A Rhode Island independent contractor agreement is a contract that outlines a business relationship between a client and a contractor. It covers the contractor’s deadlines, scope, and obligations. It also offers client-related details, like the payment they owe the contractor and whether they retain ownership of the work the contractor completes.
- Worker Classification: Common Law
- Tax Structure: Graduated-Rate Income Tax
- Definition: RI Gen. Laws § 28-29-2
- At-Will Employment: Yes
Independent Contractor Definition
An employee is anyone who performs services for an employer who controls what the worker does and how the service will be done.
In contrast, an independent contractor has an independent business, trade, or profession. They offer their services to the public, and they have the right to control the methods and means of how the work is done.
Keep in mind that Rhode Island workers cannot be independent contractors just because they or an employer wants them to be. Independent contractors in Rhode Island must file a Notice of Designation as Independent Contractor (DWC-11-IC) with the RI Department of Labor and Training (RI Gen L § 28-29-17.1).
Worker Classification Test
Rhode Island courts analyze the employer-worker relationship by looking at three Internal Revenue Service (IRS) categories: behavioral, type of relationship, and financial. [1]
Here are the main questions that courts will ask when determining worker status:
- Is the work performed an integral part of the employer’s business?
- Do the worker’s management skills result in opportunities for loss or profit?
- Who invests in the facilities and equipment?
- What is the worker’s level of skill and initiative?
- How permanent is the working relationship?
- What is the nature and degree of employer control?
Rights and Responsibilities
Independent contractors in Rhode Island have more restricted rights than employees. For example, they don’t get minimum wage pay, employee benefits, and overtime pay. However, they can control what work they accept and decline. They also enjoy freedom when it comes to where they work and how they complete an assigned project.
State Taxes
Payers use Form 1099-NEC for independent contractors and Form W-2 for employees. Clients don’t withhold taxes from independent contractors, so independent contractors are responsible for paying them to the IRS each year.
Filing for Unemployment
Only employees can file for unemployment benefits in Rhode Island. [2]
Per RI Gen. Laws § 28-42-7, Rhode Island uses IRS factors to determine worker status for the purpose of unemployment benefits.
Compensation for Work Injuries
Independent contractors are excluded from the definition of employee, so they are not eligible for worker’s compensation.
Sample
Download our Rhode Island independent contractor agreement as a PDF or Word document below:
