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New York can be a challenging state for employers and business owners. The state has tough penalties for non-compliance and the State Insurance Fund has a very high percentage of all workers' comp policies in the state. Many insurance companies struggle with the regulatory environment in the state. Aside from the fact that NYS has unusual requirements such as employer paid disability coverage attached to every workers' comp policy, the state also has very complicated coverage requirmennts and owner exclsuion requirements for business owners.
New York employers are advised to work with insurance agencies in order to get workers' compensation quotes from several insurance companies to help ensure they find the most competitive rates for their business. Give us a call at 888-611-7467 to see how we can help lower the cost of coverage with private insurance comapnies.
New York Govenor Kathy Hochul signs a new bill into law in September, 2023. The new workers' compensation law will increase the minimum benefits for temporary partial disabilty as well as permanent disability. Weekly benefits will increase to $275 in 2024, $325 in 2025. In 2026, benefits will be equal to 1/5th of the state average weekly rate.
In NYS, all for-profit businesses who have full-time or part-time employees are required to buy coverage. Employers of domestic workers and home health aids who work 40 hours a week in a residence are alos required. Additionally most nonprofit organizations are required to pay for workers' compensation insurance.
Certain types of workers, usually considered 1099 independent contractors, are considered to be employees per state statute, if they are under the employer’s direct control. This applies even when they are considered independent contractors for IRS purposes.
Business owners with no employees, individuals in partnerships, LLC’s and 1 or 2 person corporations, where all the stock is held by the owners, are not required to cover themselves for workers compensation, but can include themselves if desired.
New York also has some unusual options for workers' comp besides obtaining insurance from a private insurance carrier. An employer can purchase workers' comp through the State Insurance Fund. An employer can become self-insured or become a member of a group self-insurer authorized by the Board.
A business entity established as either a sole-proprietorship or partnership are excluded from coverage unless they choose to be included. LLC Members are excluded for workers comp unless they choose to be included. Corporate officers are considered employees and must be included unless there are 1 or two owners who hold all of the companies stock.
In New York, owners who want to change from the default owner exemption rules must be listed on the signed Acord 130 application sent to the insurance company so it can be filed. They must complete the C-105.32 Notice of Election and send it to the carrier.
Workers' compensation related penalties are very strict In New York state, failure to carry coverage is a Misdemeanor. If you have five or fewer employees it is punishable by a fine between $1,000 and $5,000. If you have more than 5 employees, it become a felony which is punishable by a fine between $5,000 and $50,000. A stop work order can be issued, plus the extra costs incurred for paying the compensation and medical expenses due to the injured employee, and for defending a civil suit filed by the injured worker which is allowed if there is no insurance.
All businesses start without an experience modification rate. Their effective EMR Rating is 1.00, which is neutral because it does not increase or decrease premium and makes no adjustment to an insurance carriers' workers comp rates. Once a business qualifies, NCCI will mail the new Experience MOD Worksheet each year prior to the renewal date. However, New York has its own rating Board (NYCIRB) which will calculate the EMR. In New York, an annual policy premium (the threshold) must cost more than $10,000 for a period covering the last 2 years; or must have an average annual base premium of more than $5,000 for two consecutive years to qualify for experience rating. A business should seek to obtain a credit mod of less than 1.0 which would lower your premium. If you are assigned a debit mod of more than 1.0 your premium would increase.
Employers are required to notify their insurance company within 10 days after a work-related injury. In New York, the injury must also be reported to the Division of Workers' Compensation, by Filing a First Report of Injury. This is typically handled by your insurance carrier. The Employer must retain the First Report for 18 years. If an employer refuses to file a claim with the carrier, then the employee can file the claim with the Division of Workers' Compensation or obtain and attorney.
The general rule is that an injured worker can draw temporary disability payments for up to 300 weeks while on temporary total disability or until they reach Medical Maximum Improvement ()MMI). If the employees reaches age 65 while on TTD some states will stop the weekly benefits.
NYCIRB 200 E. 42 St. New York, NY 10017 Phone: 212-697-3535
All out of state employers are now required to cover employees working in New York state with a workers' comp policy showing New York in item 3A of the policy information page. Each policy's Other States Coverage (Item 3C) will no longer be acceptable for temporary or incidental employment in the state of NY. An out of state employer that sends an employee to New York for even 1 day is required to procure a New York workers compensation policy
Failure to comply with this requirement could subject employer to uninsured penalties from the state of NY in the event of a work-related injury. If you have any work in New York during the course of a policy term, you are required to notify your insurance company immediately so New York can be added to your policy under section 3A
Employers that expect to have any work in New York should ask their insurance carrier to add NY to the policy on an 'if any' basis until actual employee exposure develops.
