R.I. lawmakers pass bills to increase penalties for wage theft and employment fraud

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The bills will make it a felony to “knowingly and willfully” commit wage theft of more than $1,500, instead of a misdemeanor. House Speaker K. Joseph Shekarchi called the bills “historic.”

By Amanda Milkovits Globe Staff, June 14, 2023

PROVIDENCE — The House overwhelmingly voted for legislation Wednesday that will increase the penalties for wage theft and employment fraud — a tool that supporters say will punish employers who take advantage of workers.

House Speaker K. Joseph Shekarchi called the bills “historic.”

The companion bills, sponsored by Democratic Representative Robert E. Craven Sr., of North Kingstown, and Senator Meghan Kallman, representing Pawtucket and Providence, give more power to the state Department of Labor and Training and the attorney general’s office the ability to bring felony charges to serious offenders.

The bills will make it a felony to “knowingly and willfully” commit wage theft of more than $1,500. (Currently, it’s a misdemeanor.)

The legislation also lays out how the Department of Labor and Training will audit companies and investigate complaints of employee misclassification, following the federal regulations in the Fair Labor Standards Act. A specialized investigatory team at the DLT will have the authority to determine whether the issues are good faith errors, or violations that require civil penalties or referral to the attorney general’s office for criminal charges.

Some company owners and chambers of commerce had voiced concerns about being prosecuted by the attorney general’s office for mistakes, said Representative Jason Knight, Democrat of Barrington and Warren. So, the legislation was amended to allow investigators to filter out the innocent mistakes from incidents where employers are willfully stealing from workers, he said.

The legislation will require the attorney general’s office and the DLT to produce annual reports about wage theft and misclassified employees in Rhode Island. It also calls for more public education for workers and an assessment about the industries and areas in Rhode Island where workers are more likely to be victims of wage theft and employment fraud.

The bills also hone in on the construction industry, with enhanced criminal penalties, including felony charges, for misclassification of employees. The worst offenders, as the Rhode Island underground economy and employee misclassification task force found, were often construction companies and subcontractors, according to the task force’s annual report.

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Lost taxes and salaries: RI unions kick off a campaign to make wage theft a felony

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Patrick Anderson
The Providence Journal
Feb. 16, 2022

In a renewed campaign to make wage theft a felony in Rhode Island, union leaders are pointing to new research that says more than 9% of the state’s employers misclassify workers as independent contractors.

The paper from academics at the University of Massachusetts Labor Center and a construction-industry research group analyzed the results of state labor department unemployment insurance audits of Rhode Island employers from 2016 to last year.

It estimated that that $185 million in workers’ wages and salaries went unreported to the Department of Labor and Training in 2019, and that it cost the state from $25 million to $54 million in lost taxes that year.

‘Restoring worker rights’
The paper’s authors, Russell Ormiston of Allegheny College and Tom Juravich of UMass Amherst, conclude that changes in state labor law “offer considerable promise in restoring worker rights and ensuring greater justice in Rhode Island’s workplaces. The first is to make wage theft a felony.”

That’s music to the ears of the Rhode Island AFL-CIO, which has put making wage theft a felony offense at the top of its legislative priorities for this year.

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Colorado passes law making wage theft a felony (CO)

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Author – Kim Slowey
Updated – May 17, 2019

UPDATE: May 17, 2019: Colorado Gov. Jared Polis on May 16, signed The Human Right to Work With Dignity Act (HB-1267) into law, reclassifying intentional nonpayment of more than $2,000 of wages a felony theft.

“Unscrupulous employers who purposefully withhold wages or underpay workers hurt the economy by undercutting good employers’ bids, engaging in tax fraud and denying workers fair compensation,” said one of the Act’s sponsors, Rep. Meg Froelich.

The new law takes effect Jan. 1, 2020.

