Prior to January 1, 1999, business owners in the state of Rhode Island with three or fewer employees did not have to provide workers’ compensation. “A lot of employers were telling employees ‘I’m not going to pay you from my payroll anymore, I’m going to pay you as an individual contractor,'” said Don Vass, president of The Beacon Mutual Life Insurance Company. “It was a drain on the economy because employers didn’t want to pay the premiums.”
“One of the big changes of this past legislative session is that independent contractors must be registered with the Department of Labor and Training in order (for companies) to exempt themselves from having to pay for workers’ comp,” said Vass.
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Workers’ compensation benefits are paid regardless of who is to blame for an injury; an employer does not admit liability by paying benefits.
Today, all Ocean State employers are required to provide workers’ compensation, which protects employees who are injured on the job by paying the worker’s medical bills and two-thirds of the worker’s spendable earnings.
“The insurance is based on the total payroll to cover 100 percent of any on-the-job injury,” Vass said. “There is only one single type of coverage generally available. It covers all medical expenses and lost wages to a state-wide maximum of $575 a week.”
According to Vass, what an employer can expect to pay to put a workers’ compensation program in place varies.
“It depends on the type of employment and the amount of risk involved in the job,” he said. “For example, a roofer is going to pay more for the insurance than a clerical exposure would.”
If a worker should be killed, “their dependents collect lifetime benefits. Spousal dependents for as long as they are alive, and if their children go to college, they can collect benefits until they are 23 years old,” said Vass.
Children of deceased workers who don’t attend college can collect benefits until they are 18 years old. Each year the Department of Labor and Training issues an order for a cost of living adjustment of the benefits paid to survivors, based on the consumer price index.
Self-insuring is also an alternative for Rhode Island employers. By self-insuring, a company bypasses an insurance company entirely and manages its own workers’ compensation claims, paying them itself when necessary.
In order to do this, an employer must put up a bond with the state Department of Labor and Training to demonstrate financial stability.
“It’s usually only larger companies that self-insure,” Vass said. “There aren’t very many – less than 100 – in Rhode Island that do it.”
Why do some companies opt for self-insuring?
“Cost factors,” Vass said. “Some employers feel that it gives them a little more control over the account.”
George E. Furtado, an attorney who specializes in workers’ compensation cases at Gallagher & Gallagher in Providence, offered insight into changes that will go into effect as of January 1, 2001.
“One of the changes this year is a provision which defines what an independent contractor is,” said Furtado. “When a new worker files a notice of designation form, by filing the form, it is a presumption of independent contractor status.”
There are serious penalties for employers who try to pass off workers as independent contractors – it’s a felony. Violators can be fined up to $50,000 or double the value of the fraud, whichever is greater. Violators can also be imprisoned for up to five years.
Furtado said that with the Department of Labor and Training’s workers’ compensation fraud unit “it’s not just employees getting investigated, but employers as well.”
What exactly does workers’ compensation insurance cover?
“Absolutely anything in the course of employment,” Furtardo said. “You see everything – occupational diseases, carpal tunnel, poisoning, stress injuries – those are the ones you see all the time.”
The state Department of Business Regulation has a list of hundreds of companies licensed to do business in Rhode Island. Many have consultants on staff to help employers evaluate a worksite and educate workers about specific dangers and precautions, Furtado said. Choosing means finding the one that will work best with the individual employer.
”Will the company be able to spend time?” he said. “You want them to try to help you prevent injuries.”
