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New RI law will make wage theft a felony

Posted by National Alliance for Fair Contracting on

Sarah Guernelli
June 27, 2023

Rhode Island is cracking down on wage theft.

Gov. Dan McKee recently signed a new law that will change wage theft from a misdemeanor crime to a felony starting next year.

Rep. David Morales helped champion the change.

“No longer will an unethical employer who withholds wages from their workers be met with a slap of a wrist of just a misdemeanor,” Morales said.

Under the new law, employers that knowingly and willfully fail to pay an employee more than $1,500 in wages could face up to three years in prison and pay fines.

“If you commit wage theft you are going to be held accountable,” he said.

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R.I. lawmakers pass bills to increase penalties for wage theft and employment fraud

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The bills will make it a felony to “knowingly and willfully” commit wage theft of more than $1,500, instead of a misdemeanor. House Speaker K. Joseph Shekarchi called the bills “historic.”

By Amanda Milkovits Globe Staff, June 14, 2023

PROVIDENCE — The House overwhelmingly voted for legislation Wednesday that will increase the penalties for wage theft and employment fraud — a tool that supporters say will punish employers who take advantage of workers.

House Speaker K. Joseph Shekarchi called the bills “historic.”

The companion bills, sponsored by Democratic Representative Robert E. Craven Sr., of North Kingstown, and Senator Meghan Kallman, representing Pawtucket and Providence, give more power to the state Department of Labor and Training and the attorney general’s office the ability to bring felony charges to serious offenders.

The bills will make it a felony to “knowingly and willfully” commit wage theft of more than $1,500. (Currently, it’s a misdemeanor.)

The legislation also lays out how the Department of Labor and Training will audit companies and investigate complaints of employee misclassification, following the federal regulations in the Fair Labor Standards Act. A specialized investigatory team at the DLT will have the authority to determine whether the issues are good faith errors, or violations that require civil penalties or referral to the attorney general’s office for criminal charges.

Some company owners and chambers of commerce had voiced concerns about being prosecuted by the attorney general’s office for mistakes, said Representative Jason Knight, Democrat of Barrington and Warren. So, the legislation was amended to allow investigators to filter out the innocent mistakes from incidents where employers are willfully stealing from workers, he said.

The legislation will require the attorney general’s office and the DLT to produce annual reports about wage theft and misclassified employees in Rhode Island. It also calls for more public education for workers and an assessment about the industries and areas in Rhode Island where workers are more likely to be victims of wage theft and employment fraud.

The bills also hone in on the construction industry, with enhanced criminal penalties, including felony charges, for misclassification of employees. The worst offenders, as the Rhode Island underground economy and employee misclassification task force found, were often construction companies and subcontractors, according to the task force’s annual report.

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Lost taxes and salaries: RI unions kick off a campaign to make wage theft a felony

Posted by National Alliance for Fair Contracting on

Patrick Anderson
The Providence Journal
Feb. 16, 2022

In a renewed campaign to make wage theft a felony in Rhode Island, union leaders are pointing to new research that says more than 9% of the state’s employers misclassify workers as independent contractors.

The paper from academics at the University of Massachusetts Labor Center and a construction-industry research group analyzed the results of state labor department unemployment insurance audits of Rhode Island employers from 2016 to last year.

It estimated that that $185 million in workers’ wages and salaries went unreported to the Department of Labor and Training in 2019, and that it cost the state from $25 million to $54 million in lost taxes that year.

‘Restoring worker rights’
The paper’s authors, Russell Ormiston of Allegheny College and Tom Juravich of UMass Amherst, conclude that changes in state labor law “offer considerable promise in restoring worker rights and ensuring greater justice in Rhode Island’s workplaces. The first is to make wage theft a felony.”

That’s music to the ears of the Rhode Island AFL-CIO, which has put making wage theft a felony offense at the top of its legislative priorities for this year.

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NEW UMASS AMHERST LABOR CENTER STUDY FINDS NEARLY 10% OF RHODE ISLAND EMPLOYERS MISCLASSIFY WORKERS, COSTING TAXPAYERS TENS OF MILLIONS OF DOLLARS

Posted by National Alliance for Fair Contracting on

February 14, 2022

Working paper co-produced by the Institute for Construction Economic Research finds costs to taxpayers may be as high as $54 million

AMHERST, Mass. – A new study released today by the University of Massachusetts Amherst Labor Center reveals that nearly 1-in-10 Rhode Island employers misclassified employees as independent contractors between 2016 and 2021, affecting an estimated 19,359 workers in the state in 2019 and costing taxpayers at least $25.1 million. Illegal misclassification allows firms to evade taxes while denying workers their legal rights to, among other things, unemployment insurance benefits, workers’ compensation insurance and overtime pay.

