New York workers’ compensation insurance pays for medical costs, such as medications and rehabilitation services, and lost wages when an employee is injured at work. Workers’ compensation policies in New York cost an average of $1.41 per $100 of payroll paid, but premiums vary by business type, past claim history, and carrier.
In New York, one of the best ways to get workers’ compensation insurance is to go to the New York State Insurance Fund (NYSIF). It’s a self-supporting carrier established by the state to provide low-cost workers’ comp policies to all business owners.
What Are New York Workers’ Compensation Requirements?
State workers’ compensation requirements vary greatly. In New York, state law requires nearly every employer to maintain workers’ compensation insurance for employees, according to the state’s Workers’ Compensation Board (WCB). It doesn’t matter if employees are family members or part-time workers or if they are temporary, seasonal, unpaid, or leased employees. All injuries that arise from the course and scope of an employee’s work are covered by New York laws.
Who Doesn’t Need Workers’ Compensation Insurance in New York?
New York considers most workers as employees. One big exception is an independent contractor. Individuals who work in transportation or construction are considered independent contractors if they:
- Are not under the employer’s control while working
- Perform work that isn’t in the normal course of business of the employer
- Are engaged in an independently established trade, occupation, or business similar to the services they perform
The features of independent contractors in other industries are similar to those listed above but also include:
- Obtaining a federal employment identification number or filing self-employment tax returns
- Having appropriate liability, workers’ compensation, and disability policies
- Advertising their business
- Providing all equipment and material necessary to fulfill a contract
- Working under their own permit, contract, or authority
For the construction and transportation industries, New York has additional tests identifying sole proprietors, corporations, partnerships, or other legal entities as independent contractors.
Where Can I Obtain Workers’ Compensation Insurance in New York?
A New York small business owner can get workers’ compensation insurance through private carriers, the state insurance fund, or a self-insured group. When shopping for workers’ compensation providers, consider the financial strength of the company and its rates for your specific industry and profession. Insurance provider rates reflect the industries they prefer to insure.
Top New York Workers’ Compensation Insurance Companies
*Liberty Mutual quote provided by our partner, CommercialInsurance.net.
The NYSIF is one of the largest workers’ compensation carriers in the nation that guarantees every New York employer has the availability of workers’ compensation insurance. The NYSIF is a good option for any small business owner wanting to shop and compare prices after rate increases or starting a business.
The Hartford is the premier commercial insurance carrier for small businesses in the country. This carrier is highly competitive with workers’ compensation insurance and makes it easy for small business owners to get all insurance needs properly covered in one place. The Hartford is known for adding inclusions that other carriers charge for, such as extended filing periods, voluntary coverage, and coverage for expenses incurred while defending against a claim.
Travelers is the largest carrier of workers’ compensation insurance policies in the nation. This provider serves a very diverse group of industries and has a major presence in healthcare and medical services. It offers all lines of business insurance and is an international company able to serve clients’ workforce everywhere.
AIG is an international insurance company that offers insurance for every size of business imaginable. It covers sole proprietors and Fortune 500 companies with the same level of care and risk management. AIG is a terrific option for service providers that have some degree of risk in their work. These include home service providers like plumbing companies or heating, ventilation, and air conditioning (HVAC) installation services.
Liberty Mutual maintains local offices, making it easy for clients to get a personal touch while handling insurance matters. Liberty Mutual prides itself on its risk assessment and prevention work with clients. Small companies with less than five employees are the sweet spot for Liberty Mutual.
*Liberty Mutual quote provided by our partner, Commercialinsurance.net.
Self-insured and Self-insured Groups for New York Workers’ Comp
Being self-insured or participating in a self-insured workers’ compensation group means you don’t buy coverage from a private carrier or the state fund. Instead, you demonstrate you have the assets needed to meet claim obligations and be approved by the state.
A small business choosing to self-insure workers’ compensation has two choices: become an individual self-insurer or join a self-insured group. All requirements must be met to become eligible for self-insurance programs.
To self-insure in New York, an individual business must have:
- Been in business for at least three years
- Proof of a current workers’ compensation insurance policy
- No outstanding procedural or compliance penalties
- A tangible net worth that is at least seven times the greater of its three year average of gross claim payments or annual premiums
- A safety program
- An A3 rating from Moody’s, an A rating from Standard & Poor’s, or the equivalent
- Three years of independently audited financial statements
Businesses that meet these criteria can then submit the Application for Self-insurance (Form SI-1), documents demonstrating eligibility, and the minimum security deposit to New York’s Office of Self-insurance. The minimum security deposit is $1,508,000 as of July 1, 2020.
