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New York State
Workers' Compensation Board
OFFICE OF THE CHAIRMAN
20 Park Street   Albany, New York 12207
Subject No. 046-120 (DBIC#42)

Disability Benefits Coverage for Limited Liability Companies (LLC)
And for Limited Liability Partnerships (LLP)

Date:  October 3, 2003

Background

Under the New York Limited Liability Company Law (LLCL), a Limited Liability Company (LLC), unless the context requires otherwise, is defined as an "incorporated organization of one or more persons having limited liability for the contractual obligations and other liabilities of the business (except as authorized in section six hundred nine of this chapter), other than a partnership or trust, formed and existing under this chapter and the laws of the state". [LLCL §102(m)] The word "person" means any association, corporation, joint stock company, estate, general partnership (including any registered limited liability partnership or foreign limited liability partnership), limited association, limited liability company (including a professional service limited liability company), foreign limited liability company (including a foreign professional service limited liability company), joint venture, limited partnership, natural person, real estate investment trust, business trust or other trust, custodian, nominee or any other individual or entity in its own representative capacity". [LLCL §102(w)]

An LLC is considered part corporation and part partnership. An "LLC combines the corporate limitation on personal liability of the owners (who are called members) with the partnership's operating flexibility by its members (which would be member-managed)". [McKinney's LLCL Practice Commentaries, Introductory Background, Page 4]

Existing Processing Procedure

Since the LLC and LLP are relatively new creations, there is little precedent established as to how they should be treated under the Disability Benefits and Workers' Compensation Laws. When this question arose, both the Disability Benefits Bureau and the Workers' Compensation Compliance Bureau developed their own internal guidance. The Disability Benefits Bureau has been treating LLCs similar to corporations and the Workers' Compensation Compliance Bureau has treated them as partnerships. Both Bureaus were instructed to continue to use their own practices until a uniform policy was implemented.

New Processing Procedure

Following a review of how other jurisdictions view Limited Liability Companies, and in an effort to treat LLCs consistently in both the Disability Benefits and Workers' Compensation programs, the Board has determined that Limited Liability Companies and Limited Liability Partnerships should be treated as partnerships under the Disability Benefits Law.

Limited Liability Companies and Limited Liability Partnerships are not required to cover their members for Disability Benefits; however, all employees of these entities must be covered in accordance with applicable statutory provisions.

Questions regarding this bulletin may be addressed to the Workers' Compensation Board, Disability Benefits Bureau, 100 Broadway, Albany, NY 12241, or by calling 1-800-353-3092.

 

Jeffrey R. Sweet
Acting Chairman