2013 -- S 0368 SUBSTITUTE A

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LC01198/SUB A/3

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO LABOR AND LABOR RELATIONS -- EMPLOYMENT SECURITY--

GENERAL PROVISIONS

     Introduced By: Senators McCaffrey, Goodwin, Lombardi, Miller, and Gallo

     Date Introduced: February 13, 2013

     Referred To: Senate Labor

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 28-14-19 of the General Laws in Chapter 28-14 entitled "Payment

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of Wages" is hereby amended to read as follows:

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     28-14-19. Enforcement powers and duties of director of labor and training. -- (a) It

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shall be the duty of the director to insure compliance with the provisions of this chapter 28-14 and

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28-12. The director or his or her designee may investigate any violations thereof, institute or

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cause to be instituted actions for the collection of wages and institute action for penalties or other

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relief as provided for within and pursuant to those chapters. The director or his or her authorized

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representatives are empowered to hold hearings and he or she shall cooperate with any employee

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in the enforcement of a claim against his or her employer in any case whenever, in his or her

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opinion, the claim is just and valid.

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      (b) Upon receipt of a complaint or conducting an inspection under applicable law, the

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director or his or her appropriate departmental designee is authorized to investigate to determine

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compliance with the chapters 28-12 and/or 28-14.

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      (c) With respect to all complaints deemed just and valid, the director or his or her

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designee shall order a hearing thereon at a time and place to be specified, and shall give notice

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thereof, together with a copy of the complaint or the purpose thereof, or a statement of the facts

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disclosed upon investigation, which notice shall be served personally or by mail on any person,

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business, corporation, or entity of any kind affected thereby. The hearing shall be scheduled

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within thirty (30) days of service of a formal complaint as provided herein. The person, business,

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corporation, or entity shall have an opportunity to be heard in respect to the matters complained

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of at the time and place specified in the notice. The hearing shall be conducted by the director or

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his or her designee. The hearing officer in the hearing shall be deemed to be acting in a judicial

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capacity, and shall have the right to issue subpoenas, administer oaths, and examine witnesses.

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The enforcement of a subpoena issued under this section shall be regulated by Rhode Island civil

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practice law and rules. The hearing shall be expeditiously conducted and upon such hearing the

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hearing officer shall determine the issues raised thereon and shall make a determination and enter

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an order within thirty (30) days of the close of the hearing, and forthwith serve a copy of the

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order, with a notice of the filing thereof, upon the parties to the proceeding, personally or by mail.

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In the event that any party or entity joined as a party to a formal claim, complaint or other

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proceeding asserts, as a related claim or defense, the absence of an employer-employee

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relationship or that the agent or operative employed by the contractor is an independent

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contractor, the director of the department of labor and training or his or her designee shall refer

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the matter forthwith to the Rhode Island workers' compensation court for an evidentiary hearing

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and determination of employment status in accordance with subsection 28-30-13(c). The order

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shall dismiss the complaint or direct payment of any wages and/or benefits found to be due and/or

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award such other appropriate relief or penalties authorized under chapter 28-12 and/or 28-14, and

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the order may direct payment of reasonable attorneys' fees and costs to the complaining party.

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Interest at the rate of twelve percent (12%) per annum shall be awarded in the order from the date

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of the nonpayment to the date of payment.

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      (d) The order shall also require payment of a further sum as a civil penalty in an amount

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up to two (2) times the total wages and/or benefits found to be due, exclusive of interest, which

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shall be shared equally between the department and the aggrieved party. In determining the

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amount of any penalty to impose, the director or his or her designee shall consider the size of the

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employer's business, the good faith of the employer, the gravity of the violation, the previous

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violations and whether or not the violation was an innocent mistake or willful.

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      (e) The director may institute any action to recover unpaid wages or other compensation

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or obtain relief as provided under this section with or without the consent of the employee or

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employees affected.

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      (f) No agreement between the employee and employer to work for less than the

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applicable wage and/or benefit rate or to otherwise work under and/or conditions in violation of

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applicable law is a defense to an action brought pursuant to this section.

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      (g) The director shall notify the contractors' registration board of any order issued or any

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determination hereunder that an employer has violated chapters 28-12, 28-14 and/or 37-13. The

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director shall notify the tax administrator of any determination hereunder that may affect liability

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for an employer's payment of wages and/or payroll taxes.

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     SECTION 2. Section 28-30-13 of the General Laws in Chapter 28-30 entitled "Workers'

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Compensation Court" is hereby amended to read as follows:

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     28-30-13. Controversies submitted to court. -- (a) Any controversy over which the

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workers' compensation court has jurisdiction in accordance with chapters 29 -- 38 and chapter 53

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of this title, including compensation, reasonableness of medical and hospital bills, degree of

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functional impairment and/or disability, a dispute between an insurance carrier and an employer

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under a workers' compensation insurance contract, except disputes under the jurisdiction of the

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workers' compensation appeals board established pursuant to section 27-9-29, failure of an

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employer to secure the payment of compensation under chapters 29 -- 38 and chapter 53 of this

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title and any controversy in which the state or any of its political subdivisions is a party, and

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appeals from an order of the retirement board pursuant to Rhode Island general law section 45-

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21.2-9 shall be submitted to the court in the manner provided in chapters 33 and 35 of this title.

