The employer’s guide to New York workers’ comp insurance

They say New York was dubbed The Empire State because its abundant natural resources rivaled those of an entire empire. Your growing business is one of them, relying not just on a wealth of resources but also on your employees' talent.

When you’re ready to hire, you’ll have one challenge to overcome. You’ll have to enroll in state workers’ comp insurance whether your business is growing in Albany, Buffalo, or New York City. Here’s a list of everything you need to know to get started.

What is workers’ comp coverage?

New York state workers’ compensation law requires its employers to carry workers’ compensation coverage. The goal is to protect workers who are injured or get sick on the job. It provides:

• Lost earnings
• Medical benefits
• Disability benefits
• Death benefits
• Funeral benefits

In New York state, medical care includes:

• Medical treatment and rehabilitation
• Surgery
• Medications
• Dentistry
• Optometry

The Workers’ Compensation Board (WCB) aims to help an injured employee after a work-related injury or when an employee contracts an occupational disease and protect businesses from lawsuits brought by workers.

Workers’ compensation insurance is part of the small business insurance coverage that will protect your growing business so it can reach its full potential. If you’re just starting your business in New York, you’ll also want to plan for needs like a Business Owner’s Policy, general liability insurance, business interruption insurance, and commercial property insurance.

Is workers’ comp coverage required in New York?

Yes. If you have even one employee, you’re required to purchase workers’ compensation insurance. In New York, that means that if you hire someone to do work for your business, even as a contractor, you likely need to have workers’ compensation for them.

The main exceptions to the workers’ compensation rule are:

• If you’re the only employee and there are no leased, part-time, or full-time employees, contractors, or even volunteers carrying out the work of your business
• If your business is a partnership or a corporation and has no employees other than you
• If your business is a partnership owned by 2 people who own all the stock and have no other employees

There are also some limited exceptions relating to job functions. Workers’ compensation insurance isn’t needed for:

• Volunteers in nonprofits where no one (not even the executive board) is being compensated for services, even in the form of stipends or room and board
• Volunteers in nonprofits where only the only paid employees are the executive board who do not perform manual labor
• Clergy and members of religious orders
• People covered under an alternative system, like a federal workers’ plan
• Family members on a family farm
• Workers doing odd jobs for a landlord or a residence owner
• Some independent contractors

What about contractors? Typically, if you hire workers to do the work of your business, and they are not business owners themselves but regularly work for you, you will almost certainly need workers’ comp for them. That includes household workers, like a gardener, care worker, or nanny.

Suppose you hire someone on an ongoing contract basis, but on their own time, to provide a service for your business that is not directly related to your offerings (for example, you are a photographer who hires an accountant yearly to do your taxes). In that case, you may not need to provide workers’ compensation for them.

I’m a business owner in New York. Do I need workers’ compensation insurance for myself?

You don’t have to purchase workers’ compensation insurance in New York if you’re a sole proprietor, but it’s never a bad idea. Your small business depends on you, and if you were injured on the job, your personal medical insurance might not cover work injuries. With insurance, you’ll also be eligible for lost income benefits while you’re unable to work.

What happens if I don’t enroll in workers’ comp in New York?

Costs are high for noncompliance. You’ll want to avoid:

1. Fines: You can face fines of $2,000 for each 10-day period without coverage. By the time you receive a penalty notice, you may already face fines of over $10,000. Fines amass quickly and can threaten your business and personal savings.
2. Criminal charges: You can also face criminal liability and additional fines from $1,000 to $5,000. If you have more than 5 employees, you could be on the hook for $5,000 to $50,000 in fines and a felony conviction. Violations for continued non-compliance go even higher.
3. Stop work orders: You could lose your business. The state workers’ compensation board can issue a stop-work order, forcing you to shut down and face resulting loss of income.
4. No new contracts: You can also lose access to new work. For example, you'll be disqualified from consideration if you’re bidding on public works projects.
   It’s a risk to go without workers’ compensation insurance, and it’s also illegal. The risks to a growing business are huge, so it’s better to be safe than sorry and invest in your safety net.

How do I purchase workers’ compensation insurance in the state of New York?

There are 3 ways to get workers’ compensation insurance in New York.

