Amendment to Rhode Island Law Affects Limited Liability Companies

A recent amendment to Rhode Island’s workers’ compensation law extends personal liability for failure to maintain workers’ compensation insurance to partners (both general and limited) of general and limited partnerships and members and managers of limited liability companies (LLCs). The amendment creates potential exposure for limited partners and passive members of LLCs who generally would not be liable for the obligations of the entity. Although the background that prompted the amendment may explain its broad reach, the amendment creates a serious impediment to investment in Rhode Island businesses. Anyone doing business as a limited partnership or LLC will need to consider the new risks presented by the amendment.