Q: Does My Business Need Workers’ Comp Insurance in New York State?

If you’re a business owner in New York with employees, you need workers’ compensation insurance. (Yes, even if all your employees are family members.)

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Workers’ comp insurance covers expenses for your employees if they become hurt or sick as a result of their job. Covered expenses include things like medical treatment, physical therapy, and lost income.

Even if your business doesn’t have a location in New York, you’ll need workers’ comp coverage if:

  • You hire a New York-based employee
  • You have any out-of-state employees who have worked in New York last year (or plan to this year) for a minimum of 40 hours a week for more than two weeks in a row
  • Your employees worked in New York for 25 or more days—or plan to in the current year. (The math gets weird with the 25-day rule because it includes any time spent in New York by your employees. So five employees who spend five days in New York = 25 days.)
  • And other reasons listed here

Not having workers’ compensation in New York can land you in financial trouble. If your employee reports a claim, you could be fined $2,000 for every 10 days that your business wasn’t insured. You could also be responsible for any resulting compensation and medical costs from those claims.

On top of all that, the New York State Workers’ Compensation Board has the right to assess additional penalties for noncompliance.

Keep in mind that any employee of yours that gets hurt or sick on the job also has the right to sue you directly if you don’t have workers’ comp insurance.

Do I still need workers’ comp if my business doesn’t have employees?

Not usually.

If your business is a sole proprietorship, LLC, LLP, or partnership without employees, you aren’t required to have workers’ comp insurance.

However, if your business is a corporation without employees, the workers’ comp requirements get a little more complicated. As a corporation without employees, you still need workers’ comp insurance unless:

  • You own all of the shares of stock and hold all offices of the corporation, or
  • You are one of only two officers of a corporation and both of you own at least one share of stock (together owning all the shares of stock). The two of you must also hold all offices in the corporation.

Even when it isn’t required, having workers’ comp insurance (and including yourself on the policy) may be a good idea.

Here are a few examples of how it could help you as a business owner who doesn’t have any employees:

  • It can help when you have clients who request you to have your own workers’ comp policy for your business before beginning work for them
  • It can supplement lost income if work-related injuries or illness prevent you from being able to work
  • It can help you pay for medical bills

The laws around workers’ comp insurance aren’t always clear, so it’s best to chat with your insurance agent if you’re unsure about the requirements for your business.

Pro tip: Your requirement to have workers’ comp largely depends on whether or not you have employees. The tricky thing is, in New York, independent contractors can also be counted as employees in certain situations. There’s often confusion about the difference between the two types of workers, which is why we’re diving more into the question below.

Are independent contractors considered employees in New York?

New York has specific guidelines that will help you differentiate an independent contractor from an employee. The following are just a few characteristics of independent contractors that should be considered when deciding whether or not a worker is a contractor.

You can find a complete list of criteria here.

The guidelines are even stricter for the construction and trucking industries. Here are two examples:

  • Construction: The law assumes that any worker who performs services for a construction company is an employee of that company unless it can be proven that the person has their own workers’ comp coverage. In practical terms, that means they’d have to show them their proof of coverage.
  • Trucking: Similarly, in the trucking industry, a worker is assumed to be an employee unless they’re transporting goods under their own bill of lading or Department of Transportation Number and have their own workers’ comp policy.

In the event of a workers’ comp claim, a judge will decide if your worker counts as an independent contractor or an employee. Because of this, your insurance company may include any independent contractors on your workers’ comp policy unless you can show proof that those contractors have their own workers’ comp insurance.

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So, how do I get workers’ comp insurance in New York?

First, you’ll need to get in touch with a New York licensed insurance agent or broker. Be prepared to answer several questions about your business, like your location, industry, annual payroll amount, and more. Your agent will then be able to get you a quote for workers’ comp insurance.

Having trouble finding an insurance company for your business? Reach out to the New York State Insurance Fund for extra help.

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