12.11.23
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The Best of You: When to Use a Master Services Agreement with Independent Contractors

In “Best of You” by Foo Fighters, Dave Grohl repeats the word “best” 40 times. In “Coconut,” Harry Nillson repeats the word “coconut” 28 times. I get it, Harry, she put the lime in the coconut and she got a bellyache. In “I Don’t Care Anymore,” Phil Collins ends the song with 18 mentions of “no more,” which all right I get your point.

Repeating the same thing over and over might be a useful device when performing a song. But it’s annoying in independent contractor agreements. And it’s unnecessary.

Consider using a Master Services Agreement (MSA) instead, which is a particular type of independent contractor agreement.

An MSA is an evergreen contract that describes the terms of the relationship but does not specify the particular project. The MSA will often describe the type of service to be performed — delivery, installation, whatever — but it will not describe the specific delivery or installation (or whatever).

Instead, each specific project will be described in a separate Work Order. For an installation, the Work Order would describe the customer, the location, the product to be installed, any specific customer requirements tied to that order, the installation time or deadline, and the fee to be paid. The MSA and Work Order would both make clear, in pre-printed text, that every Work Order is subject to the MSA.

The advantage of this setup is that it’s simple and convenient. There’s no need to restate the full terms of the relationship in every Work Order, particularly if the contractor is likely to perform multiple projects, all of which are subject to the same general terms and conditions.

The MSA will be a multi-page document containing all of the general terms we would expect to see in an independent contractor agreement, including representations as to IC status, a recitation of facts that support IC status, the obligations of each party, payment and invoicing terms, a general description of services, a list of things the contracting party will not control, indemnity, insurance, duration or termination, survival, and other typical IC contract terms.

The MSA should make clear that the IC can reject or accept specific proposed Work Orders, which is consistent with the IC being allowed to choose when to work. But the MSA should also make clear that once a Work Order is accepted, the IC has a contractual obligation to perform.

The MSA might also specify the manner in which Work Orders are offered and accepted. While it is preferable to have each Work Order signed, that’s not always practical. Consider how Work Orders will be accepted, and describe in the MSA what will constitute acceptance. In some cases, acceptance might be indicated by the contractor’s receipt of a Work Order and the contractor’s failure to decline it within 24 hours. It’s ok to create a presumption of acceptance, but you’ll want to preserve the contractor’s right to decline any particular Work Order without penalty.

And that’s how you can create the best, the best, the best of contracts.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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12.04.23
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Beware of Falling Tortoises: Large Fines Are the Law for Willful Misclassification in California

Aeschylus (525-456 BC) was a Greek playwright and is often described as the father of tragedy. While only seven of his estimated 70+ plays have survived, the story of his death remains solidly entrenched atop the list of all-time oddest deaths (if it’s true).

Apparently, Aeschylus died after being struck in the head by a tortoise dropped by an eagle which had mistaken his head for a rock suitable for shattering the shell. That qualifies as a surprise ending to an otherwise successful career.

Today’s post is intended to help businesses in California avoid their own surprising deaths, sans tortoises.

Businesses using independent contractors in California are reminded that misclassification risks extend beyond the usual laws you’d think to be worried about. The California Labor Code has a special section devoted to making willful misclassification of workers illegal, period, end stop, and the law imposes substantial fines.

In other words, if you are working with independent contractors who should — under California law — be classified as employees instead, your business may be subject to substantial fines, even if you are not violating any of the laws addressing overtime, meal and rest breaks, reimbursement of expenses, etc.

Under Labor Code section 226.8, “willful misclassification” of independent contractors is, by itself, unlawful. Penalties start at “not less than” $5,000 and “not more than” $15,000 for each violation. If the Labor and Workforce Development Agency or a court determines that the violations are part of a pattern or practice, the fines jump to “not less than” $10,000 and “not more than” $25,000 for each violation.

Violators will also be required to post a notice on their website or in a location accessible to the public.

If your business is registered with the Contractors’ State Licensing Board, violations will also be reported to the Board for disciplinary proceedings.

The law defines “willful misclassification” as “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.” The law applies to “any person or employer,” raising questions as to whether individuals may be penalized too.

