2012 -- S 2343

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LC01280

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO LABOR AND LABOR RELATIONS - EMPLOYMENT SECURITY -

GENERAL PROVISIONS

     Introduced By: Senators Jabour, McCaffrey, Doyle, Miller, and Lynch

     Date Introduced: February 07, 2012

     Referred To: Senate Labor

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 28-42-7 and 28-42-8 of the General Laws in Chapter 28-42

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

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     28-42-7. Independent contractor and employee distinguished. Employee

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presumption – independent contractor exception. – (a) The determination of independent

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contractor or as opposed to employee status for purposes of chapters 12, 14, 42 -- 44 of this title

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chapter 37-13, and title 44 shall be the same as those factors used by the Internal Revenue Service

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in its code and regulations.; provided, that a person performing any service, except as provided

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under section 28-42-8, shall be presumed an “employee” unless:

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     (1) The person is free from control and direction in connection with the performance of

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the service, both under his or her contract for the performance of the service and either:

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     (i) The service is performed outside the usual course of the business of the procurer of the

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service or outside of all the places of business of the procurer of the service; or

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     (ii) The person is engaged in an independently established trade, occupation, profession

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or business of the same nature as that involved in the service performed. This requirement is

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satisfied, among other ways, where the service performed has historically been recognized as an

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independent trade, occupation, profession or business and persons engaged therein have

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historically been treated as independent contractors for tax purposes.

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     (b) If the provider of the services furnishes and operates capital machinery and/or a

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specialized or heavy commercial vehicle as the major component of the service provided, it shall

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be considered a factor demonstrating lack of direction or control by the procurer for purposes of

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satisfying subdivision (a)(1) above.

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     (c) The failure to withhold federal or state income taxes or to pay unemployment

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compensation contributions or workers’ compensation premiums with respect to a person’s

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compensation shall not be considered in making a determination under this section.

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     (d) Notwithstanding the presumption established in this section and the inability to satisfy

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the requirements under subdivision (a)(1) and paragraph (i) or (ii) above, a provider of services

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may still overcome the presumption by application of the remaining factors used by the Internal

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Revenue Service, with the exception of those excluded under subsection (c) above.

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     (e) Any person, business, corporation, employer or entity of any kind failing to properly

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classify a worker as an employee according to this section shall be subject to liability and

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penalties as provided under chapter 28-14 in addition to any other liability, penalties or relief to

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which they may be subject under applicable law.

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     28-42-8. Exemptions from "employment". -- "Employment" does not include:

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      (1) Domestic service in a private home performed for a person who did not pay cash

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remuneration of one thousand dollars ($1,000) or more in any calendar quarter after December

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31, 1977, in the current calendar year or the preceding calendar year to individuals employed in

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that domestic service in a private home;

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      (2) Service performed by an individual in the employ of his or her son, daughter, or

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spouse, and service performed by a child under the age of eighteen (18) in the employ of his or

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her father or mother;

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      (3) Service performed in the employ of any other state or any of its political

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subdivisions, the United States government, an instrumentality of any other state or states or their

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political subdivisions, or of an instrumentality of the United States, except that if the Congress of

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the United States permits states to require any instrumentalities of the United States to make

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payments into an unemployment fund under a state unemployment compensation act, then, to the

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extent permitted by Congress, and from and after the date as of which permission becomes

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effective, all of the provisions of chapters 42 -- 44 of this title shall be applicable to those

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instrumentalities and to services performed for those instrumentalities, in the same manner, to the

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same extent, and on the same terms as to all other employers, employing units, individuals, and

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services. If this state is not certified by the Secretary of Labor under 26 U.S.C. section 3304 for

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any year, then the payments required of those instrumentalities with respect to that year shall be

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deemed to have been erroneously collected within the meaning of section 28-43-12 and shall be

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refunded by the director from the fund in accordance with section 28-43-12;

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      (4) Service performed:

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      (i) In the employ of:

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      (A) A church or convention or association of churches, or

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      (B) An organization which is operated primarily for religious purposes and which is

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operated, supervised, controlled, or principally supported by a church or convention or

