Rhode Island has enacted legislation (Senate Bill 1079a), which clarifies and increases certain penalties for employers that are found to have violated certain payment laws or misclassified independent contractors. Senate Bill 1079a takes effect on Jan. 1, 2024.
The details
As background, any employer that is found to have violated or failed to comply with laws that prevent wage theft or employer misclassification may face penalties under the law.
Increased Wage Theft Penalties
Senate Bill 1079a clarifies that an employer that fails to pay an employee on time under the law may face:
- Penalties for each pay period they fail to pay on time;
- A felony charge (with imprisonment of no more than three years) and a fine of up to $5,000, when they are found to have knowingly and willfully failed to pay more than $1,500 in unpaid wages on time.
Increased Penalties for Misclassifying Independent Contractors
Senate Bill 1079a also clarifies that a company that is found to have misclassified an employee as an independent contractor may face increased penalties ranging from $1,500 to $5,000 per offense (depending on the number of offenses).
The law also provides increasing penalties for employers in the construction industry that are found to have knowingly and willfully violated Senate Bill 1079a. Under the law:
- A misclassification that does not exceed $1,500, upon a plea or a conviction, may result in an employer being found guilty of a misdemeanor and being subject to imprisonment for at most one year, a fine of $1,000, or both.
- Employers that are found to have repeatedly violated the law after a previous offense, where the misclassification value exceeds $1,500, may result in the employer being found guilty of a felony and sentenced to a term of imprisonment of up to three years, a fine up to $5,000, or both.
Next steps
Rhode Island employers should lookout for further materials from the Department of Labor and Training on changes in state law regarding payment of wages and the new penalties.
Please contact your ADP® Service Representative if you have any questions.