What are New York Workers Compensation Insurance Fines for not having workers’ compensation insurance in New York?
Businesses that fail to obtain workers’ compensation insurance will get workers compensation insurance fines. Most individuals who provide services to a for-profit business are considered employees under the Workers’ Compensation Law (WCL).
An employee is someone who works under the supervision, direction, and control of an employer, whether on or off the employer’s premises. These employees must be covered by their employer for workers’ compensation insurance, as well as disability and Paid Family Leave benefits insurance. The Board is responsible for monitoring the insurance coverage status of over 800,000 New York State employers who are subject to the WCL. They ensure that these employers maintain coverage for their employees. Additionally, the Board ensures that employers in similar industries bear similar costs of doing business when it comes to required insurance.
Penalties and Workers Compensation Insurance Fines
If the Board does not have the employer’s coverage information for a specific period, it will send an inquiry notice to the business. This notice will request the business to provide evidence that it is complying with the WCL. The Board may ask for proof of the following:
1. A valid workers’ compensation insurance policy.
2. Self-insurance for workers’ compensation.
3. Legal exemption from obtaining workers’ compensation coverage.
4. Maintenance of accurate and truthful business records.
If the employer fails to provide this information, the Board will assume that the employer is violating the WCL §52 [5]. Consequently, the Board will send the first penalty notice. Noncompliance penalties can reach up to $2,000 for every 10 days without coverage. By the time the employer receives the first penalty notice, the penalty amount may exceed $12,000. The penalty accumulates for the duration in which the employer lacked workers’ compensation coverage while individuals were providing services to the business.
What is the penalty for failing to obtain workers comp in NY?
Failure to acquire workers’ compensation insurance for up to five employees in a year is deemed a misdemeanor, punishable by a workers compensation insurance fines of $1,000 to $5,000. Conversely, not obtaining coverage for more than five employees within a 12-month timeframe is considered a class E felony, with a potential fine of $5,000 to $50,000 in addition to other penalties.
Employer failing to provide coverage for a consecutive period exceeding 10 days
An employer failing to provide coverage for a consecutive period exceeding 10 days may incur a penalty of up to $2,000 for each 10-day interval of non-compliance, or up to twice the total compensation expenditure for its workforce during the period of non-coverage. This penalty is imposed separately from any other workers compensation insurance fines, penalties, or assessments related to workers’ compensation insurance. In instances where adequate business records are unavailable for determining the payroll, the claimed weekly payroll for each employee, corporate officer, sole proprietor, or partner will be computed as one-and-a-half times the New York State average weekly wage. For corporations, the president, secretary, and treasurer will bear responsibility for the penalty.
Subsequent Failure to Provide Workers Compensation Insurance
In cases where an employer has neglected to furnish workers’ compensation coverage for their employees within the preceding five years and is found guilty of a subsequent violation, they will be prosecuted for a class D felony. Upon conviction, the employer will be subject to a fine ranging from $10,000 to $50,000, in addition to any other relevant penalties and fines related to workers’ compensation insurance. The Board forwards such cases to the New York State Office of the Attorney General for prosecution.
Uninsured employers shoulder the financial responsibility for several expenses resulting from an uninsured claim:
1. Uninsured employers are responsible for covering all wage and medical benefits provided to their employees.
2. They are required to pay for legal representation expenses to defend against a workers’ compensation claim.
3. There is a possibility of being charged up to $2,000 for every 10 days of noncompliance.
4. The Board has the authority to enforce further penalties for failure to comply, as specified in WCL §52 [5].
5. Additionally, an injured worker retains the option to take legal action against the uninsured employer.
Civil and Criminal Penalties for Misrepresentation
Employers must maintain precise documentation regarding the number of employees, their job classifications, wages, and any accidents that occur within their business. These records must be retained for four years, as stated in WCL §131.
Any deliberate and significant attempts made by an employer to understate or hide payroll, conceal employee responsibilities to avoid proper classification, or withhold any other essential information required for calculating premium paid to secure compensation, can lead to severe consequences. Noncompliance with these regulations may result in workers compensation insurance fines of up to $2,000 for each 10 days. Alternatively, the fine for a criminal conviction can range from $1,000 to $50,000, as outlined in WCL §52 [1] (d).
