of complaints found by the department to be actionable;

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     (iii) Number of complaints referred by the department to the department of the attorney

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general;

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     (iv) Number of complaints that are handled administratively or civilly by the department

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of labor and training, both the aggregate number and also disaggregated by the resolution or

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outcome of those complaints, including those settled, dismissed for finding no violation,

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adjudicated, and, if appealed, the results of those appeals, as well as the number of pending matters;

 

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and

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     (v) Of the complaints referred to the department of the attorney general, a disaggregation

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of the complaints by resolution or outcome of those complaints, including those settled, dismissed

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for finding no violation, adjudicated, and, if appealed, the results of those appeals, as well as the

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number of pending matters. The department of the attorney general shall assist the department of

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labor and training in obtaining this data.

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     (k) The attorney general shall, on or before December 31, 2024, and annually thereafter on

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or before December 31, file a report (the "attorney general report") with the governor, the speaker

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of the house, and the president of the senate. The data included in the attorney general report

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required by this subsection of this section shall include, but not be limited to, the following for the

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time period covered by the attorney general report:

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     (1) The number of complaints referred to the attorney general for wage theft and

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misclassification of employees ("wage theft complaints");

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     (2) The number of civil and criminal wage theft complaints filed by the attorney general

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for and arising out of wage theft and misclassification of employees;

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     (3) A disaggregation of the wage theft complaints by resolution or outcome of those wage

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theft complaints, including those handled by plea agreement, by conviction, by a finding of not

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guilty, or other disposition;

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     (4) The number of such cases that are appealed, and the results of those appeals which have

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reached disposition;

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     (5) The number of cases pending both before the trial court and on appeal; and

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     (6) Such other information, findings, and recommendations as the attorney general

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determines to be appropriate to address the legislative initiatives set forth in this chapter.

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     SECTION 2. Section 42-156-4 of the General Laws in Chapter 42-156 entitled

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"Underground Economy and Employee Misclassification Act" is hereby amended to read as

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follows:

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     42-156-4. Duties and responsibilities.

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     (a) The Task Force shall coordinate joint efforts to combat the underground economy and

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employee misclassification. The Task Force shall:

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     (a)(1) Foster voluntary compliance with the law by educating business owners and

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employees about applicable requirements;

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     (b)(2) Protect the health, safety and benefit rights of workers; and

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     (c)(3) Restore competitive equality for law-abiding businesses.; and

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     (4) Identify industries and geographic areas where evidence shows workers are most likely

 

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to be mistakenly or deliberately misclassified or are victims of wage theft and engage in proactive

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and particular efforts, including but not limited to pro-active enforcement strategies, to reach those

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sectors where workers are least likely to report such violations.

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     (b) In addition to the duties and responsibilities set forth in subsection (a) of this section,

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the task force, working with the department of labor and training, shall institute an information

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campaign to educate the public, including but not limited to business owners, employers, and

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employees, regarding the changes in state law regarding payment of wages and in particular the

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new and enhanced civil and criminal penalties established in §§ 28-14-17, 28-14-19, and 28-14-

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19.1, which changes are set to be in effect January 1, 2024.

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     SECTION 3. Section 1 of this act shall take effect on January 1, 2024. The remaining

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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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     This act would provide for misdemeanor and felony penalties as it relates to wage theft.

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This act would also require the Department of Labor and Training to use the Fair Labor and

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Standards Act as it relates to a determination of misclassification of employees. It would provide

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for a stop work order as it relates to misclassification and would require annual reporting by the

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Department of Attorney General and the Department of Labor and Training. As it relates to the

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construction industry, it provides for enhanced criminal penalties and provides for a felony where

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an employer has misclassified an employee.

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     Section 1 of this act would take effect on January 1, 2024. The remaining sections of this

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act would take effect upon passage.

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     This act would take effect upon passage.

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