Because self-insurance is so costly, small business owners who are interested in it often join self-insurance groups. These groups consist of two or more companies with related business activities, and they operate following similar guidelines to the individual self-insured company. Most groups are established as trusts under New York law for the purpose of insuring members for workers’ compensation claims.
New York Workers’ Compensation Insurance Costs
New York workers’ compensation rates average $1.41 per $100 of payroll, according to a National Academy of Social Insurance report. Carriers base their rates on several factors, but the most common factors are the business’ payroll, work classifications, and claims history.
The basic formula for determining workers’ compensation insurance rates is:
Premium = (payroll / $100) x classification code rate x experience modification rate (EMR)
Similar types of work are grouped and assigned a workers’ comp classification code and rate based on the amount of risk employees face. An EMR is a number that represents a business’ claims history. These numbers are plugged into the workers’ comp premium formula to get what carriers often call a manual rate. However, the manual rate can change because carriers may also factor in other information, such as their appetite and fees.
Sample New York Workers’ Compensation Rates by Class Code
Industry Class Code
5183 Plumbing Contractors
7225 Towing Company
8742 Sales Professional
8810 Clerical - Office
8831 Animal Shelters
9060 Golf Courses
New York Workers’ Comp Cost Example
To understand how workers’ compensation premium is determined, let’s look at an example. Assume an animal shelter has five dog handlers and one clerical employee. Using the table above, we gather the rate for each job classification:
- Dog handler (class code 8831) rate: $1.23
- Clerk (class code 8810) rate: 13 cents
The clerk faces considerably less risk of injury because he doesn’t handle dogs that may bite or scratch, so the carrier charges a lower rate for the clerk’s worker’s compensation.
Next, let’s assume the total payroll for the dog handlers is $120,000, and the clerk’s is $20,000.
Plug these numbers into the workers’ compensation premium equation and we get:
- Dog handler: ($120,000 / $100) x $1.23 = $1,476
- Clerk: ($20,000 / $100) x 13 cents = $26
Then, we add the premium estimates for both positions: $1,476 + $26 = $1,502
More often than not, this rate is further modified by the business’ EMR. The more claims a company has, the higher its EMR. If the business has no claims or fewer than the industry average, its EMR is lower than one, causing premiums to go down.
New York Workers’ Compensation Insurance Audit Requirements
Because workers’ compensation insurance is based on a payroll estimate, carriers conduct an audit to verify the actual payroll numbers for the policy period and define the EMR for renewal. Typically, auditors review a company’s job descriptions, payroll records, cash disbursement records, and insurance information to determine what the appropriate premiums should be for the policy.
For example, take an art store owner in Albany who started a workers’ compensation policy 10 months ago when he hired an assistant. He knew he was going to pay her $15 per hour for 40 hours a week. Assuming that the work class is rated at $1.10, a full year of work with two weeks of vacation would be 2,000 hours for an estimated payroll of $30,000. His estimated premium is calculated as ($30,000 / $100) x $1.10 = $330.
However, let’s say the art store owner fires his assistant halfway through the year, which causes his total payroll to go down. His carrier would refund the difference after the premium audit. However, if he kept his assistant and added another person, his premium audit would show higher payroll. Then, his carrier would bill him for the difference. The most current payroll numbers are then used to estimate the next premium for the next policy term.
What New York Workers’ Compensation Covers
Workers’ compensation insurance protects employees from the costs that follow work-related injuries and illnesses. These costs include medical expenses incurred at the time of injury and subsequent medical bills related to healing and rehabilitation as well as partial wage payments. Most policies also include employer’s liability coverage to pay the business owner’s legal bills if the employee decides to forgo benefits and sue.
New York workers’ compensation benefits include:
- Medical care: Pays all medical expenses related to the injury, including bills for emergency room (ER) visits, surgeries, assistive devices, and medications
- Vocational rehabilitation: Covers the costs to retrain an employee in a similar or new job to return to work if they are unable to return to their original job
- Disability payments: Pays up to two-thirds of the injured party’s lost wage, not to exceed the state’s legal maximum; benefit amounts depend on the degree of disability and the employee’s earning capacity
- Beneficiary expenses: Pays the dependents of a worker who dies from a compensable injury up to two-thirds of a worker’s average weekly wage plus reasonable funeral expenses
New York workers’ compensation disability benefits don’t kick in until the injured party misses seven days of work or if the injured party sees a reduction in pay. Individuals with disabilities that last 14 days or more will receive compensation for the first seven days retroactively. Medical care is covered immediately.
