Actions against two companies that misclassified employees as independent contractors help secure nearly $1 million in back pay for 200 workers plus civil penalties of $1.3 million.
CRANSTON, RI — The Rhode Island Department of Labor and Training (DLT) today announced the outcomes of two workplace fraud cases that the Underground Economy and Employee Misclassification Task Force and DLT have closed. Combined, the decision against a valet parking company and a settlement agreement with a painting and plastering contractor will secure nearly $1 million in back pay for the businesses' 202 employees who were wrongly misclassified as independent contractors. Civil penalties and interest against East Greenwich-based Valet Connection Inc. and C & D Industrial LLC, located in Central Falls, totaled another $1.3 million.
"When companies cheat, it harms the employees they've underpaid and hurts everyone else, too — all of the businesses and taxpayers that are playing by the rules and helping our economy grow," said Governor Gina M.. Raimondo. "These cases and outcomes are about ensuring fairness so that workers, employers and all Rhode Island taxpayers can benefit."
Complaints that Valet Connection was requiring drivers to contribute money from their tips to establish an accident fund overseen by the company led to an investigation, which found that Valet Connection didn't keep payroll records but did keep work schedules. Control — whether an employer or a worker controls what will be done and how it will be done — is central to determining the employment relationship.
At a hearing, Valet Connection agreed that it wrongly misclassified 167 drivers between January 2013 and May 2015. A DLT hearing officer later found the company's conduct "to be an outright attempt to circumvent its financial obligations to their employees and the State of Rhode Island" (see attached document). The hearing officer, attorney David D. Barricelli, ordered Valet Connection to pay $258,235 in wages owed plus interest of $116,735 to the workers, a civil penalty equal to twice the wages owed or $516,471 and a misclassification penalty of $83,500 ($500 for each of the 167 employees).
The investigation of C & D Industrial followed allegations that the company was underpaying wages on public projects. State law requires that contractors and subcontractors on any publicly-funded project costing $1,000 or more pay the prevailing wage to workers. State investigators found remittance reports in which C & D Industrial documented it was performing work from January to March 2015 but did not submit certified payroll records in those same months, as required by law, for the 35 workers it was employing on seven public projects across Rhode Island. C & D Industrial admitted the violation. The company must pay $728,377 in wages owed, a $728,377 civil penalty and a $35,000 misclassification penalty.
"Governor Raimondo has made the enforcement of workplace fraud one of DLT's top priorities," said DLT Director Scott Jensen. "By coordinating efforts across state government to identify and stop fraudulent employment activities and by cracking down on violators, we are protecting the health, safety and benefit rights of workers and helping law-abiding employers get the fair shot at success that they deserve."
Chief Labor Standards Investigator Wendy Antonelli, Labor Standards Investigator Joseph Szrom, and Labor Standards Examiner Angela Dennett led the investigation into Valet Connection Inc. Chief Prevailing Wage Investigator Lisa Tirocchi and Senior Prevailing Wage Investigator Mark Ryan led the investigation of C & D Industrial.
Led by DLT, the misclassification task force includes the Office of the Attorney General, Department of Business Regulation, Division of Taxation, Department of Public Safety, and Workers' Compensation Court. The Contractors' Registration and Licensing Board assists in some capacities.
About the RI Department of Labor and Training: The RI Department of Labor and Training (DLT) offers employment services, educational services, and economic opportunity to both individuals and employers. DLT protects Rhode Island's workforce by enforcing labor laws, prevailing wage rates, and workplace health and safety standards. The department also provides temporary income support to unemployed and temporarily disabled workers. DLT's Business Workforce Center simplifies doing business in RI by coordinating job fairs, pre-screening applicants, and connecting employers with innovative methods to remain or become competitive.