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Workers’ Compensation Board

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Workers' Compensation Coverage

Liability And Penalties For Violations Of Mandatory Workers' Compensation Insurance Coverage Requirements

The Workers' Compensation Noncompliance Process

The Board monitors the coverage status of all subject employers in the State (a number that exceeds 800,000). The Board ensures that employers maintain required insurance coverage so that their employees can receive timely statutory benefits under the WCL and DBL. It also ensures employers in similar industries are subject to similar costs of doing business regarding these statutorily required insurances.

To keep track of all of those businesses, the Board uses a database that gathers information on businesses from a number of sources, including: the New York State Department of State (corporations, LLCs, LLPs, and LPs), the New York State Department of Labor, insurance carrier records, Board investigations and claims information. Once a database record for the employer is established, it is updated by workers' compensation coverage information sent to the Board from insurance carriers and approved self-insurers. The Board is notified whenever a workers' compensation insurance policy is written, modified or canceled by an insurance carrier. (The Board has instituted a program that requires insurers and self-insurers to send this information to the Board electronically using the employer's FEIN.). Employers in New York State are required to maintain continuous workers' compensation coverage. Accordingly, based upon the information contained in the database, the Board sends computer-generated noncompliance and penalty notices to subject employers found in noncompliance.

In most cases, if the Board does not have coverage information for an employer for a specific period of time, it will send out an inquiry notice to a business requiring the business to identify how it is complying with the mandatory coverage provisions of the WCL – if the business secured a workers' compensation policy, or if the business is legally exempt from the workers' compensation coverage requirement.

If no response is received, the first penalty notice will be sent. The penalties for noncompliance are up to $2,000 for every 10-day period without coverage (WCL §52 [5]). By the time that an employer receives their first penalty notice, the penalty may be more than $12,000. The penalty accrues for the time period in which the employer had no workers' compensation coverage and had individuals providing services integral to the business.

Once the Board levies a penalty, businesses have 30 days from the date of the initial penalty to seek redetermination review of such penalty, explaining why there was a lapse in coverage and asking for the penalty to be reduced. Information about how to seek redetermination review is located on the back of the penalty notice. The Board processes the redetermination review of penalties based on information provided by the business. Redetermination determinations may result in penalties being rescinded, reduced or upheld.

If the business has not either paid or sought redetermination review of the penalty within approximately three months, the Board sends the penalty to collection agencies. If the collection agencies are not successful in collecting the penalty, then the Board is able to issue a judgment against the business for the delinquent penalty amounts. All monies collected are deposited into the Uninsured Employer's Fund, the special fund used to pay no insurance claims.