When is Your Business Required to Have Workers’ Compensation Insurance in New York?

If you have a business in New York and you have employees, you need to have workers’ compensation insurance. According to the New York Workers’ Compensation Board in addition to your full-time employees, practically anyone who provides services to your business must be covered by workers’ compensation insurance. This includes day labor, leased employees, borrowed employees, part-time employees, unpaid volunteers including family members, and most subcontractors.

The New York Workers’ Compensation Board points out several factors that indicate an employer-employee relationship. These include the degree of direction and control your business exercises over someone you contract with to perform a task, whether the work being done by the person is consistent with the primary work being performed by your business, whether you provide the equipment and materials used in performing the work, whether you have to right to hire and fire the person, and the method of payment.

Whether you report payments to a worker on a W-2 form or 1099 does not affect the worker being considered an employee for workers’ compensation purposes in New York. And if you pay cash, the person would generally be considered an employee. If you pay for the completion of a task as a whole, the person could be considered an independent contractor.

A person who provides services to your business could be considered an independent contractor if you do not control the time and manner in which the work is done, the person performs work other than the primary work of your business, you have a separate and specific contract for the work, the person provides his or her own equipment and materials, the person has a separate place of business, or has separate business liability coverage including workers’ compensation insurance. If the person is an independent contractor, your business is not responsible for worker’s compensation coverage.

Under the New York State Construction Industry Fair Play Act of 2010, any person performing services for a contractor in the construction industry is presumed to be an employee for workers’ compensation purposes. In order to be considered an independent contractor and not an employee, the person would have to be free from control and direction in performing the work, the services performed would have to be outside the company’s normal course of business, and the person would have to be engaged in a trade, occupation or business that is independently established.

You may also be required to have New York workers’ compensation insurance if your business is established outside the state but you have employees working in New York. Some of the indications of this requirement would be if you are required to register with the New York State Department of Labor and pay unemployment insurance, or if you are operating under a permit, contract or license granted in New York.

If you have a permanent physical location in New York or have employees who work primarily in New York you would be required to carry workers’ compensation insurance. The requirement would also apply if you are working as a contractor or subcontractor on a construction project in New York, or you had employees physically present in New York for at least 40 hours a week for longer than 2 consecutive weeks the previous year or you had employees present in New York for 25 or more days. This is the total of the individual days of one or more employees.

Workers’ compensation insurance provides coverage for medical services to treat on-the-job injuries or illnesses, temporary and permanent disability payments to employees, and death benefits to survivors if an employee suffers a fatal injury. Workers’ compensation insurance coverage also protects you as the employer against most lawsuits for work-related injuries and illnesses.

You can purchase a workers’ compensation insurance policy from an authorized private insurance company. Or you could purchase a policy from the New York State Insurance Fund, which is a not-for-profit agency of the State of New York that provides guaranteed workers’ compensation insurance coverage at the lowest possible cost. If you meet the financial requirements, you could become authorized by the New York Workers’ Compensation Board as a self-insurer or a member of a group self-insurer.

Once you have your workers’ compensation coverage, you must post a notice of the coverage in your workplace. You can obtain this notice from your insurance carrier.

Sources:

Employers / Businesses, New York Workers’ Compensation Board

New York State Insurance Fund

Obtaining Workers’ Compensation Insurance Coverage, New York Workers’ Compensation Board

Out-of-state Employers with Employees WORKING in New York State, New York Workers’ Compensation Board

Who Is An Employee Under the Workers’ Compensation Law? New York Workers’ Compensation Board


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