Update Applicable to:

All employers with workers in Rhode Island

What happened?

Rhode Island has enacted a new “Wage Theft” law that amends the existing Payment of Wages law.

What are the details?

Wage Theft Law:

The amendment targets employers who knowingly and willfully fail to pay wages in a timely manner as required by applicable laws. Employers found guilty of this offense face felony charges if the unpaid wage amount exceeds $1,500. Specific wage payment requirements covered by this law include regular pay dates, payment upon termination, and payment in the event of an employee’s death. Employers found guilty or convicted of wage theft may be imprisoned for up to three years or fined up to $5,000.

Misclassification of Employees as Independent Contractors:

The Wage Theft law also addresses the misclassification of employees as independent contractors. Companies found to have misclassified workers will be subject to civil penalties ranging from $1,500 to $5,000 per offense, depending on the nature of the offense. For businesses in the construction industry, willful violations of this law may be considered a misdemeanor if the offense’s value is $1,500 or less, and a felony if the value exceeds $1,500.

Prosecution Process for Misclassification Claims:

The Wage Theft law establishes a process for prosecuting misclassification claims. The Department of Labor and Training (DLT) will conduct investigations using the test developed under the Federal Fair Labor Standards Act, which is considered more “business-friendly” compared to the controversial “ABC test.” If the DLT finds evidence of misclassification, it may pursue civil remedies or recommend criminal prosecution to the Rhode Island Attorney General’s office. The decision to pursue criminal charges lies with the Attorney General’s office. This approach aims to provide clarity and consistency in addressing misclassification issues in the state.

For more information, please see the links below:

Bill S1079 (Section 1 – Effective January 1, 2024)

Assembly Press Release

What do employers need to do?

Employers will need to review the new law as written in the bill referenced above. Employers needing assistance with compliance review of the classification of their employees should seek legal counsel to ensure proper and definitive determinations.

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