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What New York Employers Need to Know About Workers’ Compensation Insurance

Every business owner needs to know their legal obligations and assess their industry-specific liabilities to choose the right insurance policies that protect their company. If you operate within New York or hire employees from New York, you have to comply with the state’s rules and regulations for workers’ compensation insurance.

This coverage will pay employee benefits associated with workplace injuries or illnesses and also gives you legal protection. Having proper workers’ compensation coverage limits an employer’s liability; in most situations, an employee can only sue over a workplace injury if they can prove negligence.

The NYS Workers’ Compensation Board

Every state has its own laws and regulations regarding workers’ compensation, including a state board that manages it. The New York State Workers’ Compensation Board (WBC) is responsible for overseeing and regulating workers’ compensation across the state and has officers in nine districts: Albany, Binghamton, Brooklyn, Buffalo, Long Island, Manhattan, Queens, Rochester, and Syracuse. The WBC website also features useful information and resources for employers and employees, like summaries of the relevant NYS laws.

Coverage Requirement and Noncompliance Penalties

If your business does not comply with workers’ comp coverage state minimums, you can face legal consequences. The penalties range depending on the severity of the violation and whether it is a repeated offense. According to the state’s law, noncompliance with workers compensation NY regulations could result in criminal or civil charges depending on the severity of the offense. The penalty for failure to secure coverage ranges from $1,000 to $50,000.

NY Workers’ Comp Insurance Options

New York employers can take one of three routes to provide workers’ compensation coverage:

  • Private Insurers– Employers have the ability to shop the voluntary market and purchase coverage from a state-certified private provider.

  • The Competitive State Fund– New York has a competitive state fund. The New York State Insurance Fund (NYSIF), the state-backed insurance provider, competes with private insurers and guarantees coverage to businesses that can’t secure coverage elsewhere.

  • Self-insurance– If an employer meets the eligibility criteria, gets approval from the state, and complies with annual reporting guidelines, they can choose to self-insure their company.

Class Codes and Experience Modifiers

Insurance providers determine workers’ compensation rates based on a company’s industry classification code rate, their claims experience modifier, and their payroll amount.

  • Industry Classification Code– New York state has an independent system for classifying businesses based on their industry’s associated risk level.

  • Experience Modifier– A claims experience modifier takes into account a business’s past history of workers’ compensation injuries and illnesses. Having a high volume of claims against your business will raise your insurance rate.

  • Payroll– The business’s total payroll is multiplied by the industry classification code rate, which is expressed as a rate per $100.

Is Anyone Exempt?

New York doesn’t offer many exemptions from its workers’ insurance laws. Businesses under New York’s law are required to have active workers’ compensation insurance policies for all of their workers. However, the state offers a few exceptions to businesses that meet specific criteria. The exemptions include:

  • Individually-owned Business– If you’re the sole owner and worker in your business, then you are exempt from having workers’ insurance. That includes having no part-time and full-time employers, volunteers, interns, or subcontractors working in your business.

  • Business Partnership– As long as the only workers in the business are you and your business partner, registered under the state of New York, you don’t need a workers’ compensation insurance policy.

  • Co-owned Corporation– If you have a two-owner business where you hold the stock and are the sole workers, with no full-time, part-time, volunteer, interns, or subcontract workers, you are exempt from having an insurance policy.

If your business does not meet the criteria listed above, then you are required by law to purchase a workers’ compensation insurance policy or provide self-insurance if eligible.

Workers’ Compensation Compliance

As a business owner, it’s your responsibility to know the workers’ compensation state laws and provide the necessary coverage. Beyond legal compliance, having a workers’ compensation policy from a trustworthy provider will give you and your employees greater peace of mind regarding workplace hazards and liabilities.