The Workers' Compensation Law (WCL) considers most individuals providing services to a for-profit business to be employees of that business. An employee is a person who performs under the supervision, direction, and control of an employer either on or off their premises. This applies whether the worker is
- casual/day labor,
- borrowed, or
- unpaid – including volunteers and family members.
These employees must be covered by the employer for workers' compensation insurance as well as disability and Paid Family Leave benefits insurance.
The Board monitors the insurance coverage status of every New York State employer that is subject to the WCL (more than 800,000) and ensures they maintain coverage for their employees. The Board ensures employers in similar industries are subject to similar costs of doing business regarding required insurance.
In most cases, if the Board does not have an employer's coverage information for a specific period of time, it will mail an inquiry notice to the business, asking the business to show it is complying with the WCL.
The Board may require proof that the business
- has a valid workers’ compensation insurance policy,
- is self-insured for workers’ compensation,
- is legally exempt from having to obtain workers’ compensation coverage, and/or
- is keeping true and accurate business records.
If an employer fails to provide this information, the Board will assume that the employer is violating the (WCL §52 ) and will mail the first penalty notice. The penalties for noncompliance can be as high as $2,000 for every 10-day period without coverage. By the time 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 to the business.
Request a Review
A business has 30 days from the date of the initial penalty notice to request a review of the penalty, explain why there was a lapse in coverage and ask for the penalty to be reduced. The Board processes requests for review based on information provided by businesses. This review may result in penalties being rescinded, reduced, or upheld.
When a business has either not paid the penalty or has not submitted a timely request for a review, the Board will implement collection activity on the penalty which includes but is not limited to the following debt collection activities: obtainment (or filing) of a judgment against the employer without further notice from the Board, referral of the debt for offset against tax refunds and certain other New York State payments pursuant to Section 171-f of the New York State Tax Law. All monies collected are deposited into the Uninsured Employer's Fund, the special fund used to pay uninsured claims.
The Board may review penalties for an offer of reduction. If you would like to request an offer of reduction, please email PCU@wcb.ny.gov or send a request in writing by mail to New York State Workers’ Compensation Board, P.O. Box 5200, Binghamton, NY 13902.
Payment of Penalties
The Workers’ Compensation Board accepts checks, money orders and online payments, including electronic debit from a checking or savings account and credit/debit cards. A request to make electronic payments can be sent by email to firstname.lastname@example.org.
Payments by check can be made payable to the Commissioner of Taxation and Finance and mailed to the NYS Workers’ Compensation Board, Attn Finance Office Room 331, 328 State Street, Schenectady, NY 12305.
Penalties for Being Uninsured
Failure to Secure Coverage
Criminal Penalty (WCL §52  (a))
For five or fewer employees
Failure to secure workers' compensation coverage for five or fewer employees within a 12-month period is a misdemeanor punishable by a fine of between $1,000 and $5,000.
For more than five employees
Failure to secure workers' compensation coverage for more than five employees within a 12-month period is a class E felony punishable by a fine of between $5,000 and $50,000 and is in addition to any other penalties that may apply.
Civil Penalty (WCL §52 )
- An employer who doesn't provide coverage for 10 or more consecutive days could receive a penalty up to $2,000 for each 10-day period of non-compliance, or no more than two times the cost of compensation for its payroll for the period of such failure.
- This is in addition to all other penalties, fines or assessments.
- When an employer fails to provide sufficient business records for the Chair to determine the employer’s payroll for the period requested for the calculation of the penalty, the claimed 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 liable for the penalty.
Subsequent Failure to Secure Coverage
Criminal Penalty (WCL § 52  (b))
- If an employer has been convicted of not securing workers' compensation coverage for employees within the previous five years, that employer will be guilty of a class D felony upon conviction of a subsequent violation and will be fined between $10,000 and $50,000, in addition to any other penalties including fines.
- Cases investigated by the Board are referred to the New York State Office of the Attorney General for prosecution.
Uninsured employers are responsible for the following costs resulting from an uninsured claim:
- All wage and medical benefits awarded to any of their employees.
- Legal representation required to defend against a workers’ compensation claim.
- Assessments up to $2,000 for every 10-day period of noncompliance.
- Any other penalties the Board may issue for noncompliance as described above (WCL §52 ).
The uninsured employer may also be sued by an injured employee.
