Misclassification of Employees as Independent Contractors

Misclassification occurs when an employer treats a worker who is an employee under the Fair Labor Standards Act (FLSA) as an independent contractor. The misclassification of workers as independent contractors rather than employees is a serious problem because misclassified employees may not receive the minimum wage and overtime pay to which they are entitled under the FLSA or other benefits and protections to which they are entitled under the law. 

To report misclassification, call (401) 574-8477 or fill out the form below.

This form can be emailed to dlt.laborstandards@dlt.ri.gov .

Why is employee misclassification a problem?

When employers misclassify workers

• They avoid paying many state and federal taxes.
• They avoid providing workers' compensation coverage for their employees.
• They may fail to follow wage, contractor registration, or other labor laws.
• They have a competitive advantage and may underprice legitimate employers.

The Federal Government Accountability Office reports that the underpayment of unemployment, Social Security, income taxes, and workers' compensation are exceeding billions of dollars federally and millions of dollars at the state level.

Rhode Island employers must generally withhold state and federal income taxes, Social Security and Medicare taxes, and pay unemployment taxes on wages paid to employees. They must also pay Workers' Compensation premiums on the employees.

An employee is anyone performing service for an employer who controls what will be done and how it will be done by the worker.

Independent Contractors have an independent trade, business, or profession. Their services are offered to the public and they have the right to control the means and methods of how the work is performed.

What happens after a complaint is received by the Department?

According to R.I. Gen. Laws Section 28-14-19.1, upon receipt of a complaint alleging the misclassification of a worker, the Department will investigate the complaint under the Fair Labor Standards Act.

Effective January 1, 2024,

• Civil penalties may be brought forth by the Department if it is established that an employer misclassified one or more employee(s) as independent contractors.
• Criminal charges may be brought forth by the Attorney General’s Office if it is established that an employer misclassified one or more employee(s) as independent contractors.

Joint Task Force on the Underground Economy and Employee Misclassification