R.I. business groups criticize independent contractor legislation

April 08--PROVIDENCE, R.I. -- A coalition of Rhode Island business groups wants to derail legislative efforts to alter the rules that govern the work of independent contractors.

Fourteen groups have joined with 11 of the state's Chambers of Commerce to oppose companion proposals in the General Assembly that would grant jurisdiction to the state's workers' compensation court to decide whether an individual is an employee or an independent contractor.

Representatives of the various groups gathered Monday at the Greater Providence Chamber of Commerce offices in Providence to reinforce their opposition to perennial efforts to alter the law on independent contractors.

John Simmons, executive director of the business-backed Rhode Island Public Expenditure Council, said changes affecting independent contractors and apprenticeship programs in Rhode Island are the bellwether issues for the state's business community.

"We don't want the [business] climate to get worse," Simmons said.

It's at least the fourth year that Rhode Island lawmakers have considered legislation that would alter how such individuals -- who may be hairdressers, truck drivers, accountants or have a number of different occupations -- are treated for wage, tax and benefit purposes.

Members of the business coalition say the latest attempt would confuse both workers and employers, add an unnecessary regulatory layer on top of federal rules that govern how such workers are compensated, and may produce "unintended consequences."

Rep. Stephen R. Ucci, D-Johnston, sponsored H-7277, while Sen. Michael J. McCaffrey, D-Warwick, sponsored the identical Senate legislation.

Those bills would give a workers' compensation judge authority to fine employers between $500 and $3,000 per worker (first offense) if they are found to have misclassified workers even if the employer is following the federal IRS guidelines.

Should an employer be found to have shortchanged a worker, the judge could fine the employer three times the wages due the employee. Violations that exceed $5,000 in compensation due a worker would constitute a misdemeanor and be punishable by up to a year in jail and/or a fine of up to $1,000.

Additional fines would apply in other instances.

"I'm sure the workers' compensation court has enough to do already," said Greg Porcaro, of the Rhode Island Society of Certified Public Accountants.

The Internal Revenue Service sets out a 20-point test set businesses must use to determine whether an individual should be treated as an employee or as an independent contractor.

"Adding a duplicative and inconsistent standard will only create ambiguity and uncertainty and potentially expose law abiding employers to sanctions despite their good faith compliance with well-established and well-understood federal guidelines," said Laurie White, president of the Greater Providence Chamber of Commerce.

"There is nothing wrong with the current definition," White said.

Lee Johnson, of the Rhode Island Staffing Association, said the contracting system that's evolved in the United States entitles individuals who work through staffing agencies to overtime, unemployment insurance and other federally mandated benefits.

Those federal rules also give individuals ways to get the compensation they believe is due them.

"There are already avenues in place for workers to challenge their status," she said.

Other people who spoke at Monday's media conference said the current rules provide them the flexibility they need to attend to family matters.

Truck driver Jason Cardoza said the rules allow him to build his Truckers America LLC business while taking care of his disabled wife. Cardoza is a member of the Rhode Island Trucking Association.

"The owner operator model helped me build what I could build," he said of his business.

Ultimately, it's unclear what lawmakers want to accomplish with the proposals.

"What are we trying to solve?" asked Porcaro, of the Rhode Island Society of Certified Public Accountants.

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