Penalties for Misrepresentation
Civil and Criminal Penalties
An employer must keep accurate records of the number of employees, classification, wages and accidents for their business for four years. (WCL §131)
Any attempt by an employer to
- intentionally and materially understate or conceal payroll,
- conceal employee duties to avoid proper classification, or
- conceal any other information necessary to calculate premium paid to secure compensation,
may result in a fine of up to $2,000 for every 10-day period of noncompliance or two times the cost of compensation. Additionally, the fine for criminal conviction can be from $1,000 to $50,000. (WCL §52  (d))
Examples of Misrepresentation
Examples of misrepresentation include failure to pay appropriate workers' compensation premiums by
- paying workers "off the books,"
- not reporting wages paid to undocumented workers,
- misclassifying employees as "independent contractors,"
- misclassifying the work of a business to a classification that is less hazardous (e.g., identifying all roofers as secretarial staff), and/or
- intentionally, misrepresenting or concealing information necessary to calculate premium paid.
Failure to Maintain Accurate Payroll Records
Criminal Penalty (WCL §131 )
Every employer must keep an accurate record of the following:
- Number of employees
- Classification of employees
- Information regarding employee accidents
- Wages paid to employees for four years
These records should be open to inspection at any time and as often as necessary for inspection by Board investigators, authorized auditors, accountants or inspectors of the carrier with whom the employer is insured, or by any other entities authorized by statute.
Any employer who fails to keep accurate records, fails to furnish records as required, or falsifies any records will be guilty of a misdemeanor and subject to a fine between $5,000 and $10,000 in addition to any other penalties otherwise provided by law.
Any employer that has previously been subject to criminal penalties under this section within the previous 10 years will be guilty of a class E felony, and subject to a fine between $10,000 and $25,000 in addition to any penalties otherwise provided by law.
Civil Penalty (WCL §131 )
If an employer fails to keep accurate payroll records, the Board Chair may impose a penalty of $1,000 for each 10-day period of non-compliance. This penalty is in addition to all other penalties, fines or assessments, or a sum not more than two times the cost of compensation for its payroll for the period of such failure. Fees collected will be paid into the uninsured employers’ fund.
When an employer fails to provide business records necessary for the Chair to determine the employer’s payroll for the period requested for the calculation of the penalty provided in this section, the imputed weekly payroll for each employee, corporate officer, sole proprietor, or partner shall 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 liable for the penalty.
Stop Work Orders
If workers' compensation coverage is not in place, or if there is any outstanding debt owed to the Board, a business may be issued a stop work order. A stop work order requires the immediate stop of all business activities. (WCL §141-a)
New York State governmental entities including State, county and municipal agencies may not enter into a public works contract with businesses that are listed on a Debarment List. The 2007 Workers' Compensation Reform Legislation included provisions that would prevent employers that had various types of workers' compensation noncompliance infractions from bidding on public works projects. (WCL §141-b)
Those convicted of a misdemeanor under the WCL, and any substantially owned affiliated entity of such person, or those subjected to civil fines, penalties, or a stop-work order under the WCL, are barred for one year from bidding on public works contracts or subcontracts with the state. (WCL §26, 52 or 131). There is a five-year ban for felony convictions, or violators of the discrimination provisions of the WCL. (WCL §125 or 125-a)
Violations of the Fair Play Act
Contractors who violate the Fair Play Act by failing to properly classify employees will be subject to civil penalties of up to a $2,500 fine per misclassified employee for a first violation and up to $5,000 per misclassified employee for a second violation within a five-year period. A Workers' Compensation Law Judge will impose the civil penalties contained in the law based on the evidence presented at the hearing.
A business may be subject to criminal prosecution (a misdemeanor) with a penalty of up to 30 days in jail, up to a $25,000 fine, and debarment from bidding on or being awarded any Public Works contracts for up to one year for a first offense.
Subsequent misdemeanor offenses would be punishable by up to 60 days in jail, up to a $50,000 fine, and debarment from bidding on or being awarded any Public Works contracts for up to five years.
Penalties under the act are in addition to all existing civil and criminal penalties for misclassification, failure to provide required coverage, or other violations of the WCL, Labor Law, or Tax and Finance Law.
Failure to Report an Injury
Failure to file a First Report of Injury form, or failure to file it timely, may result in a penalty of up to $2,500.
The following individuals are personally liable for a business’ failure to secure workers’ compensation insurance:
- Sole proprietor
- President, secretary, and treasurer of a corporation
The Office of the Advocate for Business can assist employers with penalties and what you need to do to get in compliance. Visit the Advocate for Business page for additional information, or contact the office directly by calling (518) 486-3331, or emailing email@example.com.