All employers in the State of New York are required to carry workers’ compensation insurance. Failure to carry the required insurance can lead to civil and criminal penalties. Workers’ compensation insurance must be carried regardless of the industry. In New York State, over 800,000 businesses are required to comply with this requirement. These range from retail establishments to accounting firms to construction companies. Even if employee injuries are unlikely, businesses must carry the insurance.
The New York Workers’ Compensation Board (WCB) enforces this requirement. The Board routinely audits businesses within the state, so noncompliance can be detected even if no complaint or claim is ever filed with the state. There are very limited exceptions to this requirement. No business should ever assume they meet the exception requirements. Business owners should always seek legal advice before making any workers’ compensation decisions.
When an employer is found in violation of this requirement, the WCB follows a legal process, the end result being the assessment of fines. These fines can be substantial enough to cause severe hardship to a small business and its owners. In some cases, the business may be forced to close. If your business is facing an inquiry or fine from the New York WCB, contact an employment lawyer with experience in the New York WCB appeals process. Often, fines can be reduced or eliminated through an appeal.
The WCB Board’s role
The WCB is responsible for both investigating violations and assessing penalties. Penalties may come about because the Board discovers that a worker suffered an on-the-job injury and the company had no coverage. They may also result from a WCB investigation or audit.
The law entitles the WCB Board to require employers furnish proof of workers’ compensation insurance. An employer must furnish proof of coverage to the Board within 10 days of the request. This proof must show that the company is either carrying workers’ compensation insurance, is self-insured for workers’ compensation, or is exempt from workers’ compensation requirements. When a company fails to provide the proper documentation within the 10-day time period, the Board must assume that the company is in violation.
New York law holds business owners personally accountable for failure to comply. Personal accountability applies to a sole proprietor, partners, or company president. Members of a corporate board are also personally accountable, including the secretary, treasurer, and other directors.
Liability includes a fine of $2,000 per ten-day period of noncompliance. It also includes payment of all medical and related expenses from employees hurt on the job while workers’ compensation insurance was not in force. These penalties and injured employee expenses often rise into hundreds of thousands of dollars.
The Workers’ Compensation Noncompliance Process
The WCB has a well-oiled machine for compliance monitoring. It creates a database of employers by collecting information from the New York Department of State, which provides information on corporations, LLCs, and LPs. The New York State Department of Labor and workers’ compensation insurance carriers also provide information. A database record is established for each employer in the state. The WCB Board then monitors compliance using information provided by insurance carriers and approved self-insurance agencies.
Each time a workers’ compensation policy is opened, modified, or terminated, the database is updated with that information. Insurance carriers and self-insurance agencies are required to provide this information. When the system flags a possible noncompliance (no coverage or coverage lapse) a computer-generated notice is sent to the employer.
Any employer who receives one of these notices must respond to it within 10 days. Failure to do so leads to fines. There may also be an audit, which can enter areas beyond workers’ compensation, such as employee classification and tax compliance. Employers who are concerned about a WCB notice should contact an employment law firm right away.
If the Board receives no response, it will assess a penalty of $2,000 per ten-day period without coverage. A fine notice will be sent to the business. The average initial fine is $12,000, and the fines continue to accrue until the business proves compliance.
Fines must be appealed within 30 days or they become final. In an appeal, the business can ask for a redetermination of the fine. Fines may be rescinded, reduced, or upheld. If upheld fines are not paid or the business fails to respond, the WCB Board sends the matter to collections. If collections are unsuccessful, the Board obtains a judgment against the business.
Workers’ compensation noncompliance is serious business. In addition to civil penalties, business owners can face criminal charges. If an employee is severely injured, the costs to a business can be ruinous.
Fines may be reduced when the business can explain the lapse in coverage. If your business receives a WCB fine, it is essential to appeal as well as ensure future compliance. For help in appealing a WCB fine, contact an employment law firm with experience in workers’ compensation law.
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