As an employee in Rhode Island, your classification as a worker matters. Whether you are classified as a full-time employee, an independent contractor, or a part-time employee, this distinction affects many aspects of your employment. The first thing to know is that how you are classified is a matter of law, that what your employer says you are classified as may not be correct, that misclassifying employees is illegal, and that if you are misclassified, you may be owed money. Further, when an employer misclassifies an employee—either by mistake or intentionally—this mix-up can negatively impact the worker in several ways. Worker misclassification can lead to inaccurate or unjust compensation, financial harm for work-related injuries, unpaid time off, and many other detrimental consequences. While many instances of employee misclassification happen by accident, there are cases in which an employer will intentionally misclassify a worker in order to save the company as much money as possible by avoiding tax obligations and other costs.
If you have reason to believe that your employer has misclassified you, it’s essential that you get the help of an experienced and caring Rhode Island employment law attorney who can assess the details of your situation and identify the most strategic path forward. Depending on the nature of the misclassification, your attorney will explore the potential remedies available to you, such as payment for lost wages, overtime, benefits, and liquidated damages, a sort of penalty where employers owe two or three times the value of wages and benefits an employee lost due to misclassification. Let’s take a look at how employee misclassification occurs, the detrimental impacts that misclassification can have on workers, and the steps that a worker can take to correct misclassification and to recover compensation, benefits, and other money owed to them as a result of being misclassified.
How Employee Misclassification Happens
First, it’s helpful to understand the two main types of employee classifications.d. Essentially, an employer may consider you an employee or a contractor. Each of these types has sub-classifications that carry their own set of characteristics and considerations regarding benefits, taxes, and employment laws (at both the federal and state levels). Employee misclassification may occur because of an oversight or genuine mistake, or an employer may intentionally misclassify a worker to avoid paying taxes, benefits, and other costs to save their companies as much money as possible. While the reason an employer misclassified an employee may impact the remedies available, including the amount of money owed to an employee, all misclassification is legally actionable and employees are legally entitled to be classified properly.
Classifications: Employees and Independent Contractors
When an employer controls what a worker does and how they perform their job, then the worker should be designated as an employee. Employees may be full-time or part-time, and they can be hired on a temporary or permanent basis. When a worker is classified as an employee, the employer assumes several legal obligations. For example, employers are responsible for training the employee, setting the worker’s hours, providing all the necessary tools and supplies, and controlling the means and manner of the work, among many other things. Additionally, the employer assumes liability for employee mistakes and accidents, determines the wage, salary, or commission to offer the employee, and handles the hiring and firing of employees. Crucially, an employee must also be classified as exempt or non-exempt. For the most part, exempt employees receive a salary (meaning employers are not required to pay overtime), while non-exempt employees receive an hourly wage (which must be at or above the state or federal minimum wage). Exempt employees are not entitled to overtime pay, while non-exempt employees are. Thus, most hourly workers are entitled to overtime, and most salaried workers are not. However, some salaried employees are also entitled to overtime based on the sort of work performed and their yearly salary. If you have questions about your classification as an employee, reach out to a knowledgeable Rhode Island employment law attorney to learn more. One easy way to tell if you’re being classified as an employee is to see if you receive a W2 tax form for your pay.
Employers that work with contractors typically hire a worker for a certain amount of time or to complete a specific project. The employer and the contractor set the terms of their business relationship using a contract, which addresses details like the number of working hours expected by the contractor and the terms of payment. Independent contractors may work with an employer only for a specific task or period or on an ongoing or freelance basis. Independent Contractors are not considered exempt or non-exempt and are not entitled to overtime pay or many other employee benefits and protections. Instead, they are considered to be self-employed. For a worker to be an independent contractor, they should be relatively free from the employer’s direction and control, be able to serve multiple clients, establish their own work hours or schedule, set their own prices, and file self-employment taxes. Independent contractors are not eligible for employee benefits. This can be an attractive attribute to employers who are looking to protect their bottom line. Accordingly, some employers may attempt to get the benefits of direct and substantial control without the requirement to provide legally mandated benefits and protections by improperly classifying employees as Independent Contractors. This is the most common form of misclassification. It is illegal, and employees who are misclassified in this manner are entitled to be properly classified and to be paid damages for this misclassification, as mentioned above and explained more fully below. One easy way to tell if you’re being classified as an Independent Contractor is to see if you receive a 1099 tax form for your pay.
Issues Arising From Employee Misclassification in Rhode Island
Misclassifying an employee as an independent contractor means that the employer can avoid providing employee benefits, overtime pay, and paid time off to the worker. Additionally, misclassifying an employee as a contractor allows the employer to minimize their liability if the worker makes a mistake. This means the misclassified employees lose potential benefits and legal rights, such as family medical leave, protections provided under workplace anti-discrimination and anti-retaliation laws, right to reasonable accommodation in the workplace, paid time off, insurance, and more.
Compensation for Wait Time and Minimum Shift Pay
Compensation for waiting time is another issue impacted by employee classification. According to the Fair Labor Standards Act (FLSA), an employee who is waiting for work to do or for repairs to be made is considered to be “engaged to wait,” meaning that this time counts towards the number of hours worked (and is eligible for compensation). For example, a receptionist who is waiting for a customer or a phone call is on the clock, even if they are not actively engaged in a work-related activity at the moment. In contrast, waiting time that’s designated as “off-duty” or “layover time” is typically not considered hours worked if employees are actually off-duty (and, therefore, not compensated). For instance, if the employer informs the employee that they are completely relieved of their duty and must return to work at a specific time, any time spent waiting does not qualify for compensation. When an employee is “on-call” and must report back to work at the request of an employer within a short enough period that they cannot fully attend to their own affairs freely, they are generally “engaged to be waiting” and must be paid for this time. These distinctions can become confusing, especially if you believe that your employer has misclassified you and denied you the payment or benefits you deserve. Further, in Rhode Island, when an employee reports to work, they must be paid for a minimum of three hours of work, even if the employer dismisses them before that period of time has elapsed. Independent Contractors, however, are not entitled to waiting time and minimum shift pay, so employers may misclassify employees to avoid paying employees under these laws as well.
Taking Action Against Employee Misclassification
The first step in addressing an employee misclassification issue is to consult with a dedicated and experienced Rhode Island employment law attorney who can help you understand your legal rights and options. Your lawyer will discuss the potential remedies available to you, such as reclassifying your status, securing payment for any lost wages or overtime and compensation for certain benefits and retirement contributions you missed because of the misclassification, and pursuing penalties an employer might owe you for misclassification, such as double or triple the value of lost wages and benefits. In Rhode Island, employers also may owe civil penalties to the government for misclassification, and it has recently been made a criminal act punishable by fines and/or jail time to misclassify employees if done so knowingly and to financially benefit the employer. Whatever the specifics of your situation may be, an experienced and skilled employment law attorney can help you understand how these laws apply to you and will work hard to hold the employer accountable for misclassification so you can move forward into a brighter and more secure future properly classified and having been paid back any illegal losses you incurred due to misclassification.
If you believe that your employer underpaid you or used employee misclassification to deny you the full amount of wages, benefits, and protections you’re owed as an employee, the dedicated and experienced legal team at Sinapi Law Associates, Ltd. is here to help you explore your legal options. Please call our office today at (401) 739-9690 to get started with a trusted and caring Rhode Island employment law attorney.