Sole Proprietors, Partners, and Limited Liability companies who are either automatically covered or have elected coverage in their own state will need to complete an election of coverage form for New York if they want to be covered in NY. Corporate Officers who have rejected coverage, or are not subject to the law in their primary state may need to complete a rejection of coverage form for NY in order to be excluded from coverage in the state of New York.
New York does not utilize NCCI for workers compensation administration. Instead, the state operates its own state fund program known as the State Insurance Fund (SIF). NYSIF is a non-profit agency. Unlike many state fund programs, NYSISIF competes with all other private insurance companies doing business in the state of New York.
The New York State Insurance Department and NYCIRB do have a website available where employers and agents can search New York class codes and rates effective October 1st 2011. The NY Dept. of Insurance and NYCIRB do not permit 3rd party disbursement of information so comparisons between NY State Fund rates and the lowest rates offered by our insurance companies can not be illustrated here. To look up New York Class codes and current rates please visit: • NYCIRB.org • Under the heading 'Department Services' choose 'Underwriting' and then choose 'Class Code Search.
NY imposes a 60 day moratorium on insurers cancelling, non-renewing, or conditionally renewing any policy issued to an individual or small business facing financial hardship as a result of the COVID-19 pandemic. A “small business” is defined as a NY business, independently owned and operated, and employs 100 or fewer employees. The NY DFS will issue an emergency regulation addressing implementation of this order.
Mandatory law in effect from 03/29/2020.
Executive Order 202.13 prohibits the cancellation/nonrenewal of “affected policyholders.” “Affected policyholders” are individuals or small businesses (i.e., a NY domiciled business that is independently owned and operated and employs 100 or fewer employees) experiencing financial hardship as a result of the COVID-19 pandemic. In furtherance of this order, the NY DFS added the following to its regulations (11 NYCRR 229): 1) If an “affected policyholder” cannot timely pay premium and can demonstrate financial hardship as a result of COVID-19, an insurer shall not impose late fees or report the policyholder to a credit reporting/debt collection agency; 2) Insurers shall allow an “affected policyholder” who could not timely pay premium due to COVID-19 (including a policyholder to whom the insurer issued a non-payment cancellation notice prior to March 29, 2020) and who can still demonstrate financial hardship as a result of COVID-19 to pay the overdue premium over a 12 month period; 3) “Financial hardship as a result of COVID-19” can be demonstrated by a written attestation from the policyholder; 4) By April 10, 2020, insurers must begin to provide notice with each insurance premium bill of the provisions of this regulation and a toll-free number that the policyholder may call to discuss billing and alternative payment options; 5) Insurers must notify producers and any TPAs that might be impacted by this regulation. Guidance: The policyholder notice may be delivered by e-mail. Insurers with websites should post the information on their websites as soon as possible. NY also encourages supplemental dissemination of the content of the Notice Obligations by other means, including social media. Insurers should maintain records of their communications with consumers, electronic or otherwise, for a period of time sufficient to satisfy recordkeeping requirements. If an Insurer obligated itself by contract with its principal, the insurer or insured, to retain records for a period of time, then such obligation, if legally enforceable, must be satisfied, subject to an alternative acceptable to the principal.
Mandatory order for all insurance companies and all lines of insurance. Effective 03/30/2020 until further notice.
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Accurate Payroll Records Requirement
All employers doing business in NY must keep accurate payroll records including the number of employees, class codes, wages, and injury reports for four years after each policy terminates. Failure to retain accurate records may create a penalty up to $1,000 for each 10 day period of non-compliance,
Intentional misrepresentation or attempts to conceal accurate payroll records, classification, or other relevant information for workers compensation may result in a $2,000 penalty foir every 10-day period of non-compliance. There are additional fines up to $50,000 for any criminal convictions.
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Employers liability insurance is an additional layer of coverage included as part of a workers' compensation insurance policy. Employers Liability is known as Part 2 of the policy. It adds two additional coverages for employers:
Employers Legal Liability and Legal Defense Costs
In today's world, there are a variety of reasons employees and third-parties sue employers for damages. Here a some common types covered by employers liability insurance:
Third Party Lawsuits
Your employee sues another party that may have contributed to the injury, In turn, the third party sues your business.
Consequential Bodily Injury
Another party or individual is injured while providing care for the injured employee.
Dual Capacity Legal Action
An employee files a claim but also attempts to sue the employer for being responsible in other ways outside of the employment relationship.
Loss of Consortium
A spouse sues for damages caused by the loss of companionship or relations.
Employers Liability coverage is not included with coverage in the four monopolistic states. Employers in these states can endorse this coverage onto their General Liability policy. That coverage is commonly known as Stop Gap Coverage.
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