So if you’re doing business with independent contractors in California, be aware of the usual range of potential violations — overtime, meal and rest breaks, wage statements, expense reimbursements, etc. But also be aware that willful misclassification is, by itself, unlawful. Fines under Labor Code section 226.8 should be something you’re aware of. Enforcement is more frequent and more likely than being hit in the head by a falling tortoise.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.27.23
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New York State Jumps on the Band Wagon with New Freelancer Law

In the 1800s, P.T. Barnum used to promote the arrival of the circus with parades and clowns and band wagons through the town. By the late 1800s, politicians were noticing the excitement generated by the band wagons, and they would ride their own band wagons through town to generate support and excitement for the campaigns. Supporters would climb aboard, and the phrase “jump on the band wagon” was born.

So it seems fair to say, even back then, politicians were imitating clowns.

Over time, the phrase has come to mean rallying around any popular cause, clowns or no clowns.

And with the new statewide Freelance Isn’t Free Act, signed by Gov. Hochul on Nov. 22, the State of New York has done just that. New York’s statewide adoption of this freelancer law follows similar laws enacted in Illinois, New York City, Los Angeles, Minneapolis, Seattle, and Columbus. You can compare the four cities’ laws here and read more about Illinois’ law here.

Here’s what the NY State version will require, any time there is a contract with an individual independent contractor for services valued at $800 or more, either for one project or an aggregation of projects over 120 days:

  • Written contract required, which must include:
    • Name and address of hiring party and contractor
    • Itemization of services
    • Value of services
    • Rate and method of compensation
    • Date payment is due, or how due date will be determined
    • Any deadline by which the contractor must submit a list of services provided so that the hiring party can timely process payment.
  • The hiring party must provide a copy of the contract to the contractor.
  • The hiring party must retain the contract for six years!
  • Payment to the contractor must be made by the deadline specified in the contract or, if no deadline is specified, then within 30 days after the services have been completed.
  • The hiring party cannot require the contractor to accept less than the contracted amount. (The law does not seem to provide any exception for unsatisfactory services.)
  • Retaliation is prohibited against any contractor who seeks to exercise rights under the Act.

If there is a dispute over whether timely payment was made, the burden of proof is on the hiring party.

The law creates a private right of action.

The penalty for failing to provide a written contract is $250, if the contractor requested the written contract. Such a claim must be brought within two years.

The penalty for failing to make payment as required by the law or under the contract is the value of the contract, plus double damages, plus attorneys’ fees, and possibly injunctive relief. The statute of limitations for this type of claim is six years.

Waivers of any right under this Act are void as against public policy.

The law takes effect on May 20, 2024, and it will apply to contracts entered into after that date. In December 2022, Gov. Hochul vetoed an earlier version of this law, finding that it imposed too great a burden on the NYSDOL. Those concerns have been resolved in the new version of the Act.

The law does not apply to contracts with independent sales representatives, lawyers, medical professionals, or construction contractors.

The law applies not only to businesses, but to anyone in New York State who retains an independent contractor. As we discussed here when the New York City version of the law was enacted in 2017, the Act applies even to babysitters and dog walkers, if the minimum compensation amount is met.

Businesses and individuals who retain individual independent contractors in New York State, Illinois, Los Angeles, Minneapolis, Seattle, and Columbus need to know their obligations under these laws and act accordingly.

The Freelance Isn’t Free laws do not weigh in on whether the contractor is properly classified as an independent contractor.

There is a clear trend toward passing these types of laws, and we can expect more cities and states to jump on the band wagon.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.20.23
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Tips for Avoiding Liability for Injuries by Contractor Employees, Thanks to Laura Branigan

Raise your hand if you remember songs by Laura Branigan? How about “Gloria”? Or this lyric? You take my self, you take my self control?

The song “Self Control” is about stepping into the nightlife, with a bit of seedier, seductive angle. The lyrics, though, remind us of another reason not to exert control over an independent contractor’s employees.

Suppose you retain a contractor to replace the roof on your building. The contractor has legitimate employees, and one falls through a weak spot on the roof. That’s a worker’s comp claim, and you’re not liable for some kind of premises liability claim, right?

The answer may depend on whether you’ve exerted control over the contractor’s employees.

Let’s look at California law, but the same principle can often be applied elsewhere. (Check your state’s law.) Under the Privette doctrine, a property owner who hires an independent contractor is liable to the contractor’s employee for injuries sustained on the job only if (1) the owner exercises control over any part of the contractor’s work in a manner that affirmatively contributes to the worker’s injuries, or (2) the employee is injured by a concealed hazard that is unknown and not reasonably ascertainable by the contractor.

The keys points in avoiding premises liability claims are, therefore:

  • Don’t exert control over how your contractors’ employees do their job, and
  • Make sure any hazards are marked or disclosed.

