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January 8, 2024
Several changes to Rhode Island’s Payment of Wages Act, R.I. Gen Laws § 28-14-2, et seq. (“Wage Act”) took effect on January 1, 2024. These amendments bring stringent penalties for wage and hour violations. Notably, an employer’s agent or officer could face a criminal conviction and penalties for failure to pay wages in excess of $1,500. Additionally, employers within the construction industry could face criminal penalties for misclassification of workers as independent contractors. The most significant shift is the reclassification of such violations as criminal felonies, exposing employers or their representatives to imprisonment for up to three years and fines as high as $5,000 upon conviction.
Penalties for Failure to Pay Wages
The amended Wage Act reclassifies “knowing and willing” wage and hour violations to be punishable as a criminal felony. Applicable wage and hour violations include the requirement to timely pay wages (§ 28-14-2); prompt payment of wages and/or vacation pay following an employee’s separation from employment, and wages and benefits that must be paid within 24 hours if the employer is liquidating or disposing the business, merging, or removing the business out of state (§ 28-14-4); and payment of wages to deceased employees (§ 28-14-6). An employer’s agent or officer could face a felony conviction, imprisonment for up to three years, and/or be fined $5,000 for engaging in such a wage and hour violation if the wages due to the employee exceed $1,500.
Misclassification of Employees
The Wage Act, as amended, also provides escalated penalties for misclassification of workers as independent contractors in the construction industry. Generally, any employer that misclassifies a worker as an independent contractor shall be liable for a civil penalty between $1,500 and $3,000 for each misclassified worker for a first offense, and up to $5,000 for each misclassified worker for any subsequent offense. Additionally, any employer in the construction industry that knowingly and willfully misclassifies a worker shall be: (1) guilty of a misdemeanor and subject to imprisonment up to one year and/or a fine up to $1,000 where the value of the misclassified wage does not exceed $1,500; or (2) guilty of a felony and subject to imprisonment for up to three years and/or a fine up to $5,000 where the construction employer violates the prohibitions against misclassification for the second time and where the value of the misclassified wage exceeds $1,500.
The amendments outline a revised protocol, mandating the Rhode Island Department of Labor and Training to report misclassification cases to the attorney general for potential criminal prosecution. However, this requirement is not extended to other wage-related violations. A party that does not meet the definition of an “employer” but that intentionally contracts with an employer knowing the employer intends to misclassify workers shall be subject to the same penalties.
Employer Takeaways
The revised law applies to all employers, regardless of their size. However, the law does clearly define which agents within an employer’s structure could face criminal penalties. The ambiguity surrounding terms like “knowingly and willfully” further complicates compliance, leaving employers in a challenging position regarding legal interpretation and adherence.
Given the transformative nature of these changes and the risk of severe criminal penalties, employers are strongly advised to seek legal counsel specializing in wage and hour compliance as these amendments come into effect. Understanding the intricacies of these amendments becomes paramount to avoid inadvertently falling afoul of the law and facing the serious repercussions it entails.
*Special thanks to Ava Petrellese, our Paralegal, for her contributions to this article.
The author of this article, Christopher S. Koller, is a member of the Bar of Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in Pennsylvania, Rhode Island, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