New York Workers’ Compensation Coverage Example
Chris is a Rochester painter working on a three-story home. While working, he loses his footing on the scaffolding and falls 15 feet, injuring his knee severely. He is taken from the job site by ambulance to the ER, where he is diagnosed with a torn ligament. The doctor says he needs surgery and will be unable to work for four months.
All of Chris’s medical care is paid for by his employer’s workers’ comp insurance. This includes the ambulance ride, ER visit, and any surgeries and physical therapy that follows. Because he is off for more than 14 days, he receives disability payments starting from the day after his injury. He continues to receive disability payments until he can return to work.
What Are the Penalties for Not Having Workers’ Compensation Insurance in New York?
A business that doesn’t meet the New York state law requirements of maintaining workers’ compensation insurance is subject to a $2,000 penalty for every 10 days of noncompliance. Additionally, small business owners could face misdemeanor or felony charges with fines starting at $1,000 and going as high as $50,000. Failure to comply can lead to a cease and desist of business operations.
How to File a Workers’ Compensation Claim in New York
Both employers and employees have responsibilities in New York’s worker’s comp claim process. When someone gets hurt on the job, everyone must do their part to preserve the employee’s right to benefits and prevent the employer from being fined. Follow these guidelines when filing a claim:
- Employee seeks medical attention immediately. Except in an emergency, the healthcare provider must be authorized by the WCB.
- Employee informs employer within 30 days of the incident or risks losing benefits.
- Employee files an Employee Claim (Form C-3) with the WCB.
- Employer notifies the insurance carrier within 10 days of the incident if the employee requires medical treatment beyond first aid or losing a day of work beyond the date of the incident.
- Employer completes an Employer’s First Report of Work-related Injury/Illness (Form C-2F) to be filed with the WCB. This form is required even if the injury doesn’t require the form being filed with the WCB, and the employer must keep a record of this form for 18 years.
- Insurance carrier provides the employee with a Statement of Rights (Form C-430S) within 14 days of notification or with the first benefit check, whichever comes first.
- Insurance carrier begins paying benefits within 18 days of the employer’s notification of a work-related injury or illness or notifies the employee and the WCB that it is contesting the claim.
Employers filing a workers’ compensation insurance claim must also complete an Employer’s Statement of Wage Earnings (Form C-240) with the WCB if the board requests it.
New York does not allow electronic signatures for claimants on any documents of receipt of forms at this time. This means that all forms must be signed physically and returned as originals to complete the process.
New York Workers’ Compensation Deadlines
Employers must have workers’ compensation insurance in effect before the first employee punches in. Failure to do so can result in criminal prosecution and a variety of fines up to $50,000. Injury reports must also be filed on time or employers could face fines up to $2,500.
Some claim filing deadlines with New York workers’ compensation insurance are:
- Worker injury reporting: Injured parties must report an incident within 30 days to retain rights to a claim and file Form C-3 with the WCB.
- Business reporting: Employers have 10 days after being notified of an injury to alert their insurers and to ensure that Form C-2F is submitted to the WCB.
- Statute of limitations: Injured parties have two years from either the date of the incident or their last benefit payment to file a further claim for the same incident
Employees failing to meet the required deadlines could forfeit their rights to workers’ compensation benefits. Employers failing to meet the deadlines could face penalties assessed by the New York Workers’ Compensation Board.
New York Workers’ Comp Resources
- Contact Information:
- Key Forms
- Useful Links
Workers’ compensation protects employers from the potential costs of workers injured on the job. It pays expenses, including medical treatments and prescription drugs as well as employees’ lost wages. In New York, failing to maintain workers’ compensation results in fines up to $50,000 and civil lawsuits from injured employees not covered adequately.
New York is a competitive state where private carriers and self-insured options are available. The top provider in the state is the NYSIF, a self-supporting carrier created by the government to ensure all business owners who are required to have coverage can get it. The NYSIF competes with private carriers to bring affordable workers’ comp to New York businesses.