The study, which was co-produced by the Institute for Construction Economics Research (ICERES) and conducted by Tom Juravich, professor of labor studies and sociology at UMass Amherst, and Russell Ormiston, associate professor of business and economics at Allegheny College and president of the ICERES, relied on extensive data provided by the Rhode Island Department of Labor and Training.

“This research builds on the work we did in Massachusetts and shows that rampant worker misclassification and employer tax fraud is a problem across New England,” says Juravich.

Worker misclassification occurs in every industry of the Rhode Island economy, but is especially rampant among residential construction, janitorial services, landscapers and certain types of construction contractors, such as painting and finish carpentry.

“The illegal misclassification of workers as independent contractors in residential construction has created a hothouse for wage theft,” Juravich says.

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(PDF Copy of Study)

Labor organizations rally against wage theft and employee misclassification Station Row project in Providence

Posted by National Alliance for Fair Contracting on

April 22, 2018
Steve Ahlquist

The International Union of Painters and Allied Trades (IUPAT) District Council 11 held a rally Saturday afternoon in partnership with Fuerza Laboral and Rhode Island Jobs With Justice at the site of Trilogy Development’s Station Row project being built by Tocci Construction at Smith and Canal Streets in Providence.

Trilogy has received $5.6 million in public subsidies in the form of a Tax Stabilization Agreement (TSA) from the City of Providence, but, say leaders of the Saturday rally, Trilogy and Tocci have “sadly decided to use the broken model of open shop sub contracting,” adding, “Construction workers employed in the open shop model are at a greater risk of suffering substandard wages and benefits.”

“Wage theft, employee misclassification, tax and insurance fraud are all still far too
common in the industry in Rhode Island and across the country. While unionized contractors can be found to break the law as well as open shop contractors, the collective bargaining agreements in place give workers the ability to assert their rights and get remedy of grievances” said Raul Figueroa of Fuerza Laboral.

In September 2015 open shop contractor Cardoso Construction came to settlement around wage theft to pay more than $730,000 in back wages, interest and penalties under a settlement agreement with the Rhode Island Department of Labor and Training (DLT)’s Workplace Fraud Unit.

Rhode Island’s Underground Economy and Misclassification Task Force reported in 2016 that “the Division of Taxation found that 673 employees had been improperly classified as independent contractors instead of employees in 2015, ordering the offending companies to pay more than $220,000 in taxes.”

Rhode Island’s Underground Economy and Misclassification Task Force reported in 2017 that “six construction companies entered into settlement agreements with DLT where they admitted to misclassifying 33 workers on four separate construction projects “and that “The Division of Taxation found that 590 RI employees had been improperly classified in 2016, resulting in almost $5.6 million in unreported wages and an assessment of $200,988 in additional state taxes.”

“When low road employers are allowed to cheat with impunity it undercuts not only worker’s wages and conditions but also legitimate contractors who are looking to compete in doing honest business”, said IUPAT District Council 11 Business Representative Justin Kelley, noting that these issues cause a cycle of exploitation and poverty and starve our municipal and state governments of much needed revenue.

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Raimondo Speaks To Construction Unions, Supports Prevailing Wage

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The taxpayers will not get any breaks on school construction but will pay the prevailing wage, the governor signaled in a D.C. speech.

By Margo Sullivan, Patch Staff |
Apr 18, 2018 1:30 pm ET

WASHINGTON, DC – Rhode Island Gov. Gina Raimondo told the Building Trades unions she is running for another term, and she supports the prevailing wage. Raimondo delivered a speech in Washington, D.C. on Wednesday. In her remarks, she mentioned the projects her administration has undertaken to put construction workers back on the job. Among the projects, she included her $1 billion plan to replace and rebuild the public schools.

State Rep. Patricia Morgan, a declared Republican candidate for governor, had suggested saving the taxpayers money by not paying the prevailing wage for the school construction jobs. But Raimondo, without mentioning Morgan, stood squarely with the unions and demands for the prevailing wage. The unions had a seat on the panel that developed the billion dollar plan for the schools. No taxpayer groups were represented.

Here is the governor’s speech.

Introduction
Thank you! I love having the opportunity to spend time with people who build things.

Thank you Sean McGarvey. I am so grateful for your friendship and support, and for inviting me back to speak here once again. Brent Booker, thank you for your leadership and for everything you do to support America’s tradesmen and tradeswomen. Terry O’Sullivan, you’re incredible – I’m so thankful for our partnership.

Armand Sabitoni – the pride of Rhode Island! I could not ask for a better friend or supporter. You are a champion for the building trades and you deserve so much credit for all of the exciting development that’s happening back home in our small state.

