"Both wage theft and misclassification are crimes that warrant felony treatment"

Peter Neronha, RI Attorney General

 

 

AG Neronha testifies before Senate Labor Committee strengthen penalties for wage theft and misclassification

 

 

From a press release: Rhode Island Attorney General Peter Neronha testified in the Senate Committee on Labor Wednesday evening in support of S0195, a bill that would increase penalties for both wage theft and the misclassification of employees as independent contractors in Rhode Island.

“There is an underground economy in Rhode Island where people are misclassified as independent contractors when they are really employees. That’s cheating workers and it’s cheating the state’s taxpayers,” said Attorney General Neronha in a statement. “Additionally, when employers cheat workers by failing to pay them the wages they are due, it’s theft, plain and simple. Wage theft not only harms employees, it also deprives Rhode Island of tax revenue, which means taxpayers also pay the price. Both wage theft and misclassification are crimes that warrant felony treatment.”

 

CLICK IMAGE BELOW FOR FULL TEXT OF SENATE BILL 0195

Misclassification occurs when an employer falsely treats an employee as an independent contractor in order to avoid paying benefits, overtime, taxes, Social Security Insurance, Medicare, and workers’ compensation insurance.

 

Currently, both wage theft and employee misclassification are misdemeanor offenses. The Attorney General’s bill, introduced in the Rhode Island Senate by Majority Leader Michael McCaffrey (Democrat, District 29, Warwick), would make these practices felony conduct. The bill would increase existing penalties to up to three years in prison and a fine of up to $10,000 for the first offense of misclassification or wage theft of $1,500-$5,000, or up to five years in prison and a fine of three times the wage amount or $20,000 (whichever is greater) for subsequent offenses of misclassification or wage theft in excess of $5,000.

 

As reported in Bloomberg Law, within the last few years, the Department of Labor has beefed up efforts to help businesses voluntarily comply with employment laws. That includes by reviving a system for employers to self-report wage-and-hour violations and bringing back opinion letters in which businesses, workers, and unions can ask the department to weigh in on specific legal issues. Those letters can then be used as a shield in court.

 

It is unclear at this time what the Biden administration's approach to this issue will be.

 

Rhode Island Proposed Wage Theft Penalties

Wages Penalties

 

< $1,500 (misdemeanor) >$400 per offense*, or 1 year imprisonment or both

 

$1500 - $5,000 Imprisonment <3 years (or) 2X wages or $10,000 or both

 

> $5,000 Imprisonment <5 years (or) 3X wages or $20,000 " "

 

2nd or Subsequent " " " " " " " " "

 

 

Please note that as defined by legal dictionary, the term "chapter" refers to the entire bill. Which implies that the separate and distinct violation per day applies to each penalty category.

 

The separate and distinct per day violation, as defined, can result in significant monetary penalties. Additionally, if wages and fines are not paid within thirty (30) days of final decision and after notification, the state has the authority to revoke the company's business license until full payment is made, or a payment agreement is finalized.

 

If you would like to know more about this subject, and how ASN joins in the fight against wage theft and employee misclassification, we would love to talk with you.