Rhode Island Gov. Dan McKee last month signed into law Senate Bill 427, which requires independent contractors to file a designation form each year with the state’s Department of Labor and creates a public and searchable database that discloses the relationship between contractors and the businesses hiring them.
While compliance with the law falls to independent contractors, some fear businesses and workforce managers might feel ramifications as well.
“Labor experts predict that many independent contractors will struggle to meet the filing deadline, resulting in a decrease in the number of self-employed individuals in Rhode Island,” an msn.com opinion piece stated. “This could lead to some workers relocating their families and businesses to other states. The added regulatory burden and potential consequences of non-compliance are seen as significant challenges that could discourage individuals from maintaining their independent contractor status.”
Other concerns include the possible violation of individual privacy rights, as personal information such as date of birth and address would be publicly available. In addition, the database raises concerns about client poaching and intimidation, potentially providing labor unions with a tool to target opponents of their causes, according to the opinion piece.
Bill 427 seems to be an improvement on another bill, Senate Bill 430, that would have introduced an ABC test — a three-pronged test to determine proper independent contractor classification — which many independent contractors would not pass. However, some worry the law could serve as a model for other Democrat-led states. Senate Bill 430 didn’t advance this year but was recommended for further study.
“[Bill 427] is an obvious workaround to an ABC test modeled after California Assembly Bill 5 that assumes workers are default employees and not independent contractors,” Gabriella Hoffman, a senior fellow with Independent Women’s Forum, wrote in a blog post.
In light of the new employment law, Rhode Island employers may want to conduct an audit of independent contractor relationships and periodically re-audit those relationships, law firm Epstein Becker Green reported in a workforce bulletin. They should also establish procedures for collecting and preserving documents and information that establish the propriety of independent contractor classifications.