The Senate yesterday approved legislation drafted in response to The
Station nightclub fire that would make employers who fail to carry
workers' compensation insurance subject to felony charges punishable by
fines of up to $10,000 and two years in prison.
The legislation, strengthened since last week's debate in a House
committee, is intended to toughen criminal sanctions against workers'
compensation scofflaws by, among other things, removing ignorance of the
law as a defense.
It sailed through the Senate on a vote of 34 to 0 with no debate, and an
identical bill was then promptly approved by the House Labor Committee.
A vote on the House floor is expected sometime next week.
The legislation follows revelations that The Station's owners, Jeffrey
and Michael Derderian, had no coverage when their nightclub burned to
the ground on Feb. 20.
The fire killed 100 people and injured more than 200. A waitress, two
bouncers and a ticket-taker who were working at The Station on the night
of the fire were among those killed.
By law, any business with one or more employees must carry workers'
compensation coverage.
Unlike other types of insurance, workers' compensation covers businesses
in the event that an employee gets hurt on the job or dies as a result
of such an injury. The coverage generally pays a portion of an
employees' lost wages, plus medical care.
In the case of a death, the insurance provides $15,000 for burial
expenses, plus a portion of lost wages to the deceased's spouse or
dependent children until they reach age 18, or, if they are in college,
until age 23.
But with no coverage, The Station employees received none of those
benefits.
The Derderians are facing a $1.06-million penalty leveled by the state
Department of Labor and Training for failure to have coverage for the
nearly three years that they owned the West Warwick nightclub. The
department also has referred the case to the state attorney general's
office for criminal prosecution.
The Derderians are scheduled to appear today in state Workers'
Compensation Court on their appeal of the civil penalty.
Under existing law, besides civil penalties of up to $1,000 per day,
employers who fail to purchase coverage can be charged with a felony --
but only if it's their second offense in 10 years, and if they
"knowingly" violated the law.
The legislation debated for 1 1/2 hours in a House committee last week
would have allowed felony charges against first-time offenders, but it
made a distinction between "unintentional" violators and "knowing"
violators. To be charged with a felony, the original version of the
legislation said, the employer had to have violated the law "knowingly."
Rep. Arthur Corvese, the House Labor chairman, and others last week
questioned the need to prove that an employer "knowingly" failed to
purchase workers' compensation insurance to be charged with a felony,
and suggested that the provision be removed.
One critic of that language, lawyer Stephen Dennis, who represents
workers in claims against employers, said in an interview that
"knowingly violated" was a loophole so big that "you could drive a Mack
truck through it."
Yesterday, that language in the legislation was gone. Instead, it read
simply: Any employer "that is found to have violated this section or
section 28-36-15, is guilty of a felony for failing to secure and
maintain compensation . . . "
"I think it was just a question of making sure there were not any
unnecessary impediments to prosecuting a felony," George Nee,
secretary-treasurer of the AFL-CIO, said in an interview after the
Senate approved the measure. Nee is chairman of the 17-member Workers'
Compensation Advisory Council, made up of members of business and labor,
which helped craft the legislation.
"I hope this will provide a wake-up call to every employer in the
state," Nee added.
The legislation still distinguishes between violators subject to felony
charges and "unintentional" violators in cases where the "unintentional
noncompliance" is a result of "clerical error where the uninsured period
is less than one year from the date of discovery and there were no
employees injured."
In such cases, violators could face an administrative penalty of at
least one year's insurance premium -- and at most, triple that.
Other violators would face civil penalties of $500 to $1,000 per day, as
as well as criminal charges punishable by fines of up to $10,000 and up
to two years in prison.
Under the new legislation, the Labor Department would only handle cases
of "unintentional noncompliance or noncompliance resulting from clerical
error" where the employer was without coverage for less than one year
and no employees were injured.
All other cases would either go directly to Workers' Compensation Court
or, in the most serious cases, to the attorney general for criminal
prosecution.
Only the state attorney general can prosecute criminal charges for
workers' compensation violations. And to date, that level of enforcement
has been almost nonexistent.
And while the legislation was born out the The Station tragedy, it would
have no impact on the Derderians' case, the AFL-CIO's Nee said during an
interview.
Nor will it help Justin DeMaio, the 8-year-old son of Dina DeMaio, who
died while working as a waitress at The Station on the night of the fire.
But Nee said that perhaps the legislation might prevent other employers
from operating the way the Derderians did at The Station.
"You would hope that if a law like this had been in effect," Nee said,
"that this type of employer would have taken it more seriously and
they'd have comp. . . . And [Justin DeMaio] would have been eligible for
weekly benefits until he was 18."
DIGITAL EXTRA:
See the full text of the proposed Senate legislation regarding workers'
compensation benefits, including floor amendments made yesterday.
-- Journal staff writer Lynn Arditi can be reached at
larditi@projo.com.
