What are the Criminal Penalties for Not Having Workers’ Comp in New York?

The Criminal Penalties for Not Having Workers’ Comp in New York

Getting injured on the job is bad enough. But not having workers’ compensation insurance to cover medical bills and lost wages can make it worse. New York state law requires most employers to provide workers’ comp insurance. Companies that don’t comply face stiff penalties – even criminal prosecution.

This article explains New York’s workers’ comp requirements. We’ll look at the fines for being uninsured, cases that lead to criminal charges, and defenses employers might raise. Our goal is to help New York businesses avoid legal trouble – and get their workers the coverage they deserve.

New York’s Workers’ Comp Requirements

With some exceptions, all New York employers must carry workers’ comp if they have one or more employees. This includes full-time, part-time, seasonal, and temporary workers. Independent contractors don’t count. But misclassifying employees as contractors is illegal in New York.

The workers’ comp law is in New York Workers’ Compensation Law (WCL) Article 1, Sections 50-52. Employers must buy a policy from a licensed insurer or qualify to self-insure. The policy must cover work injuries, occupational diseases, and deaths. And it must pay for medical treatment, lost wages, death benefits, and rehabilitation.

New businesses should get workers’ comp coverage right away. Employers can be fined for any gap in coverage, even if no one gets hurt. Existing businesses must renew their policies on time to stay compliant. Employers must notify the New York Workers’ Compensation Board (WCB) when they get or renew coverage. They can do this online at the WCB’s website.

Some employers are exempt from the workers’ comp rules. These include:

• Farmers with fewer than 3 employees
• Charitable organizations with unpaid volunteers
• Some religious groups
• Homeowners with domestic workers
• Businesses owned by parents, spouses, or children

It’s illegal for any employer to misrepresent facts to avoid workers’ comp requirements. Common schemes include paying workers off the books, misclassifying employees as independent contractors, and lying about employee duties.

Penalties for Being Uninsured

New York hits uninsured employers with fines called civil penalties. For each 10-day period without coverage, the fine is $2,000 or two times the cost of the missed premiums – whichever is greater. Just one missed payment can lead to thousands in penalties.

The WCB may also order uninsured employers to reimburse the state for any workers’ comp claims paid out. For example, the New York State Insurance Fund often covers claims when there is no private policy in place. It can then seek repayment from the employer.

In addition to fines, being uninsured can hurt businesses in other ways:

• They may be unable to bid on state contracts.
• They can be sued by injured workers for damages.
• They can be charged with fraud for lying about coverage.
• They may face trust fund liability if not paying into benefit funds as required.

The WCB posts a list of uninsured employers on its website. Being on this list signals that a business is breaking the law. Competitors, vendors, lenders, and potential employees may think twice about working with lawbreaking companies.

Criminal Penalties

Beyond civil fines, some workers’ comp violations lead to criminal charges. These include:

• Fraud: Intentionally deceiving the WCB is a felony. Examples are lying about the company’s payroll or employee duties.
• Willful misrepresentation: Knowingly avoiding premium payments is a misdemeanor. This includes paying workers off the books.
• Coercion: Threatening to fire workers who file claims is a misdemeanor.
• Discrimination: Firing injured workers for filing claims is a misdemeanor.
• Failure to secure benefits: Not paying into state benefit funds as required is a misdemeanor.

Criminal convictions can lead to fines up to $50,000 per violation. Employers may also get up to 1 year in jail. Workers’ comp fraud can mean up to 7 years in prison.

The WCB’s Enforcement Unit investigates criminal violations. It also assists local district attorney offices with prosecuting offenders. Investigators use surveillance, undercover operatives, and other methods to build cases.

Defenses for Uninsured Employers

Some employers get hit with workers’ comp penalties by mistake. Maybe they held a policy that got canceled unknowingly. Or they thought certain workers were exempt when they weren’t. Employers can raise defenses to avoid or reduce penalties. Some common defenses include:

• Good faith mistake: The employer reasonably thought workers were exempt or that coverage was in place.
• Cancellation issues: The insurer canceled the policy improperly.
• Employee misconduct: Staff intentionally hid info from the employer that led to lapsed coverage.
• Retaliation: An employee, ex-employee, or competitor falsely accused the employer of being uninsured.

Defenses need solid evidence like policy documents and sworn affidavits. Employers should consult a New York workers’ comp attorney right away if accused of being uninsured. The lawyer can help gather evidence and present defenses to the WCB.

Getting Back Into Compliance

For employers who lost coverage accidentally, getting insured again quickly is key. This shows the WCB it was an honest mistake. Fines may be waived or reduced for cooperative businesses. Employers should:

• Research insurers and get quotes right away.
• Be honest with agents about past lapses.
• Inform the WCB of new coverage ASAP.
• Ask about repayment plans for fines if needed.

Learning from past compliance issues can also help. Employers may need to improve paperwork systems and communication with staff. Getting help from a payroll service, accountant, or workers’ comp attorney may be wise.

The Bottom Line

Running a business is hard enough without legal troubles. Yet hundreds of New York employers get fined each year for workers’ comp violations. Smart companies make coverage a top priority. They see it as an investment, not a cost. Workers’ comp protects injured employees as the law requires. And it shields employers from lawsuits and criminal prosecution.

New York has strong incentives for businesses to comply with workers’ comp rules. The civil fines and criminal penalties are no joke. Falling short on coverage can damage a company’s finances, reputation, and freedom. But employers who meet their obligations have far less to fear from the law. Their workers get medical care and wage benefits after injuries. And that’s a win for everyone.

Citations

[1] Employers Violations of Workers’ Compensation Law (Liability and Penalties), New York State Workers’ Compensation Board.

[2] Workers’ Compensation Issue Resolution – An Introduction, New York State Workers’ Compensation Board.

[3] Grammar for Academic Writing, University of Edinburgh.

[4] Answer Explanations: PSAT/NMSQT 2015 Practice Test #1, The College Board.