Rhode Island Department of Labor and Training

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Business Closure Motivates Compliance
with Workers’ Compensation Laws
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June 2, 2004


PROVIDENCE – Investigators at the RI Department of Labor and Training Workers’ Compensation Fraud and Compliance Unit continue to identify employers operating without the required workers’ compensation insurance; some pleading ignorance of the requirements. Such employers have learned the hard way that ignorance of the law is no defense for breaking it. Failure to carry workers’ compensation insurance will result in the assessment of a substantial monetary penalty, the risk of the business being closed by the Director of the Department of Labor and Training, and potential criminal charges including jail time and fines of up to $10,000.00.

In 2004, to date over $128,000 has been collected in penalties from employers found in violation. In 2003, $287,000 was collected in penalties. These crackdowns have benefited over 500 workers, who are now properly covered by workers’ compensation insurance.

Legislation enacted July 31, 2003 strengthened the penalties imposed against employers who fail to obtain workers’ compensation insurance. The Director can immediately shut down a business determined to be operating without workers’ compensation insurance. This provision has proven effective in prompting employers to obtain insurance without delay. A penalty of up to $500 to $1000 per day for each day of noncompliance will be imposed.

At a recent Departmental hearing to determine a noncompliance penalty, a mortgage banking firm argued it should not be required to maintain workers’ compensation insurance because of the low risk for on-the-job injuries, further explaining that if an injury occurred, the company’s Blue Cross would cover the injury. This employer’s beliefs were erroneous, and unfortunately, he is not alone.

First, regardless of the risk of injury relative to a particular line of business, an employer with one or more employees must carry workers’ compensation insurance. Of course, the cost of the policy takes the risk of injury into account. Second, Blue Cross will not cover a work-related injury. Other common misconceptions are that family members and part time employees are exempt from workers’ compensation insurance. This is not the case.


Some employers complain that the cost of workers’ compensation insurance is too great. Employers need to realize that the cost of an uncovered injury is likely to result in a much greater expense than an annual premium. Employers should understand that operating without workers’ compensation insurance leaves them vulnerable to personal liability for an employee’s injury, both in terms of lost wages and medical bills.

Employers with questions about workers’ compensation insurance or compliance issues are encouraged to call the Workers’ Compensation Fraud and Compliance Unit at 462-8100 or visit www.dlt.ri.gov/wc/fraud.htm.
 



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