Is Workers’ Comp Insurance Required In NY?

Gabrielle Sinacola | Jun 15, 2023

In 2022, New York reported a gross state product of over two trillion dollars, the third highest number of any state in the US. That’s a lot of business activity—and it represents a large number of employers subject to New York’s workers’ compensation policies.

New York imposes strict workers’ compensation requirements and steep penalties for violations. If you employ workers in New York, you’ll need to comply with the state’s workers’ compensation laws to avoid fines or actions against your business.

Is Workers’ Comp Insurance Required In NY?

Is workers’ compensation required in NY?

For-profit businesses in New York are required to provide workers’ compensation coverage for all employees, regardless of business size or number of employees in the state.

Although some exemptions apply, the New York State Workers’ Compensation Board is clear about the broad scope of New York workers’ comp law: Its official guidance states, “Virtually all employers in New York State must provide workers’ compensation coverage for their employees.”

What does workers’ compensation cover in NY?

New York workers’ compensation provides protection for both employers and ill or injured workers. Workers’ compensation benefits can include the following:

  • Legal protection for the employer. In most cases, employees who file a claim for a work-related injury or illness forfeit the right to take legal action against their employer.
  • Liability coverage for the employer. In the event of a dispute, insurance carriers can cover an employer’s legal expenses.
  • Payment of medical treatments or services for employees. Workers’ compensation insurance can pay for medical care needed to treat a work-related injury or illness.
  • Wage replacement for employees. Workers’ compensation coverage can provide temporary payments to employees to help replace lost wages.
  • Compensation for permanent effects of an employee’s work-related injury or illness. Coverage can include payments to employees to compensate for permanent effects of a covered injury or illness, including those that prevent a return to work.
  • Death benefits. In the event of a fatality, workers’ compensation coverage can pay death benefits to an employee’s beneficiaries.

Employers in New York are also required to provide State Disability Insurance (SDI) and Family Leave Insurance (FDI) coverage to employees for an off-the-job injury or illness. Many insurance carriers allow businesses to include a rider adding these coverages to their workers’ compensation insurance policies.

Who is exempt from workers’ comp in NY?

Almost all for-profit businesses are required to maintain workers’ compensation coverage in New York. Exemptions apply in the following two cases:

  • Your business does not have employees. If your business does not have employees or if all employers are also owners of the business, you are not required to obtain workers’ compensation coverage in New York. This most commonly applies to sole proprietors, partnerships, or a New York LLC owned by one or two people.
  • You are an out-of-state entity performing all work outside of the state. If your business is incorporated outside of New York and all of your work is performed out of the state, you do not need to obtain workers’ compensation insurance in New York to obtain a contract in the state. If some work is performed in New York, you may have to obtain coverage.

If either of these situations applies to you and you want to apply for a license, permit, or contract with a New York state government entity, you can apply for a Certificate of Attestation of Exemption with the New York State Workers’ Compensation Board.

Who’s covered and not covered by workers’ comp in NY?

Here’s a breakdown of who’s covered by New York workers’ comp law.

Who’s covered by workers’ comp in NY

All employees of for-profit businesses in New York are covered by the state’s workers’ compensation laws.

  • Employees of for-profit organizations. New York requires all employees of for-profit businesses to receive workers’ compensation coverage. For the purposes of New York workers’ compensation law, the term “employee” includes part-time employees, full-time employees, leased or borrowed employees, seasonal employees, temporary employees, and day laborers.
  • Volunteers for for-profit organizations. New York does not recognize volunteer status for for-profit organizations, instead considering all individuals doing work for a for-profit organization (even the business owner’s family members) to be employees of the organization entitled to workers’ compensation coverage.

Who’s not covered by workers comp in NY

New York workers’ comp law might not cover individuals who are not considered employees or who are employed in specific roles by certain types of nonprofit organizations. The New York State Workers’ Compensation Board provides guidance for determining coverage requirements in these cases as well as a list of other specific situations in which coverage might not be required.

