JDSupra (11/17/15) Jamie Bachant

The Rhode Island Department of Labor and Training has stated that the misclassification of employees as independent contractors is workplace fraud. Rhode Island, similar to other states, requires employers to withhold state and federal income taxes, Social Security taxes, and Medicare taxes for each of their employees. Additionally, employers must pay taxes on wages paid to employees as well as contribute to workers’ compensation premiums. Notably, independent contractors are not afforded the same protections as employees, such as family and medical leave and protections from discriminatory employment practices under the State Fair Employment Practices Act.

Misclassifying an employee as an independent contractor may result in fines, penalties, and private lawsuits in which affected workers seek, among other things, wages, benefits, and other relief, such as reinstatement of employment, fringe benefits, seniority rights, and reasonable attorneys’ fees and costs. It is particularly important for Rhode Island employers to properly classify their workers, due to the state’s agreement with the U.S. Department of Labor regarding the coordination of law enforcement efforts to prevent misclassification. Employers should consider the totality of the working relationship to determine how workers should be classified.