1. Because workers’ compensation is a state program, you could apply through the NY State Insurance Fund. You can complete an application online or mail it in, remembering to submit payroll, 1099 forms, and verification, then wait for a response.
2. You could self-insure. Self-insurance isn’t for everyone. To qualify, you’ll need a lot of cash to cover potential claims. You’ll agree to make benefit payments and meet New York’s workers’ compensation laws.
3. You could get private insurance from an insurance company digitally. It’s almost instant to get an online quote from Huckleberry.

How much does workers’ comp cost in New York?

New Yorkers pay some of the highest rates in the country for workers’ compensation insurance, from $3.00 to $3.49 per $100 in payroll.

Rates are set in part by the New York Workers’ Compensation Board that sets rates according to its independent list of industry classes. Rates are calculated based on risk using a formula:

Base rate x (Payroll/100)

There are some ways to save:

1. You should make sure you’re paying the correct base rate for the class of the work your workers are doing. Class codes are based on job duties. Say you’re running a high-risk diamond mining business. You have several drivers and office assistants who never set foot in a mineshaft. You’ll want to make sure that you code them correctly and that you’re not overpaying based on the risk only a few of your employees are taking.
2. Establishing an excellent safety record is another way to reap cost savings. Your rates change based on the standards for your industry when you’re new, but the longer you stay in business with a stellar record, the more significant advantage you’ll have. Develop a workplace training and safety protocol, get on board with job injury response tools. You’ll enjoy reduced premiums with a culture of safety and accountability.

What are the workers’ comp limits in New York?

There are 2 important sections of a New York workers’ compensation policy. The first is shown in item 3.A. in the Declarations, stating there is no limit to the liability for coverage in New York. But there’s also a section where you might see limits, so let’s talk about each.Explaining New York’s unlimited coverage Most employers just need to know that there will be no limit to paying for damages arising from a work-related injury for your employees in New York State.

After all, most New York businesses will be hiring their workers to work for them within the state.

And the unlimited benefit is great news for employees. It’s also good for employers, because unlimited coverage also includes suits that arise from the worker's claim. Say your injured employee, who gives up the right to sue you under the workers’ comp program, sues the maker of the food processor that cut her hand. The company countersues you, as the employer, for failing to train employees on the safe use of their machines. In this case, your coverage is limitless in this lawsuit with the food processor company because of the unlimited liability coverage provision in your workers’ compensation insurance.

New York’s coverage limits

There’s also section 3.B. in your Declarations, which might state policy limits. You may see policies with different limits for unusual scenarios. If an injured worker is not covered by workers’ compensation but is injured in the course of work and sues you, other policy limits can apply and help protect your company.

For example, a landscaper you hire to do odd jobs, cleaning up your business property, is not eligible for workers’ comp and is not your employee. But that person gets injured on the job. Their health insurance does not cover work injuries, so the worker sues your business. In this case, policy limits apply, giving you some protection for this worker even though New York’s state program does not cover workplace injuries.

What should I do if my employee needs to file a workers’ comp claim?

If one of your employees working in New York is injured and you need to start the claims process, follow these steps:

• Get medical treatment right away, if needed. Your employee works hard for your business, and their safety is your primary concern after a workplace accident.
• Make sure your employee notifies you in writing within 30 days of injury, telling you what happened and how it occurred. Notification is a requirement for workers’ compensation claims, but if your employee notifies you of an injury, it does not mean they have filed or will file a claim.
• Employees will need to file a C-3 form online with the New York State Workers’ Compensation Board to become a claimant. They have 2 years from the date of injury to submit their claim, but the sooner they file, the faster they’ll be able to start receiving workers’ compensation benefits like reimbursement for their medical bills.
• Employees who want reimbursement for lost wages due to missing work will need to calculate their average weekly wage.
• Employees will also submit a C-4 from their medical provider. This one won’t be digital. They’ll have to email, fax, or mail the form to the NYS workers’ compensation board.
• Employers contesting a claim have 18 days from the disability or 10 days after notification. An employer may contest a claim if they believe an employee wasn’t injured in the course of their duties or wasn’t injured as seriously as they are claiming. However, the insurance carrier will ultimately decide whether to approve your employee’s claim for workers’ comp benefits.

Remember, you can get a quote online for workers’ compensation insurance in a New York minute. It’s fast and easy.

And don’t forget to protect your growing business with small business insurance in New York from Huckleberry. You know your business. That doesn’t mean you know the ins and outs of insurance. We’re here to walk you through the process.