Here are some of the most common situations that do not require coverage:

  • Independent contractors. New York does not require businesses to carry insurance for independent contractors. Independent contractor classification can be legally complex, and misclassification can carry steep fines, so consult New York law for guidance.
  • Volunteers for nonprofit organizations. New York does not consider uncompensated volunteers for a nonprofit organization to be employees and does not require nonprofits to maintain workers’ compensation coverage for these individuals.
  • Certain nonprofit employees. New York maintains a list of exemptions for the employees of certain nonprofit organizations. This list includes exemptions for New York City and some other municipal officers, firefighters, and sanitation workers; clergy; amateur athletes; and educators and non-manual laborers employed by a religious, charitable, or educational nonprofit.

Is Workers’ Comp Insurance Required In NY?

Penalties for not having workers’ comp in NY

If a business required to carry workers’ compensation coverage fails to obtain coverage or allows coverage to lapse for ten or more consecutive days, the state will assess penalties based on the amount of time that coverage has lapsed and the number of employees who should receive coverage. Penalties can be up to $2,000 for every ten days without coverage.

Employers who fail to obtain coverage within a 12-month period may also be subject to criminal penalties—and those who have more than five workers or who commit a subsequent offense within five years can face felony charges.

How to get workers’ comp in NY

Follow these four steps to obtain workers’ compensation coverage in New York.

1. Obtain a workers’ compensation insurance policy

You can obtain a new workers’ compensation policy from a private insurance carrier, the New York State Insurance Fund, or through self-insurance.

  • Private insurance carrier. Over 200 private insurance carriers are authorized to provide workers’ compensation insurance in New York. Contact carriers to inquire about costs to your business and obtain coverage.
  • The New York State Insurance Fund. The New York State Insurance Fund (or NYSIF) is a non-profit state agency that offers workers’ compensation coverage in New York. The fund pays dividends to participants in the event of a profit and is required to offer coverage to all employers except for those who owe money to the fund (i.e., from a previous unpaid bill). Contact the NYSIF for information about coverage costs or to obtain coverage.
  • Self-funded. Qualified employers can self-fund workers’ compensation in New York. The New York State Workers’ Compensation Board maintains business eligibility requirements, which include current workers’ compensation coverage, an assessment of low credit risk, three years of independently audited financial statements, and a business net worth equal to or greater than seven times the three-year average of gross claims cost paid or seven times the annual premium paid, whichever is greater.

If you already have a workers’ comp policy from a private carrier in another state, you may have the option to add New York coverage to your existing policy.

2. Include a rider for SDI and FLI

Because State Disability Insurance (SDI) and Family Leave Insurance (FDI) are also required in New York, many workers’ compensation policies include a rider (a document addressing additional details and terms) for SDI and FLI coverage. You can request this rider from your insurance carrier when you obtain workers’ compensation coverage.

New York businesses are not permitted to fund workers’ compensation insurance costs through payroll deductions, but SDI and FLI costs can be withheld from employee paychecks. Decide how you’ll fund these insurance types before obtaining a worker’s compensation insurance policy.

3. Post a notice of compliance

New York requires all businesses to post an English- and Spanish-language notice of workers’ compensation coverage in a conspicuous location in the place of business and imposes a $500 fine for failure to post. For remote businesses, posting can be electronic.

4. Research employer responsibilities

Research New York state employer responsibilities to maintain compliance in case of a claim.

If an employee files a claim, as an example, you are required to report the incident to the insurance carrier and Board within ten days. Failure to do so can result in a fine of up to $2,500.

If you have employees in New York, Mosey’s compliance platform will track all of your requirements for the state. From payroll and HR to corporate compliance and tax, you get real-time monitoring when you meet a compliance threshold or become liable for adhering to new legislation. Unsure how to get workers’ comp? Mosey’s app provides step-by-step instructions on how to complete this requirement and ensure your business stays compliant.

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