Dive Brief:

  • The Colorado General Assembly’s House Judiciary Committee approved a proposed wage theft bill that would make intentional underpayment of certain wages a criminal offense.
  • In Colorado it is a misdemeanor to willfully short employees on their paychecks, but the new measure would make it a felony theft to intentionally underpay them by $2,000 or more. The bill includes migratory and foreign workers under the definition of employee.
  • One of the bill’s stated intentions is to provide an additional vehicle for state law enforcement to fight labor trafficking by recognizing labor as a thing of value that is subject to theft. According to the General Assembly, labor trafficking each year costs Colorado workers hundreds of millions of dollars and the loss of tens of millions of dollars to the state.

Dive Insight:

According to the Colorado Fiscal Institute, more than 500,0000 workers in the state – many of them in the construction industry – lose $750 million a year because of wage theft. The institute’s analysis shows that the most common methods employers use to short employees on their pay are:

  • Nonpayment, which includes late payments and not paying employees what they’ve earned.
  • Underpayment.
  • Misclassification of employees as independent contractors in order to avoid having to pay benefits.
  • Unauthorized payroll deductions for expenses like transportation, materials and tools.

There has been a push by some states and cities to address wage theft and misclassification of workers as independent contractors. In California, lawmakers are considering codifying a state Supreme Court ruling that sets the parameters of which workers qualify as independent contractors. The “ABC” test asks whether the person claiming to be an independent contractor is free from the control and direction of the employer; performs work that the hiring employer doesn’t typically do; and engages in the work as part of a business.

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Lawmakers to vote to make wage theft a felony crime in Minnesota (MN)

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Law also increases state’s budget for enforcement.

By Stephen Montemayor
MAY 23, 2019 – 8:40PM

Minnesota lawmakers and labor groups hailed a bipartisan agreement Thursday to hold employers responsible for holding back workers’ wages, one of the nation’s firmest policies to beat back wage theft.

For the first time, refusing to pay workers would be a felony under an agreement lawmakers plan to vote on in special session. The law would also broaden the state’s ability to prosecute employers in an effort to prevent the loss of an estimated $12 million in unpaid wages from roughly 39,000 Minnesota workers each year.

“In my view it’s the best piece of policy legislation that’s going to pass and I’m very happy about it,” Attorney General Keith Ellison said in an interview Thursday.

Under the new law, wage theft in excess of $1,000 would become a felony crime. It would also penalize retaliation against employees who report wage theft. It also boosts the Department of Labor and Industry’s budget by nearly $4 million to expand prevention and inspection efforts.

Labor and Industry Commissioner Nancy Leppink, who called for the new law and increased resources to enforce it, praised the deal on Thursday.

“The Wage Theft law will level the playing field for Minnesota employers who both play by the rules and create decent jobs for their workers,” Leppink said in a statement Thursday. “The law will also ensure workers receive the wages they have earned.”

The issue emerged as a leading priority for House Democrats early this session and was also backed Sen. Eric Pratt, a Prior Lake Republican. Ellison and Leppink also called for new legislation criminalizing the practice. Wage theft can occur when employers don’t compensate workers through measures like failing to pay overtime, misclassifying employees as independent contractors or declining to pay them outright.

Despite early disagreements on how to craft the law in a way that protected both workers and Minnesota businesses, Pratt and state Rep. Tim Mahoney, DFL-St. Paul, the bill’s House sponsor, managed to strike a deal that was acceptable to state officials and labor groups.

“A couple things we always agreed on is if you earn a wage you should be paid a wage – that was the underlying value statement that we shared which really enabled us to work on this together,” Pratt said. “Every job has its dignity and we need to be able to make sure that every Minnesota worker is treated with dignity.”

Mahoney added that stronger wage theft laws and enforcement would also benefit businesses that find themselves undercut by competitors who can get by with illegally failing to pay their workers. He took issue with language in the bill’s criminal section that requires proof of “intent to defraud,” which he said can be very difficult to prove in many cases.