You could have other problems if the contractor misclassifies its workers and treats them as individual subcontractors. But avoiding control can also help you avoid joint employer liability in that situation.

The bottom line here when dealing with contractors’ employees is to avoid Laura Branigan’s idea of the nightlife: Don’t take their self, don’t take their self-control.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.13.23
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No Unions? No Escape: NLRB’s Joint Employer Rule Imposes New Risks on Businesses Without Unions

TikTok star Matthew Lani earned a substantial following as a 27-year old medical prodigy, having graduated high school at age 16 before becoming a doctor. He posted videos of himself walking through a South African hospital, dishing out medical advice to his followers or selling them medication.

Lani, however, turns out not to be a doctor at all. When the ruse was uncovered and authorities went to arrest him, he said he had to pee and then tried to escape through a bathroom window. TikTok later banned his account.

The NLRB’s new joint employer rule has many employers trying to figure out whether they need a doctor or whether they can avoid the rule’s reach by escaping through a bathroom window.

Today we’ll answer questions about how the new joint employer rule affects non-union businesses.

We have no unions. Does the rule apply to me?

Yes, 100% yes. In fact, companies without unions may be most at risk here. If your business has vendors, suppliers, business partners, or even customers with employees, pay attention.

The point of the rule is that if your business exerts any control over any of the listed seven terms or conditions of employment, you’re a joint employer. In fact, the rule makes you a joint employer even if you merely have the right to exert control over one of these seven terms, even if you never do.

The listed terms and conditions are broader than the usual suspects, and they include control over health and safety matters.

If the other company’s workers are ever in your building while doing their jobs, you might be exercising control over their terms and conditions of employment without realizing it. Read more here.

What if the vendor’s employees don’t have a union?

Still yes. The rule may still directly affect your business’s rights and legal obligations.

What happens if I have no unions but am deemed a joint employer of someone else’s employees?

If you are a joint employer under the new rule, here’s what that means:

(1) If the other company’s employees form a union, your business would be required to participate in the collective bargaining process.

You’d be required to bargain regarding any term or condition that you have the authority to control. That could include your site-wide health and safety rules.

(2) If the other company’s employees have complaints about terms or conditions that your business can control, you cannot retaliate against them for raising these concerns.

Under federal labor law, all employees — including those not in unions — have the right to engage in protected concerted activity without being retaliated against.

Protected concerted activity can mean just about anything that involves more than one employee, including actions by one employee that are intended to seek support from other employees. Like an Instagram post or a Glassdoor review. Ending their assignment or asking the vendor to remove them from the project could be considered unlawful retaliation.

But these are not my employees? Why would I have to do these things?

Because joint employment.

The concept of joint employment is that more than one person can be the employer. If your business is deemed a joint employer of another company’s employees, then under the National Labor Relations Act (NLRA), you’re also their employer.

What about wage and hour law, unemployment compensation, and workers comp? Would I be a joint employer under those laws too?

No. The new NLRB joint employer rule applies only to the NLRA. Other laws have other tests for determining who is a joint employer.

You can be a joint employer under the NLRA and not a joint employer under other laws. But a finding of joint employment under one law could make it more likely that your business is deemed a joint employer under other laws — particularly if you comply with the new NLRB rule by, let’s say, participating in collective bargaining.

Do I need a real doctor, or will a TikTok doctor be good enough?

All businesses should pay attention to the new NLRB joint employer rule, even if you don’t have unions.

Proactively evaluate your risk of joint employment under the new rule. The whole point of the law is that you may be an employer of other workers without realizing it.

And you can’t escape the reach of the rule by climbing through a bathroom window.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.06.23
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This Will Not Do! Health and Safety Rules May Create Joint Employment under New NLRB Rule

Ginsberg’s Theorem is a parody of the laws of thermodynamics. Generally attributed to the poet Allen Ginsberg, it goes like this:

  1. There is a game.
  2. You can’t win.
  3. You can’t break even.
  4. You can’t even get out of the game.

That’s the conundrum businesses now face when trying to comply with both the NLRB’s new joint employer rule and OSHA requirements (or general safe workplace practices).

Last week we looked at the new NLRB rule on joint employment. This week I want to focus on the most troubling part of that rule — the NLRB’s decision to include “Working conditions related to the safety and health of employees” as an “essential term and condition of employment” for purposes of determining joint employer status.

