Workers’ compensation insurance is mandatory for most employers of one or more employees. It protects employers from liability for on-the-job injury or illness and provides the following:
- Legal representation for the employer by the insurance carrier
- Protection for the employer against most lawsuits for on-the-job injuries/illnesses
- Payment of medical services needed to treat the job injury or illness
- Temporary payments to the employee to help replace lost wages
- Payments to the employee to compensate for permanent effects of the injury
- A death benefit for the employee’s survivors in the event of a fatal injury
Ways to Obtain
Insurance policies can be obtained through a private insurance carrier, State Insurance Fund, or becoming self-insured. See below for more information on each option.
Policies can be purchased through an insurance carrier, broker, or agent. There are more than 200 private insurance carriers authorized by the New York State Department of Financial Services. These insurance carriers may specialize in certain markets and offer various incentives to policyholders.
NY State Insurance Fund (NYSIF)
Policies may also be purchased through NYSIF, a public insurance carrier. NYSIF is a not-for-profit agency of the State of New York that offers workers’ compensation, New York State disability benefits and Paid Family Leave insurance. It is a separate and distinct entity from the New York State Workers’ Compensation Board.
NYSIF must provide insurance to any employer seeking coverage, regardless of the employer’s type of business, safety record or size. However, if an employer owes NYSIF money from a previous bill or account, coverage can be denied.
Qualified participants receive an advance discount. Based upon the safety performance of the members of the group, each group member receives a proportionate share of any dividend earned.
Employers may apply to provide workers’ compensation, disability, and Paid Family Leave benefit coverage to their employees through self-insurance. If qualified to self-insure, employers agree to make benefit payments, meet all obligations under WCB laws, rules and regulations, and must maintain an adequate security deposit in the event of a default.
Deduction and Waiver
It is important to note that WCL Section 31 specifically states that it is a misdemeanor for employers to make deductions from the salary or wages of an employee to offset the costs of workers’ compensation insurance coverage.
Further, Section 32 of the WCL specifically states that NO agreement by an employee to waive his/her right to workers’ compensation benefits shall be valid if it does not relate to a specific claim and has not been approved by the Board.
Your FEIN Is Important
Each business that is a legal entity (e.g. sole proprietorship, partnership, corporation, etc.) has its own, unique Federal Employer Identification Number (FEIN) assigned to it. A firm’s FEIN is the Board’s primary identification for that business.
Employers must notify their insurance carrier of FEIN(s) when
- Obtaining or modifying workers’ compensation coverage.
- Changing their legal entity type.
- Adding new legal entities to their business operations.
When an employer obtains an insurance policy, it is the insurer's responsibility to electronically notify the Board of that coverage using the employer's FEIN.
If the FEIN on your notice is the correct legal FEIN (and the FEIN on your policy is incorrect), contact your insurance carrier (or advise your agent/broker) and request they submit the correct FEIN to the Board.
If the FEIN on the policy is the correct legal FEIN (and the FEIN on this notice is incorrect), send a copy of your CP575 issued by the Internal Revenue Service (IRS) to the New York State Department of Labor, Registration Section, State Office Campus, Building 12, Albany, NY 12240 or fax it to (518) 485-8010.
Tips to Decrease Cost
Workers’ Compensation insurance can be an expensive cost of doing business. However, employers can take responsibility for those costs by following some of the tips below:
- Start getting quotes from a variety of insurance carriers through your agent. Do this several months before you need the policy.
- Make sure that the underwriter is using the proper classification of employees. If you misclassify your employees to get an initial lower rate, an audit will catch this and you will be charged retroactively. You may also be subject to penalties and/or felony prosecution for misclassification of employees.
- Discuss what types of alternative plans are available (deductibles, premium credits, safety programs)
- Research the insurer’s claims handling practices. A carrier that either automatically pays every claim or controverts many claims can directly affect your premium in the future.
- Collect certificates of New York State workers’ compensation insurance from all subcontractors that are providing services to your business. Insurance carriers routinely charge general contractors workers’ compensation insurance premiums for all subcontractors not covered by their own New York State workers’ compensation insurance policies.