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Archambault's Labor Play

A couple of days ago, I noted in this space that Peter Kilmartin, Democratic candidate for attorney general, is making a labor-friendly play to crack down on employers who classify full-time workers as contractors in order to cut costs. Democratic rival Steve Archambault's campaign notes that their candidate put forth a similar proposal last month.

The jockeying for position on this issue - the Democratic primary also includes Joe Fernandez, whose campaign says he, too, will crack down on misclassification - is emblematic of what is shaping up to be perhaps the tightest race of the year. Here's a portion of Archambault's press release from last month:

Steve Archambault, Democratic candidate for Attorney General, today called for a crackdown on employee misclassification—the widespread practice of companies paying regular employees as independent contractors.

Steve Archambault said, “Employee misclassification is costing our state millions of dollars in tax revenues, leaving workers without basic protections, and putting employers who comply with the law at a competitive disadvantage. It is time to address this problem head on.”

Archambault pointed to the findings of the Special Joint Commission to Study the Underground Economy and Employee Misclassification, which estimated that paying people as independent contractors who should be employees is costing Rhode Island as much as $50 million annually in unpaid income tax. Studies indicate that independent contractors do not report about 30% of their income.

Companies pay people as independent contractors, in part, to avoid paying unemployment insurance, workers’ compensation and temporary disability insurance. “This leaves too many workers without a basic safety net and that is even more problematic in these difficult economic times,” Steve Archambault said.

According to Archambault, businesses that comply with the law are put at a competitive disadvantage because it is significantly more expensive to pay people as regular employees.

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