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      (b) Disputes between an insurance carrier and an employer under a workers'

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compensation insurance contract shall not be subject to a pretrial conference in accordance with

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section 28-35-20, but shall be assigned consistent with the rules and regulations of the workers'

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compensation court.

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     (c) Where any party or entity joined as a party to a formal claim, complaint or other

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proceeding brought before the director of the department of labor and training or his or her

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designee, pursuant to sections 28-14-19, 28-40-11 and 37-13-14.1, asserts the absence of an

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employer-employee relationship or the existence of an independent contractor relationship as a

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related claim or defense, the director or his or her designee shall refer the matter to the workers'

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compensation court for an evidentiary hearing and determination of employment status. Such

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disputes shall not be subject to a pretrial conference in accordance with section 28-35-20. Rather,

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the court shall assign the matter for trial within twenty-one (21) days of the date on which the

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matter is docketed at the court. The judge to whom the matter is assigned shall hear and decide all

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questions of law and fact relating to the disputed employment status and shall render a decision in

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accordance with the workers' compensation laws regarding the determination of employment

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status and shall enter an order reflecting his or her findings and decisions. Costs, counsel or

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witness fees shall not be awarded by the court to the prevailing party. Any party aggrieved by the

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entry of the order by a judge relating to employment status under this section may appeal said

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order to the appellate division pursuant to the provisions of section 28-35-28. Upon the entry of a

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final order of the court, the matter shall be remanded to the department of labor and training for

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further proceedings consistent with the court's order.

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     (d) The process created by subsection 28-30-13(c) shall not apply to "employment" that

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are exempt from the workers' compensations statutory scheme, pursuant to section 28-42-8.

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     SECTION 3. Section 28-40-11 of the General Laws in Chapter 28-40 entitled

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"Temporary Disability Insurance - Contributions" is hereby amended to read as follows:

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     28-40-11. Determination of unreported contributions due. -- If an employer for any

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reporting period fails to make any report used for the purpose of determining the amount of

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contributions payable under chapters 39 -- 41 of this title at the time and in the manner required

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by the prescribed rules and regulations, or if those reports when filed are incorrect or insufficient,

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and the employer fails to file a corrected or sufficient report within twenty (20) days after the

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director has required it by written notice, the director shall determine on the basis of such

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information as the director may be able to obtain, the amount of contributions due from that

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employer, and the director shall give written notice to any employer of the amount of

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contributions so determined. That determination shall finally and irrevocably fix the amount of

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contributions due unless the employer, within twenty (20) days after the giving of that notice,

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applies to the board of review for a hearing, or unless the director on his or her own volition

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reduces the amount. In the event that any party or entity joined as a party to a formal claim,

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complaint or other proceeding asserts, as a related claim or defense, the absence of an employer-

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employee relationship or that the agent or operative for whom a contribution has been assessed is

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an independent contractor, the director of the department of labor and training or his or her

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designee shall refer the matter forthwith to the Rhode Island workers' compensation court for an

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evidentiary hearing and determination of employment status in accordance with subsection 28-

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30-13(c).

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     SECTION 4. Section 28-42-7 of the General Laws in Chapter 28-42 entitled

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"Employment Security - General Provisions" is hereby amended to read as follows:

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     28-42-7. Independent contractor and employee distinguished. -- The determination of

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independent contractor or employee status for purposes of chapters 42 -- 44 of this title shall be

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made by the Rhode Island workers' compensation court in accordance with subsection 28-30-

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13(c) the same as those factors used by the Internal Revenue Service in its code and regulations.

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     SECTION 5. Section 37-13-14.1 of the General Laws in Chapter 37-13 entitled "Labor

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and Payment of Debts by Contractors" is hereby amended to read as follows:

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     37-13-14.1. Enforcement -- Hearings. -- (a) Before issuing an order or determination,

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the director of labor and training shall order a hearing thereon at a time and place to be specified,

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and shall give notice thereof, together with a copy of the complaint or the purpose thereof, or a

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statement of the facts disclosed upon investigation, which notice shall be served personally or by

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mail on any person, firm, or corporation affected thereby. The person, firm, or corporation shall

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have an opportunity to be heard in respect to the matters complained of at the time and place

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specified in the notice, which time shall be not less than five (5) days from the service of the

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notice personally or by mail. The hearing shall be held within ten (10) days from the order of

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hearing. The hearing shall be conducted by the director of labor and training or his or her

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designee. The hearing officer in the hearing shall be deemed to be acting in a judicial capacity,

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and shall have the right to issue subpoenas, administer oaths, and examine witnesses. The