Businesses often have site-wide, plant-wide, or company-wide health and safety requirements. If you enter this building, you must follow the health and safety rules that apply in this building. For example, you must wear steel-toed shoes to enter the manufacturing floor. Or, you must not enter this high-voltage area without permission. Or, you must walk only on designated pathways to avoid the risk of being hit by a forklift.

Some of these rules are driven by OSHA compliance, some by other governmental regulations, and some by a general desire not to cause grievous injury to other human beings.

Those motivations may now cause your business to be joint employer. The reasoning goes like this:

  1. You have a site-wide safety rule, and anyone in the facility must comply.
  2. Employees of vendors work onsite.
  3. Employees of vendors must comply.

Under the new NLRB joint employer rule, the exercise of control over “working conditions related to the safety and health” of a vendor’s employees would automatically create a joint employment relationship.

More absurd, merely reserving the right to exert control over health and safety conditions would create a joint employer relationship, even if such control is never actually exercised. In other words telling a vendor, if your employees enter our facility, they will will have to follow our site safety rules, would also seem to make you a joint employer.

The NLRB’s position ignores reality and creates a conundrum for businesses: If you comply with health and safety laws, or if you take steps to protect human beings from injury, and those humans are not your employees, the NLRB would now apparently say you’re a joint employer. Beware of showing feelings, showing feelings of an almost human nature.

Queue Pink Floyd “The Trial” from The Wall:

Good morning, Worm your honor
The crown will plainly show
The prisoner who now stands before you
Was caught red-handed showing feelings
Showing feelings of an almost human nature
This will not do
Call the schoolmaster

What to do?

Could the NLRB and OSHA be teaming up to jointly enforce this conundrum? Well, yes.

It just so happens that the NLRB and OSHA have teamed up, and on October 31 — less than a week after the NLRB released its final rule on joint employment — the two agencies jointly released a Memorandum of Understanding (MOU). In the MOU, the agencies commit to sharing information and working together to enforce their respective laws, including notifying workers who make OSHA complaints of their NLRA rights, and notifying workers who make NLRA complaints about health and safety of their OSHA rights.

So what are businesses to do?

The answer can’t be to ignore health and safety rules or to waive these rules for non-employees. But the NLRB needs to recognize that exercising control over health and safety conditions does not — or should not — convert a company into a joint employer. Certainly this aspect of the rule will be tested in court, as it seems to go well beyond the bounds of the common law definition of joint employment, and the common law test is supposed to be the joint employer test under the NLRA.

One option for businesses to consider is to tie site-wide health and safety rules to legal requirements whenever possible. Compliance with the law is not supposed to be the type of control that is taken into account under the common law joint employer test. But that approach creates a conundrum too. Be careful that you don’t go too far and say that the law requires something when, in reality, it doesn’t.

Another option might be to revise how site-wide health and safety rules are drafted. Try to try to thread the needle, protecting everyone onsite, but not explicitly setting working conditions for vendor’s employees. It might be possible to draft this way; it might not be. But it’s worth looking at your policy language.

In the meantime, let’s keep an eye on how this new factor is interpreted by administrative law judges and the Board when actual disputes are adjudicated. Let’s also see if court challenges to the new joint employer rule will knock out this troubling provision.

This will not do. Call the schoolmaster!

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.06.23
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This Will Not Do! Health and Safety Rules May Create Joint Employment under New NLRB Rule

Ginsberg’s Theorem is a parody of the laws of thermodynamics. Generally attributed to the poet Allen Ginsberg, it goes like this:

  1. There is a game.
  2. You can’t win.
  3. You can’t break even.
  4. You can’t even get out of the game.

That’s the conundrum businesses now face when trying to comply with both the NLRB’s new joint employer rule and OSHA requirements (or general safe workplace practices).

Last week we looked at the new NLRB rule on joint employment. This week I want to focus on the most troubling part of that rule — the NLRB’s decision to include “Working conditions related to the safety and health of employees” as an “essential term and condition of employment” for purposes of determining joint employer status.

Businesses often have site-wide, plant-wide, or company-wide health and safety requirements. If you enter this building, you must follow the health and safety rules that apply in this building. For example, you must wear steel-toed shoes to enter the manufacturing floor. Or, you must not enter this high-voltage area without permission. Or, you must walk only on designated pathways to avoid the risk of being hit by a forklift.

Some of these rules are driven by OSHA compliance, some by other governmental regulations, and some by a general desire not to cause grievous injury to other human beings.

