Starting a New Business

Thinking about starting a new business? If so, then you are undoubtedly attending to every detail to ensure the success of your new venture. However, one thing you don’t want to overlook is the necessity of Worker’s Compensation Insurance. The law in Rhode Island is straightforward: ALL employers with one or more employee are REQUIRED to obtain coverage.

As with any start-up, financing is typically limited to those bare essentials necessary to get the business up and running. As a result, one may contemplate pressing on without workers’ compensation insurance. However, this decision can place both you and your new venture in serious jeopardy.

For example, in a typical scenario where an employee is injured at work, the employer’s workers’ compensation insurance will pay the injured worker the benefits he or she may be entitled to. Those benefits may include weekly compensation during the period of time an injured employee is unable to return to work as well as payment of all medical bills necessary to treat the injury. It may also include compensation for scarring, disfigurement, loss of use and any settlement proceeds.

If a dispute arises regarding the liability of the claim (i.e. the injury did not occur at work) or with the disability of the employee (i.e. the employee’s injury has resolved or the injury does not prevent the employee from performing their normal job duties), the insurance carrier will provide defense attorney(s) experienced in litigating such matters. All of these services are partof your insurance coverage and are not unlike the benefits provided to you by your auto insurance in exchange for a monthly premium.

Absent coverage, not only will the business be liable, but the business owner or owners may become personally liable for paying for all the benefits the injured employee is entitled to as well as attorney’s fees awarded by the Court to the employee’s legal counsel. To make matters worse, the State of Rhode Island can also levy fines against an employer for failing to have workers’ compensation coverage.

As with most rules, there often are exceptions. For instance, workers’ compensation insurance is not required for a sole proprietor or the partners of the business. There are also certain types of workers who are not covered by the Rhode Island Workers’ Compensation Act, however, that topic is beyond the scope of this article. Suffice it to say, when in doubt, contact a legal professional for advice regarding your particular venture before an injury puts an abrupt end to what may become a flourishing business.

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