§ 28-36-15. Penalty for failure to secure compensation — Personal liability of corporate officers.
(a) Any employer required to secure the payment of compensation under chapters 29 — 38
of this title who or that knowingly fails to secure that compensation shall be guilty
of a felony and shall be subject to imprisonment for up to two (2) years. In addition
to the foregoing, the employer shall be subject to a civil penalty punished by a fine
not to exceed one thousand dollars ($1,000) for each day of noncompliance with the
requirements of this title. The director shall institute any and all reasonable measures
to comprehensively monitor, investigate, and otherwise discover all employer noncompliance
with this section and shall establish rules and regulations governing these measures.
Each day shall constitute a separate and distinct offense for calculation of the penalty.
Where that employer is a corporation, the president, vice president, secretary, treasurer,
and other officers of the corporation shall be severally liable for the fine, penalty,
or imprisonment as provided in this section for the failure of that corporation to
secure the payment of compensation. The president, vice president, secretary, treasurer,
and other officers of the corporation shall also be severally personally liable, jointly
with the corporation, for any compensation or other benefit that may accrue under
those chapters in respect to any injury that may occur to any employee of that corporation
while it fails to secure the payment of compensation as required by those chapters.
(b) Where the employer is a limited-liability company, the managers and managing members
who knowingly fail to secure the payment of compensation under chapters 29 — 38 of
this title shall be guilty of a felony and shall be subject to imprisonment for up
to two (2) years. The managers and managing members shall also be severally liable
for the fine, penalty, or imprisonment as provided in this section for the failure
of that company to secure the payment of compensation. The managers and managing members
shall be severally personally liable, jointly with the company, for any compensation
or other benefit that may accrue under those chapters in respect to any injury that
may occur to any employee of that company while it fails to secure the payment of
compensation as required by those chapters.
(c) Where the employer is a partnership or a registered limited-liability partnership,
the partners who knowingly fail to secure the payment of compensation under chapters
29 — 38 of this title shall be guilty of a felony and shall be subject to imprisonment
for up to two (2) years. The partners shall also be severally liable for the fine,
penalty, or imprisonment as provided in this section for the failure of that partnership
to secure the payment of compensation. The partners shall be severally personally
liable, jointly with the partnership, for any compensation or other benefit that may
accrue under those chapters in respect to any injury that may occur to any employee
of that partnership while it fails to secure the payment as required by those chapters.
(d) Where the employer is a limited partnership or a registered limited-liability limited
partnership, the general partners who knowingly fail to secure the payment of compensation
under chapters 29 — 38 of this title shall be guilty of a felony and shall be subject
to imprisonment for up to two (2) years. The general partners shall also be severally
liable for the fine, penalty, or imprisonment as provided in this section for the
failure of that limited partnership to secure the payment of compensation. The general
partners shall be severally personally liable, jointly with the limited partnership,
for any compensation or other benefit that may accrue under those chapters in respect
to any injury that may occur to any employee of that partnership while it fails to
secure the payment of compensation as required by those chapters.
(e) All criminal actions for any violation of this section shall be prosecuted by the
attorney general. The attorney general shall prosecute actions to enforce the payment
of penalties and fines at the request of the director. The workers' compensation court
shall have jurisdiction over all civil actions filed pursuant to this section.
The court shall consider the following factors in assessing a civil penalty: gravity
of offense; resources of the employer; effect of the penalty on employees of the company;
the reason for the lapse in coverage; and the recommendation of the director. Following
a review of the factors set forth above, the court may suspend all or a part of a
civil penalty or shall establish a timetable for compliance with any court order.
(f)(1) As soon as practicable after the director receives notice of noncompliance under this
section, the director shall determine whether cause exists for the imposition of a
civil penalty. Unless the director determines that the noncompliance was unintentional
or the result of a clerical error and subject to the administrative proceedings under
subsection (g) of this section, the director shall commence an action in the workers'
compensation court to assess a civil penalty against the employer as set forth in
subsection (a) of this section and shall refer the matter to the attorney general
for prosecution of criminal charges.
(2) The director shall bring a civil action in the workers' compensation court to collect
all payments and penalties ordered and not paid. All civil actions for any violations
of this chapter or of any of the rules or regulations promulgated by the director,
or for the collection of payments in accordance with §â€‚28-37-13, § 28-33-17.3(a)(2), or § 28-33-17.3(a)(3), or civil penalties under this chapter, shall be prosecuted by any qualified member
of the Rhode Island bar whom the director may designate, in the name of the director,
and the director is exempt from giving surety for costs in any proceedings.
(g) In the case of unintentional noncompliance or noncompliance resulting from clerical
error where the uninsured period is less than one year from the date of discovery
and there were no employees injured during the uninsured period and the employer has
not been subject to any other findings of noncompliance with these chapters, the director
shall assess an administrative penalty of not less than the estimated annual workers'
compensation insurance premium for that employer and not more than triple that amount.
Any party has the right to appeal the orders of the director. The appeal shall be
to the workers' compensation court in the first instance and thereafter from the workers'
compensation court to the Rhode Island supreme court in accordance with §â€‚28-35-30.
(h) The director shall collect all payments under this chapter under the rules and regulations
that may be set forth by the director. All fines collected pursuant to this section
shall be deposited to a restricted-receipt account to be administered by the director
of the department of labor and training in his or her sole discretion to carry out
chapters 29 — 38 of this title.
(i)(1) In that the operation of a commercial enterprise without the required workers' compensation
insurance is a crime and creates a clear and present danger of irreparable harm to
employees who are injured while the employer is uninsured, the director shall suspend
the operation of the business immediately and until workers' compensation and employers'
liability insurance is secured consistent with these chapters. The director shall
lift the suspension upon receipt of satisfactory proof of insurance and evidence sufficient
to satisfy the director that the employer is in full compliance with these chapters.
Any party has the right to appeal the suspension to the workers' compensation court
where the matter shall proceed pursuant to the workers' compensation court rules of
procedure.
(2) In the event that the employer shall fail to comply with the director's order of suspension,
the director may apply immediately to the workers' compensation court for an order
directing the employer to comply with the director's prior orders.
(3) Actions filed with the workers' compensation court pursuant to this section shall
be subject to a pretrial conference in accordance with §â€‚28-35-20 and shall be assigned consistent with the workers' compensation court rules of practice.
(4) Interest shall accrue on unpaid penalties during the pendency of any appeal at the
rate per annum provided in §â€‚9-21-10.
(j) These provisions shall take effect upon passage except §â€‚28-29-2(6)(iv) which shall take effect on January 1, 2006.