A Superior Court judge in Rhode Island has upheld an administrative decision denying a construction worker’s claim for unpaid wages because of his status as an independent contractor rather than an employee.

The plaintiff worker argued that the Board of Review of the Rhode Island Department of Labor and Training, or DLT, applied the wrong factors in determining his employment status.

Judge Netti C. Vogel disagreed.

“The Court finds that the DLT properly examined the parties’ relationship — specifically ‘the degree of control and … independence’ between them — to determine whether [the plaintiff] was an ‘employee’ or an ‘independent contractor,’” the judge wrote. “[T]he Court finds that the DLT’s determination that [the plaintiff] was an ‘independent contractor’ is supported by adequate and legally competent evidence.”

The 14-page decision is Pimentel v. R.I. Dept. of Labor & Training.

Veronika M. Kot of Providence represented the plaintiff. The Department of Labor and Training was defended by Pawtucket attorney Bernard P. Healy.

Working relationship

Plaintiff Michael Pimentel claimed that Cliff Dolan hired him on April 26, 2010, to perform residential rehabilitation work on three projects for Dolan’s company, Small Job Pro.

On July 22, 2010, Pimentel filed a complaint with the DLT’s Division of Labor Standards, alleging that Dolan failed to pay him wages from April 26 to June 21, totaling approximately $2,582.50.

At a DLT hearing, the plaintiff stated that Dolan provided him with the tools, supervision and knowledge necessary to complete the projects. He testified that Dolan assisted him in setting up in the morning and checked his progress at the end of each business day.

Although the plaintiff acknowledged that he was able to set his own schedule, he claimed that he did not work for other contractors during the nine weeks he worked for Dolan and was not registered as a contractor with the Rhode Island Contractors’ Registration and Licensing Board.

Dolan testified that the plaintiff did, in fact, work for other contractors, as well as for Small Job Pro, during the subject time period. Dolan denied knowing that the plaintiff was not a registered contractor, stating that the plaintiff operated his own contracting business and had business cards.

Dolan testified that the plaintiff made most of the decisions regarding his assigned projects and brought his own tools to the job sites. He also stated that he only assisted the plaintiff when he fell behind in his work and required Dolan’s help to meet deadlines.

Dolan described the parties’ relationship further by explaining that he would get the jobs, receive bids for the work involved, and subcontract out the work. He testified that, during the time frame in question, customers often paid the plaintiff directly, as they would any independent subcontractor.

Though acknowledging that he owed the plaintiff money under their agreement for work the plaintiff performed, he insisted that the plaintiff worked as an independent contractor, not as an employee. Dolan argued that Small Job Pro had no obligation to provide workers’ compensation coverage for him, nor was the plaintiff entitled to any other benefits available to employees.

On Jan. 10, 2011, the DLT’s Board of Review issued its decision, finding that the plaintiff did not meet the strict definition of an “employee” under §28-14-1 and was not entitled to wages from Dolan or Small Job Pro.

Proper test

The plaintiff’s claim was brought under the statute governing the payment of wages. Though the statute states that an employee means “any person permitted to work by an employer, except independent contractors or subcontractors,” it fails to define what constitutes an independent contractor.

The plaintiff argued the DLT incorrectly relied on the statutory definition of independent contractor as found in the workers’ compensation statute. Under that statute, the Employment Security Act (G.L. §28-42-7), the test for determining independent contractor status “shall be the same as those factors used by the Internal Revenue Service (IRS) in its code and regulations.”

Vogel disagreed with the plaintiff’s contention that the DLT applied the wrong criteria.

“His argument fails because the DLT’s determination as to Pimentel’s status follows not only the IRS test, but also well-established Rhode Island case law, as well as Restatement (Second) of Agency §220,” she stated.

Vogel found that, under Rhode Island law, “the test [as to] whether a person is [an employee or] an independent contractor is based on the employer’s right or power to exercise control over the method and means of performing the work.”

In addition, “our Supreme Court has found certain factors to be of particular importance in determining whether one party actually has the authority to control the work of another, including, ‘the provisions of the employment contract between the parties, if any; the method of payment; the option as to time in doing the work; and the giving of instructions by the employer,’” the judge noted.

In Pimentel, the DLT relied on appropriate factors, including those in the Restatement and the IRS code, in determining that the plaintiff was an independent contractor, Vogel said.

“[T]he DLT outlined certain factors — from the Restatement, IRS code, and Rhode Island law — that it considered, including, ‘[t]he parties’ intent to establish an employee relationship … [t]he type of service … whether the individual has been and will continue to be free from control or direction … whether the services are either outside of the usual course of the business for which that service is performed … and whether the individual is customarily engaged in an independently established trade, occupation, profession or business,’” Vogel said. “Thus, the DLT’s reliance on these factors in connection with the evidence before it was not affected by other error or law.”

The plaintiff additionally contended that, in light of the Restatement’s guidelines, the DLT’s decision was clearly erroneous because the record proved that Dolan had control over the plaintiff and his work.

The DLT, however, relied on Dolan’s testimony that the plaintiff set his own hours, provided some of his own tools, worked for other contractors, received some payment directly from the homeowners, owned his own contracting business, and did not regularly work under Dolan’s instructions.

“The record also reveals that, for the most part, Dolan left Pimentel alone to perform his work unsupervised,” the judge said.

“The Board of Review accepted Dolan’s version of events as credible, and favorably noted ‘his demeanor and forthright answers,’” Vogel pointed out. “This Court must defer to the Board’s findings of fact and determinations as to the credibility of the witnesses.”