Cute Little State Dishes Up Big Ugly Problem for Self-Employers
Little Rhode Island, the nostalgic oceanside home of 1.1 million Americans, just muscled into the front lines of job-killing legislation. Rhode Island is going after self-employers with a vigor unlike its welcoming image.
On June 22, 2023, Rhode Island Governor Dan McKee signed SB 427, thereby requiring all independent contractors to designate themselves as self-employed by submitting a form disclosing each client they serve.
Self-classification privately and freely would be a step forward, but other provisions make this law a huge loss for Rhode Islanders and a national problem.
Loss of Privacy. Worst loss of all is the total loss of privacy soon to be suffered by all RI independent contractors.
Every contractor's name, date of birth, address, signature, and other information, including all client names, addresses and phone numbers, will be made public, since “any employer” anywhere can request the information. Imagine, Rhode Islanders, your DOB, signature, and clients could be anywhere. What could possibly go wrong?
Since more than half of all ICs are women, every woman filing to be an IC will become public information. This threatens every family statewide.
Self-employers' names once publicized will get vacuumed into directories everywhere, and immediately be sold and shared.
Seriously—was the safety of the 190,000 self-employed among RI’s workforce of 569,000 considered for this law?
Rhode Island Gov. Dan McKee
If employed, IC’s current bosses could learn of their interest in moonlighting, unions will know who to target for vandalism and harassment, taxation authorities can target ICs for income audits and their clients for "misclassification." Private individuals simply following the law will be inundated with texts, calls, mail, emails and unwelcome household visitors.
Imagine how a mom will feel about working from home via an online platform, after she pays a lawyer to interpret for her the personal risks of this vague new law.
Hide-and-Seek with a Permitting Fee for Self-Employment. The second worst loss is the threat of a state fee on the filing forms. The draft legislation in March 2023 set at a rate $50 annually per form filed. Then the fee was pulled back to one $50 fee per year, then abandoned before signing.
Nearby Massachusetts charges a $456 annual excise tax on corporations of all sizes, even LLCs. You can imagine Rhode Island charging a fee as soon as it thinks no one is looking.
Since Rhode Island slavishly imitates Massachusetts to its north and east, expect Rhode Island to play catch-up.
The same legislature and governor that silently swept SB 427 into law can and likely will impose filing fees as soon as politically possible.
Imposing costs on ICs is national labor unions’ preferred backup mechanism for eliminating contracting. With this law they likely will soon challenge self-employers by charging exorbitant state rent for the status. The Massachusetts fee is very effective at dissuading cautious or cash-short entrepreneurs.
There’s broader damage to come. Rhode Islanders need to loudly demand "repeal!" to their legislators. Self-employed individuals nationwide need to publicize widely this cruel law and give their state legislators the gumption to resist it. Otherwise, RI’s anti-IC disease will spread like a California wildfire.
— RI Department of Labor and Training; Local Area Unemployment Statistics program, Unemployment Statistics program
— Rhode Island approved House Bill 5710 Sub A and Senate Bill 427 Sub B; Gov. McKee signed the result.