New York State Workers’ Compensation insurance protects employers and employees against financial loss in the event of injury while performing one’s duties. All employers that have at least one part-time employee, even if they are family members, are required to have Workers’ Compensation insurance. Otherwise, the State will impose fines. For example, in the state of New York, a $2,000 fine is imposed for each 10-day period of noncompliance starting from the date any employee payment check is made. Having more than 5 employees and NOT having Worker’s Compensation is a felony. If you have 5 or less employees it is a misdemeanor. Business owners must pay lost wages and medical care of uninsured employees. Permanent total disability and death benefits are not capped.
Who needs it?
- Workers in all for-profit businesses.
- Domestic workers, sitters, companions and live-in maids employed 40 hours per week in a residence.
- Farm workers whose employer paid $1,200 or more for farm labor in the preceding calendar year.
- Most workers compensated by a nonprofit organization.
Workers under your direct control are probably considered your employees for workers’ compensation purposes, regardless of their tax status. There is a perception that “independent contractors” do not need Workers’ Compensation Insurance coverage and that is often false. A worker’s tax status does not determine if Workers’ Compensation insurance is required; you may need coverage even for 1099 employees.
How Does One Obtain Workers Compensation?
To purchase, you must determine your estimated annual payroll for all employees. If officers of the corporation will be included in the policy, their estimated payroll and duties must also be disclosed. Premiums are based on the total annual payroll. After the 1-year policy period is over, your insurance company will audit your business records in order to obtain the actual payroll that was previously estimated. If your actual payroll is higher than what was estimated, you will be charged the difference. If the actual payroll is less, you will receive a refund or credit on the current year’s policy.