Glossary

Alternative forms of resolving a dispute outside of the court process such as arbitration and mediation.

A written agreement between the contractor and homeowner specifying the work to be completed. Rhode Island law requires that residential contractors have a written contractor with a homeowner for each project over $1,000. Rhode Island law also requires certain terms be included in the contract and attachments be provided to the homeowner.

A consumer protection agency primarily designed to protect homeowners in their dealings with contractors. All residential contractors doing work in Rhode Island must register with the CRB including painters, roofers, floor covering specialists, finish carpenters, swimming pool installers, deck installers, masons, plasterers, drywall workers, siding installers, foundation installers, insulation installers, and other construction-related specialists. The CRB is responsible for handling homeowner complaints, issuing regulations for contractors, and investigating contractor compliance with the regulations. The CRB has the power to impose civil and criminal penalties for contractors' non-compliance with its regulations.

Owners of a limited liability entity such as a corporation or LLC must follow corporate formalities in order to maintain their limited liability as owners. Corporate formalities are the actions that business owners should take to validate and confirm the fact that their corporation or LLC has a distinct and separate legal existence from the business owner. Corporate formality suggestions include avoid the entity from being undercapitalized, memorialize annual meetings, signing documents properly, and maintaining separateness from the entity.

A limited liability entity created under the Rhode Island Business Corporation Act. The owners are generally protected from the liabilities of the business such that they are not personally responsible as long as the owners follow corporate formalities.

This statute codified at Rhode Island General Laws Section 6-28-4 applies to residential contractors to the extent the contract with the homeowner is not signed at the contractor's main office. The Door-to-Door Sales Act requires that the contract contain a notice of cancellation and specifies the exact language, font, and placement within the contract. If a contractor fails to comply, the homeowner can cancel the contract at anytime and seek full reimbursement of the contract price even if the contractor has already performed the work.

An individual is an employee when the employer controls the manner and means by which the worker completes his/her tasks. Rhode Island law requires that employees be covered by workers' compensation insurance.

An association of two or more people to carry on a business as co-owners for profit that have not formed a limited liability entity with the Secretary of State. In a general partnership, the owners are personally liable for all debts and actions of the business and its owners.

An individual that does work for a contractor is either an employee or independent contractor. The courts look at the extent the hiring party controls the manner and means by which the worker completes his/her task using the following factors: (i) right to accept or reject work, (ii) source of tools, (iii) location of work, (iv) duration of relationship between parties, (v) supervision, (vi) scheduled hours, and (vii) skill. Contractors prefer to designate workers as independent contractors to avoid paying workers' compensation, unemployment tax, and payroll taxes. Improperly classifying an employee as an independent contractor will result in civil and criminal penalties. All independent contractors must file a written notice of designation as independent contractor with the Rhode Island Department of Labor and Training. Filing of the form only creates a presumption that the individual is an independent contractor.

A limited liability entity created under the Rhode Island Limited Liability Act. The owners are protected from the liabilities of the business such that they are not personally responsible as long as the owners follow corporate formalities.

A limited liability entity is an entity created and organized under Rhode Island law and filed with the Secretary of State. The owner's are generally personally protected from the liabilities of the business such that the entity provides a shield to protect personal assets from claims related to the business. Corporations and LLCs are examples of limited liability entities.

A mechanic's lien is a type of lien filed against a homeowner's land for non-payment of labor or materials provided by a contractor for improvement to the land. The Rhode Island Mechanics Lien Act is codified at Chapter 28 of Title 24 of the Rhode Island General Laws. The regulations adopted by the Contractors' Registration Board require that contractors include written notices of possible mechanic's lien in the contract and be provided to the homeowner.

A contractor with its principal place of business located outside of Rhode Island. Non-Resident contractors must register with the Rhode Island Contractors' Registration Board to do work in Rhode Island.

A sole proprietorship is an individual in business for himself or herself that has not formed a limited liability entity with the Secretary of State. The owner is personally liable for all debts and actions of the business.

An individual or business that performs works on a project for the general contractor. The general contractor is responsible for the work of its subcontractors and for ensuring that subcontractors are registered with the Contractors' Registration Board.

Insurance coverage for work-place injuries. In Rhode Island, all businesses are required to have workers' compensation insurance for its employees. Owners of a limited liability entity can waive workers' compensation insurance by filing paperwork with the Department of Labor and Training.