Examples of Misrepresentation
Instances of misrepresentation can encompass various actions, such as evading the payment of rightful workers’ compensation premiums by compensating employees “under the table,” neglecting to disclose wages provided to undocumented workers, categorizing workers as “independent contractors” when they should be classified as employees, assigning a less hazardous job classification to a business’s operations (for instance, labeling all roofers as administrative staff), or deliberately hiding or distorting information essential for determining the premium to be paid.
Failure to Maintain Accurate Payroll Records
Criminal Penalty (WCL §131 [1])
Every employer must maintain precise documentation of the following:
1. The total number of employees.
2. The classification of each employee.
3. Information about any accidents involving employees.
4. The wages paid to employees for four years.
These records must be readily available for inspection at any given time and as frequently as required by Board investigators, authorized auditors, accountants, or inspectors from the carrier with whom the employer is insured, as well as any other entities authorized by law.
Failure to maintain accurate records, failure to provide records as mandated, or falsification of any records will result in the employer being charged with a misdemeanor. In addition to any other penalties stipulated by law, the employer will be subject to a fine ranging from $5,000 to $10,000.
If an employer has previously faced criminal penalties under this section within the past 10 years, they will be charged with a class E felony. Along with any other penalties provided by law, the employer will be liable to pay a fine ranging from $10,000 to $25,000.
Civil Penalty (WCL §131 [3])
If an employer does not maintain accurate payroll records, the Board Chair has the authority to impose a penalty of $1,000 for every 10 days of non-compliance. This penalty is in addition to any other penalties, workers compensation insurance fines, assessments, or an amount not exceeding twice the cost of compensation for the employer’s payroll during the period of non-compliance. The fees collected will be deposited into the uninsured employers’ fund.
When an employer fails to provide the necessary business records for the Chair to determine the payroll for the requested period, which is used to calculate the penalty mentioned in this section, the imputed weekly payroll for each employee, corporate officer, sole proprietor, or partner will be the New York state average weekly wage multiplied by one-and-a-half.
If the employer is a corporation, the president, secretary, and treasurer will be held responsible for the penalty.
Stop Work Orders
If there is a lack of workers’ compensation coverage or any unresolved debt owed to the Board, a business may receive a cease work order. This order mandates the immediate cessation of all business operations. (WCL §141-a)
How to Avoid Penalties for the Lack of Workers Comp Insurance in NY
It is crucial to ensure that your company has workers’ compensation coverage due to the severe penalties associated with not having it. By purchasing a suitable workers’ compensation policy for your employees and their families, you can avoid these penalties.
To prevent unforeseen consequences, it is important to maintain accurate records of employee duties and payroll. Even if any information is unintentionally concealed, proving it to the authorities may be challenging.
If you receive an inquiry notice from the Workers’ Compensation Board, it is imperative to respond promptly. You can address the notice through the Board’s official website.
While complying with the law and avoiding penalties are compelling reasons to purchase workers’ compensation coverage, they are not the only ones.
Accidents can occur even in the safest work environments. Workers’ compensation insurance reimburses medical expenses and lost wages to your employees.
The potential costs associated with medical services and lost wages can be substantial. Having them covered by insurance could protect your business. Additionally, certain policies may include provisions where employees who utilize workers’ compensation benefits agree not to pursue additional financial compensation from your business related to the incident.
Compare New York Workers’ compensation Insurance Costs & Quotes
Seriously, understanding workers’ compensation is an essential part of being a small business owner. Put simply, if you have employees, you should have workers’ comp insurance. Even if you think you would never need to file a claim, not having it opens you up to state penalties, including workers compensation insurance fines. Having workers’ compensation insurance gives you and your employees peace of mind. You’ll know any on-the-job injury-related claims will be handled!
Ready to compare the cost of Workers’ Compensation Insurance policies for your business? Fill out our brief online application, and one of our agents will send Workers’ Compensation Insurance quotes to your email inbox. In most cases, you can expect to receive business insurance quotes within a matter of minutes.