United States: Rhode Island's 2023 Legislative Session: What Employers And Hr Professionals Need To Know

Providence, R.I. (June 22, 2023) – On June 16, 2023, the Rhode Island General Assembly wrapped up its 2023 legislative session. As in previous years, the General Assembly passed several new employment-related bills that expand employee protections and increase compliance burdens on Rhode Island employers. Governor Daniel McKee is expected to sign these bills into law in the coming days.

Below is a brief summary of what Rhode Island employers and human resource professionals need to know about these new laws.

Enhanced Penalties for Non-Payment of Wages and Misclassification of Employees

Over the past several legislative sessions, progressive members of the General Assembly and Rhode Island Attorney General Peter Neronha have pushed for legislation to enhance existing statutory penalties for non-payment of wages and misclassification of employees as independent contractors. Their efforts finally paid off with the passage of Senate Bill 1079 Sub Aaa and House Bill 5902 Sub Aaa.

If Governor McKee signs these bills into law, any employer that knowingly and willfully fails to pay wages of $1,500 or more on an employee's regular pay day or at the time of termination will face felony criminal liability. Failure to pay wages of $1,500 or more owed to a deceased employee also will expose an employer to felony criminal liability. Upon a plea or conviction under the new law, employers will face potential imprisonment for a term of up to three years, a fine of up to $5,000, or both.

With respect to misclassification of employees as independent contractors, the House and Senate bills adopt the test for independent contractor status under the federal Fair Labor Standards Act (FLSA). If these bills become law, the Rhode Island Department of Labor and Training (DLT) will be directed to review all misclassification complaints using the FLSA test. If the DLT finds that an employer has knowingly and willfully misclassified an employee as an independent contractor, the DLT will be directed to refer the matter to the Office of the Attorney General for potential criminal prosecution.

In addition to any other relief that may be ordered by the DLT, any employer that knowingly and willfully misclassifies an employee as an independent contractor under the new FLSA test will be liable for civil penalties ranging from $1,500 to $3,000 for each misclassified employee for a first offense and up to $5,000 for each misclassified employee for any second and subsequent offense. The civil penalty will be shared equally by the DLT and the misclassified employee or employees.

The House and Senate bills focus special attention on the Rhode Island construction industry - an industry with a dubious track record of improperly classifying and paying workers. Any "construction industry" employer that knowingly and willfully misclassifies an employee as an independent contractor will be guilty of a misdemeanor if the value of the employee's services is less than $1,500, or a felony if the value of their services is more than $1,500. If the employer did not make its classification decision knowingly and willfully, the employer will be liable for a civil penalty of $1,500 to $3,000 per misclassified employee.

It is worthwhile to note that any "party" that is not itself an employer, but that intentionally contracts with an employer that intends to misclassify an employee as an independent contractor, will be subject to the same penalties as the employer.

With Governor McKee's signature, the enhanced penalties for wage theft and misclassification are set to take effect on January 1, 2024.

Annual Registration Required for Independent Contractors

Independent contractors in Rhode Island are required to file a form with the DLT known as Form DWC-11 – Notice of Designation as Independent Contractor Pursuant to RIGL §28-29-17.1. This form reaffirms that the independent contractor is not an employee of the hiring entity and, as such, is not entitled to workers' compensation benefits from the hiring entity. The designation of independent contractor status remains in full force and effect until the contractor files the appropriate withdrawal with DLT.

In an effort to further crack down on misclassification of employees as independent contractors, the General Assembly passed House Bill 5710 Sub A and Senate Bill 427 Sub B. These companion bills require independent contractors to file a new Form DWC-11 electronically on an annual basis. There will be no charge for the annual filing.

If signed these bills are signed into law, the new annual registration requirements will take effect on January 1, 2024.

New Limits on Non-Disclosure and Non-Disparagement Agreements

During the height of the #metoo movement, it became evident that overly broad non-disclosure and non-disparagement agreements were being used as weapons to silence victims of sexual harassment and abuse. If Senate Bill 342 Sub Aa is signed into law, it will be an unlawful employment practice in Rhode Island to require an employee, as a condition of their employment, to execute a non-disclosure agreement requiring alleged violations of civil rights to remain confidential. It also will be an unlawful employment practice to proffer to an employee a non-disparagement agreement concerning alleged violations of civil rights or any agreement that requires alleged violations of civil rights to remain confidential. Any contract provision in violation of the new law will be void and unenforceable.

This bill will take effect upon Governor McKee's signature.

Juneteenth Recognized as a Rhode Island State Holiday

Governor McKee already has signed into law House Bill 5380 and Senate Bill 444 to designate June 19th as "Juneteenth National Freedom Day." Employers are reminded that they are required to pay employees classified as non-exempt holiday premium pay for all hours worked on the new state holiday. Additionally, employers cannot impose disciplinary action if a non-exempt employee refuses to work on Juneteenth.

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