Personnel Practices: Workers’ Comp – What You Need to Know

Rhode Island employers are required to compensate employees for job-related injuries under the Workers’ Compensation Act (WCA). The workers’ compensation system is designed to provide compensation to employees for medical expenses and lost wages following a workplace injury. The WCA provides workers’ compensation as an alternative to common law negligence claims against employers for personal injuries. Though recoveries under the WCA do not include common law damages such as pain and suffering or loss of use and enjoyment, the system is designed to compensate injured employees more quickly and efficiently than through the common law process, without analyzing fault.

Typically, Rhode Island employers purchase insurance policies to cover accidental injuries to employees in the workplace. However, an employer may opt to file a bond with the director of the Department of Labor and Training (DLT) demonstrating the employer’s financial ability to pay claims out-of-pocket. If an employer fails to provide an annual proof of insurance or a bond, the employer may be subject to civil or administrative penalties that can be imposed for each day of noncompliance. In egregious cases, employers may also be subject to criminal penalties, such as fines and possible imprisonment. Accordingly, it is important that employers be aware of the requirements of the WCA in order to ensure compliance and avoid penalties. The following highlights provide a snapshot of important provisions:

• As of January 1, 1999, every person, firm, public service or private corporation, including the State of Rhode Island, that employs employees regularly in the same business is subject to the WCA.

• The WCA broadly defines the term “employer” to include “any person, partnership, corporation, or voluntary association, and the legal representative of a deceased employer…” Under the WCA, “employee” means “any person who has entered into the employment of or works under contract of service or apprenticeship with any employer…” (The term “employee” does not include shareholders, directors, sole proprietors, or independent contractors). Accordingly, the WCA applies to most employment relationships in Rhode Island.

• Under the WCA, employees are deemed to have waived their rights to file a lawsuit against their employer to recover damages for personal injuries. This concept is referred to as the exclusivity provision of the WCA—meaning that workers’ compensation is the exclusive remedy for injured employees subject to the WCA. The practical effect of the exclusivity provision is that an employer is immune from a lawsuit when an injured employee is entitled to recover under the WCA.

• An employee can retain the right to file a lawsuit against his or her employer by giving the employer, at the time of hiring, a notice in writing that he or she claims that right. Within ten days of notifying his or her employer, the employee must file a copy of the notice with the director of DLT. It is relatively uncommon for employees to file such a notice, but employers should be aware of that possibility. Rhode Island courts have consistently held that, if an employee fails to properly retain his or her rights to sue his or her employer, the employee is barred from bringing a lawsuit against his or her employer if workers’ compensation benefits are appropriate.

In addition, all employers—whether or not they are subject to the WCA—must disclose to prospective employees at the time of application either that the employer is subject to or exempt from workers’ compensation. If the employer is exempt from the WCA, the specific type of exemption must be disclosed. Moreover, the WCA requires employers to post a notice that includes insurer information. DLT provides sample notices in English and Spanish, which employers may download from the Department’s website (http://www.dlt.ri.gov/wc/pdfs/dwc-08Poster.pdf). When in doubt as to the requirements of the WCA, always contact an experienced professional, rather than going it alone.

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