Rhode Island continues to target independent contractors under the guise of combatting misclassification.
Governor McKee (D-RI) recently signed Senate Bill 427 into law requiring independent contractors to file a “notice of designation” (Form DWC-11 – Notice of Designation as Independent Contractor) with the RI Department of Labor.
Freelancers will be required to pay $50 annually to retain their status and must demonstrate they don’t receive workers’ compensation or benefits. A worker won’t be considered an independent contractor unless they file with the state and pay the mandatory fee. Once collected, these fees will be directed to the Department of Taxation. The law goes into effect on January 1st, 2024.
A local Chamber of Commerce chapter said independent contractors will be required to file with the Department on an annual basis “regardless of how many forms are filed.” This means an annual filing for each client the freelancer maintains.
There are myriad privacy violations that could also arise from this law. The Form DWC-11 website currently has a search feature to look for independent contractors and hiring entities by name. The bill’s text says “any designation or withdrawal of designation form shall be deemed public information and the director shall furnish copies or make available electronically the forms and designations, upon written request, to any employer or insurer or its authorized representative.”
This is an obvious workaround to an ABC test modeled after California Assembly Bill 5 that assumes workers are default employees and not independent contractors. Rhode Island’s proposed ABC test law, Senate Bill 430, didn’t advance this year but was recommended for further study.
As I noted in the Boston Globe, had SB 430 passed this session it would have displaced countless legitimate freelancers:
If 50% of Rhode Island’s freelance workforce were forcibly reclassified as traditional employees, it would cost the state $655 million — twelve-fold the cost of alleged misclassification. Comparatively speaking, forced reclassification poses a greater threat to the economy and worker well-being.
Rhode Island’s 85,000 plus self-employed gig workers comprise 27% of the state’s small business workforce. This new law would, undoubtedly, invite forced reclassification and be exploited by labor unions to target workplaces that hire independent contractors—a blow to the freelance workforce.
To learn about independent contracting, go HERE.
CORRECTION: Although the initial draft language of SB 427 included a provision mandating a maximum $50 fee per client, the bill’s final language nixed its inclusion. The registration form and publicly-searchable database, however, will go into effect on January 1st, 2024.