Those motivations may now cause your business to be joint employer. The reasoning goes like this:

  1. You have a site-wide safety rule, and anyone in the facility must comply.
  2. Employees of vendors work onsite.
  3. Employees of vendors must comply.

Under the new NLRB joint employer rule, the exercise of control over “working conditions related to the safety and health” of a vendor’s employees would automatically create a joint employment relationship.

More absurd, merely reserving the right to exert control over health and safety conditions would create a joint employer relationship, even if such control is never actually exercised. In other words telling a vendor, if your employees enter our facility, they will will have to follow our site safety rules, would also seem to make you a joint employer.

The NLRB’s position ignores reality and creates a conundrum for businesses: If you comply with health and safety laws, or if you take steps to protect human beings from injury, and those humans are not your employees, the NLRB would now apparently say you’re a joint employer. Beware of showing feelings, showing feelings of an almost human nature.

Queue Pink Floyd “The Trial” from The Wall:

Good morning, Worm your honor
The crown will plainly show
The prisoner who now stands before you
Was caught red-handed showing feelings
Showing feelings of an almost human nature
This will not do
Call the schoolmaster

What to do?

Could the NLRB and OSHA be teaming up to jointly enforce this conundrum? Well, yes.

It just so happens that the NLRB and OSHA have teamed up, and on October 31 — less than a week after the NLRB released its final rule on joint employment — the two agencies jointly released a Memorandum of Understanding (MOU). In the MOU, the agencies commit to sharing information and working together to enforce their respective laws, including notifying workers who make OSHA complaints of their NLRA rights, and notifying workers who make NLRA complaints about health and safety of their OSHA rights.

So what are businesses to do?

The answer can’t be to ignore health and safety rules or to waive these rules for non-employees. But the NLRB needs to recognize that exercising control over health and safety conditions does not — or should not — convert a company into a joint employer. Certainly this aspect of the rule will be tested in court, as it seems to go well beyond the bounds of the common law definition of joint employment, and the common law test is supposed to be the joint employer test under the NLRA.

One option for businesses to consider is to tie site-wide health and safety rules to legal requirements whenever possible. Compliance with the law is not supposed to be the type of control that is taken into account under the common law joint employer test. But that approach creates a conundrum too. Be careful that you don’t go too far and say that the law requires something when, in reality, it doesn’t.

Another option might be to revise how site-wide health and safety rules are drafted. Try to try to thread the needle, protecting everyone onsite, but not explicitly setting working conditions for vendor’s employees. It might be possible to draft this way; it might not be. But it’s worth looking at your policy language.

In the meantime, let’s keep an eye on how this new factor is interpreted by administrative law judges and the Board when actual disputes are adjudicated. Let’s also see if court challenges to the new joint employer rule will knock out this troubling provision.

This will not do. Call the schoolmaster!

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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10.29.23
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Feeling At Risk? You Might Be, Now That NLRB Issued New Joint Employer Rule

I took this picture on Friday of a window washer at the Hilton across the street.

Late last week, the NLRB issued its new joint employer rule. I’ve listed three takeways below. Don’t be left hanging. Click here for the full Alert.

1) The National Labor Relations Board has issued a Final Rule that changes the test for determining who is a joint employer.

2) The Final Rule rescinds the Rule enacted in 2020 and adopts a test that will vastly expand the circumstances under which a company is a joint employer of the employees of another company.

3) The new rule may cause absurd results, including creating joint employment from the application of worksite safety rules to everyone onsite, including a vendor’s employees. The new rule requires joint employers to participate in the collective bargaining process.

The full Alert explains in more detail. If you are not subscribed to BakerHostetler employment law alerts, let me know and I’ll add you to the distribution list.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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10.23.23
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It’s Not Lemon Juice: Here’s the One Key Ingredient Missing from Your Staffing Agency Agreements

In 1995, a man robbed two Pittsburgh banks during the day. He wore no disguise and was easily identified by surveillance cameras and arrested. This surprised the man.

The man was surprised because he had covered himself in lemon juice, and he believed that lemon juice made him invisible to video cameras. Obviously, it doesn’t and it didn’t. Lemon juice does not prevent a person from being seen.

Now let’s talk about staffing agency temps and being seen. If your temps are integrated into your workforce, there is a high likelihood you are a joint employer.

If your staffing agency temp improperly pays your temp, and the temp files a wage and hour claim, you can’t just drench yourself in lemon juice and hope not to be seen. Chances are, you’ll be sued too.

