§ 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 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 time table 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 § 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 § 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 § 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 § 9-21-10.

(j) These provisions shall take effect upon passage except § 28-29-2(6)(iv) which shall take effect on January 1, 2006.

History of Section. (G.L. 1923, ch. 92, art. 5, § 13; P.L. 1936, ch. 2290, § 16; G.L. 1938, ch. 300, art. 5, § 13; P.L. 1954, ch. 3297, § 1; G.L. 1956, § 28-36-15; P.L. 1987, ch. 561, § 1; P.L. 1992, ch. 80, § 1; P.L. 1994, ch. 101, § 5; P.L. 1994, ch. 401, § 6; P.L. 1998, ch. 105, § 4; P.L. 1998, ch. 404, § 4; P.L. 2003, ch. 388, § 5; P.L. 2003, ch. 395, § 5; P.L. 2004, ch. 273, § 4; P.L. 2004, ch. 293, § 4; P.L. 2005, ch. 342, § 3; P.L. 2005, ch. 403, § 3; P.L. 2008, ch. 377, § 3; P.L. 2014, ch. 78, § 8; P.L. 2014, ch. 87, § 8; P.L. 2018, ch. 86, § 3; P.L. 2018, ch. 98, § 3.)