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enforcement of a subpoena issued under this section shall be regulated by Rhode Island civil

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practice law and rules. The hearing shall be expeditiously conducted and upon such hearing the

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hearing officer shall determine the issues raised thereon and shall make a determination and enter

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an order within ten (10) days of the close of the hearing, and forthwith serve a copy of the order,

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with a notice of the filing thereof, upon the parties to the proceeding, personally or by mail. In the

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event that any party or entity joined as a party to a formal claim, complaint or other proceeding

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asserts, as a related claim or defense, the absence of an employer-employee relationship or that

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the agent or operative employed by the contractor is an independent contractor, the director of the

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department of labor and training or his or her designee shall refer the matter forthwith to the

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Rhode Island workers' compensation court for an evidentiary hearing and determination of

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employment status in accordance with subsection 28-30-13(c). The order shall dismiss the

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charges or direct payment of wages or supplements found to be due, including interest at the rate

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of twelve percentum percent (12%) per annum from the date of the underpayment to the date of

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payment, and may direct payment of reasonable attorney's fees and costs to the complaining

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party.

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      (b) In addition to directing payment of wages or supplements including interest found to

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be due, the order shall also require payment of a further sum as a civil penalty in an amount up to

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three times the total amount found to be due. Further, if the amount of salary owed to an

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employee pursuant to this chapter but not paid to the employee in violation of thereof exceeds

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five thousand dollars ($5,000), it shall constitute a misdemeanor and shall be referred to the office

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of the attorney general. The misdemeanor shall be punishable for a period of not more than one

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year in prison and/or fined not more than one thousand dollars ($1,000). In assessing the amount

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of the penalty, due consideration shall be given to the size of the employer's business, the good

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faith of the employer, the gravity of the violation, the history of previous violations and the

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failure to comply with recordkeeping or other nonwage requirements. The surety of the person,

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firm, or corporation found to be in violation of the provisions of this chapter shall be bound to

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pay any penalties assessed on such person, firm, or corporation. The penalty shall be paid to the

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department of labor and training for deposit in the state treasury; provided, however, it is hereby

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provided that the general treasurer shall establish a dedicated "prevailing wages enforcement

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fund" for the purpose of depositing the penalties paid as provided herein. There is hereby

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appropriated to the annual budget of the department of labor and training the amount of the fund

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collected annually under this section, to be used at the direction of the director of labor and

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training for the sole purpose of enforcing prevailing wage rates as provided in this chapter.

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      (c) For the purposes of this chapter, each day or part thereof of violation of any provision

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of this chapter by a person, firm, or corporation, whether the violation is continuous or

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intermittent, shall constitute a separate and succeeding violation.

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      (d) In addition to the above, any person, firm, or corporation found in violation of any of

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the provisions of this chapter by the director of labor and training, an awarding authority, or the

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hearing officer, shall be ineligible to bid on or be awarded work by an awarding authority or

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perform any such work for a period of no less than eighteen (18) months and no more than thirty-

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six (36) months from the date of the order entered by the hearing officer. Once a person, firm, or

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corporation is found to be in violation of this chapter, all pending bids with any awarding

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authority shall be revoked, and any bid awarded by an awarding authority prior to the

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commencement of the work shall also be revoked.

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      (e) In addition to the above, any person, firm, or corporation found to have committed

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two (2) or more willful violations in any period of eighteen (18) months of any of the provisions

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of this chapter by the hearing officer, which violations are not arising from the same incident,

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shall be ineligible to bid on or be awarded work by an awarding authority or perform any work

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for a period of sixty (60) months from the date of the second violation.

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      (f) The order of the hearing officer shall remain in full force and effect unless stayed by

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order of the superior court.

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      (g) The director of labor and training, awarding authority, or hearing officer shall notify

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the bonding company of any person, firm, or corporation suspected of violating any section of

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this chapter. The notice shall be mailed certified mail, and shall enumerate the alleged violations

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being investigated.

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      (h) In addition to the above, any person, firm, or corporation found to have willfully

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made a false or fraudulent representation on certified payroll records shall be referred to the

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office of the attorney general. The false or fraudulent representation shall be considered a

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misdemeanor and shall be punishable for a period of not more than one year in prison and/or

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fined one thousand dollars ($1,000). Further, any person, firm, or corporation found to have

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willfully made a false or fraudulent representation on certified payroll records shall be required to

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pay a civil penalty to the department of labor and training in an amount of no less than two

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thousand dollars ($2,000) and not greater than fifteen thousand dollars ($15,000) per

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representation.

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     SECTION 6. This act shall take effect upon passage.

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LC01198/SUB A/3

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO LABOR AND LABOR RELATIONS -- EMPLOYMENT SECURITY--

GENERAL PROVISIONS

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     This act would grant jurisdiction to the workers' compensation court to decide whether an

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individual is an employee or an independent contractor in a number of various labor contexts.

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     This act would take effect upon passage.

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LC01198/SUB A/3

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