Steve Archambault, Democratic candidate for Attorney General, has called for a crackdown on the widespread practice of companies paying regular employees as independent contractors.
Steve Archambault said, “Employee misclassification is costing our state millions of dollars in tax revenues, leaving workers without basic protections, and putting employers who comply with the law at a competitive disadvantage. It is time to address this problem head on.”
Archambault pointed to the findings of the Special Joint Commission to Study the Underground Economy and Employee Misclassification, which estimated that paying people as independent contractors who should be employees is costing Rhode Island as much as $50 million annually in unpaid income tax. Studies indicate that independent contractors do not report about 30% of their income. Companies pay people as independent contractors, in part, to avoid paying unemployment insurance, workers’ compensation and temporary disability insurance.
“This leaves too many workers without a basic safety net and that is even more problematic in these difficult economic times,” Steve Archambault said.
According to Archambault, businesses that comply with the law are put at a competitive disadvantage because it is significantly more expensive to pay people as regular employees. Archambault called for the creation of a single uniform statutory definition of independent contractor with a three point test as recommended by the Commission and for enhanced penalties for companies that continue to misclassify.
Archambault said, “One clear definition will limit confusion and provide a solid foundation for aggressive enforcement actions.” Generally speaking, a person is an independent contractor when they control their own work. When an employer controls where, when and how a person performs their work, they should be paid and classified as an employee.”
As Attorney General, Archambault pledged to work closely and cooperatively with the appropriate state agencies to bring about more effective enforcement.