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Colorado bill set to make wage theft a felony (CO)

Posted by National Alliance for Fair Contracting on

AUTHOR- Kim Slowey
PUBLISHED – April 8, 2019

Dive Brief:

  • The Colorado General Assembly’s House Judiciary Committee approved a proposed wage theft bill that would make intentional underpayment of certain wages a criminal offense. 
  • In Colorado it is a misdemeanor to willfully short employees on their paychecks, but the new measure would make it a felony theft to intentionally underpay them by $2,000 or more. The bill includes migratory and foreign workers under the definition of employee.
  • One of the bill’s stated intentions is to provide an additional vehicle for state law enforcement to fight labor trafficking by recognizing labor as a thing of value that is subject to theft. According to the General Assembly, labor trafficking each year costs Colorado workers hundreds of millions of dollars and the loss of tens of millions of dollars to the state.  

Dive Insight: According to the Colorado Fiscal Institute, more than 500,0000 workers in the state – many of them in the construction industry – lose $750 million a year because of wage theft. The institute’s analysis shows that the most common methods employers use to short employees on their pay are:

  • Nonpayment, which includes late payments and not paying employees what they’ve earned.
  • Underpayment.
  • Misclassification of employees as independent contractors in order to avoid having to pay benefits.  
  • Unauthorized payroll deductions for expenses like transportation, materials and tools.

There has been a push by some states and cities to address wage theft and misclassification of workers as independent contractors. In California, lawmakers are considering codifying a state Supreme Court ruling that sets the parameters of which workers qualify as independent contractors. The “ABC” test asks whether the person claiming to be an independent contractor is free from the control and direction of the employer; performs work that the hiring employer doesn’t typically do; and engages in the work as part of a business.

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Owners of Concord firm charged with wage theft, tax fraud (CA)

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By Nate Gartrell
POSTED: 04/29/2016 12:01:28 PM PDT
MARTINEZ — A Concord construction firm is facing 11 felony charges after a 10-month investigation produced evidence that its owners were withholding wages from employees and failing to pay them workers’ compensation insurance, according to the Contra Costa County District Attorney’s Office.

Nathan and Sarah Moore, owners of NRM Renovations Inc., were charged with grand theft of labor, workers’ compensation insurance fraud, and a litany of other counts all related to labor code and insurance law violations, a DA news release says.

The company is accused of owing more than $30,000 in back wages to several employees, around $250,000 in workers’ compensation premiums to insurance companies and back taxes for more than $1 million in wages. They’re also charged with an aggravated white-collar crime enhancement, which could add jail time to their sentence if they’re convicted.

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MnDOT contractor who shorted workers $242K is convicted of theft by swindle

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$242,000 case involved co-owner of firm hired for MnDOT project.

By Paul Walsh Star Tribune
MARCH 8, 2016 – 8:09PM

A co-owner of a Twin Cities electrical contracting company has been convicted of cheating nearly two dozen employees out of a total of $242,000 in wages by paying them far less than the law required for their work on a state highway project in the north metro and elsewhere.

Laura Plzak, 54, of Loretto, was convicted in Hennepin County District Court of 16 felony counts of theft by swindle.

County Attorney Mike Freeman praised the bench verdict issued by Judge Tamara Garcia, calling it “a good decision, based on the enormous amount of evidence gathered by the FBI and the Minnesota Department of Transportation.”

Freeman said Monday that Plzak was “driven by greed, pure and simple, and it was the hardworking electricians who suffered.”

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Construction boss convicted of not paying fair

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1:23 PM, NOVEMBER 20, 2014 

Attorney General Eric T. Schneiderman today announced the conviction and sentencing of Leonid Fridman for failing to pay legally required wages to his workers on a Port Authority of New York and New Jersey construction project.

Fridman pled guilty to the felony crimes of grand larceny in the second degree and violation of prevailing wage requirements of New York State Labor Law.  As a condition of the plea, Fridman agreed to pay $200,000 in restitution to underpaid workers and prohibition from working on public works projects for five years.  Fridman was sentenced to five years of probation.

“Mr. Fridman is being held accountable for stealing wages from workers who renovated parts of JFK,” Attorney General Schneiderman said. “My office will continue to take strong action, including filing criminal charges, against employers who violate New York’s labor laws, steal taxpayer dollars and violate the public trust.”

Based upon court filings and statements in court, Fridman, 60, owned and operated Millennium Commercial Corp., a Brooklyn-based company that performed tile work.

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