And to my own local leaders: Michael Sabitoni, Tim Byrnes, and Scott Duhamel, thank you for everything you’ve done to strengthen Rhode Island’s middle class. We’re not done yet. Let’s keep going, and let’s keep building.

Rebuilding the Middle Class Deal
For decades, there was a deal in America: if you worked hard and did what was expected of you, then you could raise a family with dignity and security. You could own a home, save for retirement, help your children pay for school, and even take time to visit beautiful beaches like the ones we have in Rhode Island!

In recent years, though, that “deal” has come under attack. There are powerful forces in America that have been working to ensure that a privileged few do well, without any concern for what happens to American workers.

In my state, the building trades got crushed by the recession. As recently as 2012, nearly one out four Rhode Islanders in the building trades were unemployed. When I was running for Governor, I would talk to tradesmen and tradeswomen. They’d been out of work three months, four months, nine months, a year. They were losing their homes. Losing their marriages. Losing their pride.

We had to do something. Back in 2014, across Rhode Island, there weren’t any jobs for laborers, but there was so much work to do.

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(Rhode Island) Senate passes two bills governing unpaid wages

Posted by National Alliance for Fair Contracting on

3/31/2016

PROVIDENCE – The Rhode Island Senate passed two pieces of legislation Thursday designed to curtail the theft of wages from employees by unscrupulous employers. The measures offer employees improved methods for collecting unpaid wages.

The first piece of legislation passed was sponsored by Senate Majority Leader Dominick Ruggerio, of District 4, North Providence, Providence. Ruggerio’s bill would establish a procedure for employees to secure liens against employers for unpaid wages and contested claims would be decided by the Superior Court.

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Michael F. Sabitoni: I’m thrilled to see crackdown on bad R.I. businesses

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By Michael F. Sabitoni

Posted Sep. 18, 2015 at 2:01 AM

A $730,000 fine! That is what a construction subcontractor hanging drywall recently voluntarily agreed to pay to Rhode Island for misclassification and wage and hour violations on just one public works project.
According to the Sept. 1 news story “R.I. construction firm settles with DLT to pay more than $730,000 in back wages, penalties,” the subcontractor’s lawyer actually commended the owner of the company for coming “to the plate” and working “to make things right” rather than fleeing the country and/or filing bankruptcy. Wow, what an upstanding citizen!

When someone blatantly exploits workers in such an egregious way, we in the trades do not know how anyone could commend the perpetrator in any respect. The fact of the matter is the only reason this contractor is coming “to the plate” is not because of character, it is because of money and/or profits. It goes to show you how lucrative cheating is in the construction industry.

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DOL Signs Agreement with RI Department of Labor and Training

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The agreement is a new effort by the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. 

May 08, 2015

 

The U.S. Department of Labor and the Rhode Island Department of Labor and Training signed a three-year memorandum of understanding intended to protect the rights of employees by preventing their misclassification as independent contractors or other non-employee status. Under the agreement, both agencies will share information and coordinate law enforcement, according to DOL’s release.

The agreement is a new effort by the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. Before the Rhode Island Department of Labor and Training agreed to partner with DOL, Alabama, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Utah, Washington, Wisconsin, and Wyoming agencies also signed similar agreements.

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For more information on misclassification, visit (DOL/Misclassification)

 

RI 6-Agency Task Force Announces Establishment of Anonymous Tip Line for Allegations of Misclassification of Workers as Independent Contractors Instead of as Employees

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By WorkersCompensation.com

Providence, RI (WorkersCompensation.com) – A six-agency task force established to protect both workers’ rights and law-abiding businesses that classify their employees properly announced today that it has set up an anonymous telephone tip line for allegations of misclassification.

Staffed by the Rhode Island Division of Taxation, the tip line number is 401-574-8477. Also, the task force is currently building a website to allow people to post tips online.

The chairman of the Joint Task Force on the Underground Economy and Employee Misclassification, DLT Director Charles J. Fogarty, and RI Tax Administrator David M. Sullivan also announced that their agencies have been meeting regularly to share information since the task force came into being in June with the enactment of the Fiscal Year 2015 State Budget. The panel’s purpose is to:

  • coordinate joint efforts to combat fraudulent employment activities;
  • foster voluntary compliance with the law by educating workers and employers;
  • protect the health, safety and benefit rights of workers; and
  • protect law-abiding businesses from being undercut by companies that skirt the law. If warranted, an investigation may be referred to the Office of Attorney General.

 

“One of our major goals is educating, not violating, Rhode Island companies that might unknowingly be misclassifying their workers,” Fogarty said. “At the same time, however, fighting misclassification is an important strategy to promoting shared prosperity in our state