In almost every U.S. state, employers are required by law to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in New York, you must carry workers’ comp insurance if you have at least one employee. Like most states, New York specifies a few employee types that are exempt from compulsory coverage.

Workers’ compensation is one of many small business insurance types all New York entrepreneurs should consider.

In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.


How does workers’ compensation insurance in New York work?


The state of New York requires you to carry workers’ compensation insurance as soon as you have one employee. That includes part-time employees, seasonal employees, and family members.

You can purchase coverage via the private market through either a licensed insurance broker or directly through an insurance company.

If your company is considered high-risk, you might struggle to find insurance through the private market. The New York State Insurance Fund provides coverage for insurers who can’t find a suitable private market solution.

Although rare in New York, some larger employers can also qualify to become self-insurers. To become a self-insurer, a company must periodically submit proof that it has the financial capability to handle injury claims from any and all of its employees.


Who needs workers’ compensation insurance in New York?


In New York, every employee must be covered by a workers’ compensation policy. Day laborers, volunteers, seasonal workers, part-time workers, borrowed employees, and sub-contractors are all considered employees under New York’s workers’ compensation guidelines.

In fact, there are very few situations in which a New York business can forgo workers’ comp. Those businesses are:

  • Sole proprietorships without employees
  • Partnerships without employees
  • Corporations with one or two owners who hold all stock and offices and have no employees
  • Non-profit entities that have no compensated workers

As a business owner or sole proprietor, you don’t have to purchase workers’ compensation insurance for yourself. That doesn’t mean you shouldn’t get coverage. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.


What are the penalties for not having workers’ comp in New York?


Failing to carry workers’ compensation insurance when you’re required to do so can have several consequences. Your business can receive a stop work order, forcing you to shut down until you resolve all your issues. While the stop work order is in place, you’ll be unable to bid on any public contracts. The state can also assess a $2,000 fine for every 10 day lapse in insurance coverage. Beyond legal penalties, if one of your employees gets injured on the job, you will likely be held liable for all of their medical bills and lost wages.

It’s also vital to avoid lapses in coverage. The New York State Workers Compensation Board requires insurers to notify them whenever a Compensation policy is bound, modified or cancelled. If a policy has been canceled and no record of replacement coverage is received, an inquiry is sent and if the employer doesn’t respond, they receive a penalty notice.


What does workers’ comp cover?

Medical costs

If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.

For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.

Lost Wages

Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.

If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.

Ongoing Care

Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who might receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.

Death Benefits

If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.