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association of churches;

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      (ii) By a duly ordained, commissioned, or licensed minister of a church in the exercise of

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his or her ministry or by a member of a religious order in the exercise of duties required by that

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order;

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      (iii) In a facility conducted for the purpose of carrying out a program of rehabilitation for

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individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury or

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providing remunerative work for individuals who, because of their impaired physical or mental

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capacity, cannot be readily absorbed in the competitive labor market, by an individual receiving

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that rehabilitation or remunerative work;

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      (iv) As part of an unemployment work relief or work training program assisted or

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financed in whole or in part by any federal agency or an agency of a state or one of its political

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subdivisions, by an individual receiving that work relief or work training;

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      (v) In the employ of a hospital by a patient of the hospital; or

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      (vi) By an inmate of a custodial or penal institution;

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      (5) Service with respect to which unemployment compensation is payable under an

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unemployment compensation system established by an act of Congress. The director is authorized

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and directed to enter into agreements with the proper agencies under that act of Congress, which

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agreements shall become effective ten (10) days after their publication as in the manner provided

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in section 28-42-34 to provide reciprocal treatment to individuals who have, after acquiring

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potential rights to benefits under chapters 42 -- 44 of this title acquired rights to unemployment

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compensation under that act of Congress, or who have, after acquiring potential rights to

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unemployment compensation under that act of Congress, acquired rights to benefits under those

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chapters;

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      (6) Service covered by an election duly approved by the agency charged with the

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administration of any other state or federal employment security law in accordance with an

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arrangement pursuant to section 28-42-58 during the effective period of that election, except as

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provided in section 28-42-3(15)(i);

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      (7) Services performed by an individual in any calendar quarter on or after January 1,

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1972 in the employ of any organization exempt from income tax under 26 U.S.C. section

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501(a)(other than services performed for an organization defined in section 28-42-3(24) or for

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any organization described in 26 U.S.C. section 401(a) or under 26 U.S.C. section 521) if the

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remuneration for that service is less than fifty dollars ($50.00);

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      (8) Service which is occasional, incidental, and occurs irregularly, and is not in the

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course of the employing unit's trade or business. Service for a corporation shall not be excluded;

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      (9) Service as a golf caddy, except as to service performed solely for a club with respect

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to which the club alone bears the expense. A golf caddy, except as in this specifically provided

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subdivision, shall not be construed to be an "employee" as defined in section 28-42-3(14);

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      (10) Notwithstanding any provisions of titles 5 and 27, service performed by an

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individual as a real estate salesperson if all the service performed by that individual is performed

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for remuneration solely by way of commission;

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      (11) Notwithstanding any provisions of titles 5 and 27, service performed by an

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individual as an insurance broker, agent, or subagent if all the service performed by that

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individual is performed for remuneration solely by way of commission. This exemption shall not

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apply to service performed as industrial and debit insurance agents;

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      (12) Service performed by an individual who is enrolled at a nonprofit or public

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educational institution which normally maintains a regular faculty and curriculum and normally

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has a regular organized body of students in attendance at the place where its educational activities

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are carried on, as a student in a full-time program, taken for credit at that institution which

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combine academic instruction with work experience, if that service is an integral part of that

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program, and that institution has so certified to the employer, except that this subdivision shall

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not apply to service performed in a program established for or on behalf of an employer or group

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of employers;

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      (13) Service performed by an individual on a boat engaged in catching fish or other

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forms of aquatic animal life under an arrangement with the owner or operator of that boat

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pursuant to which:

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      (i) That individual does not receive any cash remuneration other than a share of the

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boat's catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale

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of that catch; and

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      (ii) The operating crew of that boat is normally made up of fewer than ten (10)

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individuals; and

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      (14) Services performed by a member of an Americorp program.; and

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     (15) Services performed by a newspaper deliverer.

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     SECTION 2. This act shall take effect upon passage.

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LC01280

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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 clarify the definition of independent contractor by providing a

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presumption that a person is an employee unless certain specific conditions are met.

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     This act would take effect upon passage.

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LC01280

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