If you are a joint employer, you are likely liable for wage and hour violations by the staffing agency, even though you had no control over the staffing agency‘s pay practices. For liability purposes, their mistake is your mistake.

One of the best ways to avoid getting drawn into a class action filed by an agency temp is to require, in your staffing agency agreements, that all temps sign an individual arbitration agreement. All temps should be required, as a condition of being placed at your company, to agree that any claims they have against your company will be resolved in arbitration, on an individual basis, not through a class action.

How do you do this? In three parts.

First, insert in your staffing agency agreement a clause requiring that all temps placed at your facility must first signed an arbitration agreement, a copy of which will be attached to the staffing agency agreement.

Second, draft the individual arbitration agreement exactly the way you want it, and attach it to the staffing agency agreement as an exhibit. Include a class waiver. Consider allowing small claims to be carved out and resolved in small claims court. Consider omitting AAA or JAMS as a designated arbitration administrator, to reduce the risk of mass arbitration filings. You can require arbitration without designating any agency to administer it. The agencies charge high fees, which creates the leverage that makes mass arbitration an effective tool of the plaintiffs’ bar. No arbitration agency = no administrative fees = probably no mass arbitration.

Third, require the agency to maintain copies of these agreements. You want the ability to audit compliance. You can also require the agency to show you a copy of each signed agreement before each temp begins an assignment.

It is frustrating to think that your business could be jointly liable for wage and hour violations by a staffing agency when you have no control over how they pay their employees. But with joint employment, that risk is a reality. You need to prepare for that possibility well in advance.

The staffing agency agreement provides you an ideal opportunity to plan ahead and protect yourself against this possibility.

Lemon juice might be a nice addition to iced tea, but it does not provide any protection against security cameras or class action lawsuits. You’ll need arbitration agreements for that.

Click here for more tips about what should be in your staffing agency agreements.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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10.16.23
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Weighing Heavy: Rhode Island Makes Some Misclassification a Felony

Because of gravitational pull, topography, and geology, people apparently weigh a bit more when in Southern Illinois than in Ohio or Indiana.

For an adult human, the difference is only about .02 pounds, so relocation is probably not a viable weight loss strategy. But still. Who knew?

Meanwhile, in Rhode Island a new wage theft law is going to weigh heavily on some buysinesses, no matter what the gravitational pull might be in Providence.

Amendments to the Rhode Island Payment of Wages Act, effective 1.1.2024, drastically increase the penalties for independent contractor misclassification.

Outside of the construction industry, penalties for misclassification will include fines between $1,500 and $5,000 per misclassified employee. Complaints will result in an investigation and, if a violation is found, a lengthy new administrative process ensues that may result in referral to the state attorney general for criminal prosecution.

In the construction industry, independent contractor misclassification will now be a felony, punishable by up to three years in prison, if the violation (a) is knowing and willful, (b) is a second violation of the Rhode Island law, and (c) is valued at $1,500 or more. First violations, if knowing and willful, are misdemeanors punishable by up to one year of imprisonment, for violations valued at $1,500 or less. Violations may also result in a fine of up to $1,000, instead of or in addition to imprisonment.

The amendment contains a possible drafting error (using “and” instead of “or), creating ambiguity as to whether a first violation in the construction industry may be punishable as a felony if the offense is knowing and willful and results in an underpayment of more than $1,500. The questionably drafted section is 28-14-19.1(i)(2)(i).

“Construction industry” is defined broadly and includes remodeling, repairing, improving, and maintaining any building.

“Employer” is also defined broadly and includes “any agent” of the employing entity.

The standard for determining misclassification will be the same standard that applies to the Fair Labor Standards Act (FLSA). That means an Economic Realities Test.

The amendments also impose criminal felony penalties for other selected wage and hour violations, if knowing and willful, including (a) failure to follow payday requirements, (b) failure to timely pay wages or accrued unused vacation upon termination, and (c) failure to timely pay an employee’s family wages due upon an employee’s death. Penalties for violations of these provisions include imprisonment for up to three years.

According to this article on SHRM.org, the Rhode Island Attorney General supported the amendments as providing enhanced tools and penalties for wage theft violations. The Attorney General seems particularly focused on going after independent contractor misclassification in the construction industry.

Businesses with employees and contractors in Rhode Island should review their current practices and double check for misclassification risks. The penalties for wage and hour violations in Rhode Island will be heavier than ever, starting in 2024.

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© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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