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Do you have workers’ compensation insurance? While failing to have such coverage in all states is against the law, the state of New York’s investigations and penalties are especially strict.

New York State Workers’ Compensation Board carefully oversees companies to ensure all employees have workers’ comp insurance.

All insurance companies providing services to businesses in New York must report whenever they issue and change the policy or if the holder cancels it. Accordingly, the Workers’ Compensation Board can easily check if your company pays for the required coverage. The Board coordinates its work with the Department of State and the Department of Labor.

What are the penalties for the lack of workers’ compensation coverage in New York? How can you avoid them?

Penalties for Not Having Workers’ Compensation Coverage in New York

It’s a business owner’s responsibility to purchase workers’ comp coverage according to the state law. Whether you’ve failed to buy the insurance or accidentally missed extending the policy, you may be subject to a penalty.

1. Failing to Provide Coverage

According to section 52 of NYS Workers’ Compensation Law, if you have five or fewer employees, failing to purchase workers’ comp coverage for them within one year is considered a misdemeanor. Your company may have to pay a fine between $1,000 and $5,000.

If you do the same for five or more employees, the offense turns into a felony. You have to be ready for a fine between $5,000 and $50,000. In case you fail to secure coverage again within five years, you may face a fine between $10,000 and $50,000 as well as other penalties. Such subsequent conviction is considered a class D felony.

Penalties apply for the entire period an employer had employees but failed to provide coverage.

2. Misrepresentation

According to section 131 of NYS Workers’ Compensation Law, each business owner should keep accurate records of the number of employees, their classification, wages, and worker compensation cases for four years.

In case an employer intentionally provides wrong information about payroll, employee duties or any other parameters that affect the calculation of premium, the company may be subject to a penalty of up to $10,000.

For payroll record misrepresentation, a business owner may face a fine up to 2,000 for every 10 days of non-compliance. Such actions could also lead to a criminal conviction.

3. Stop-Work Order

According to section 141 NYS Workers’ Compensation Law, in case the employer fails to secure the compensation or pay a fine imposed according to sections 131 and 52, the business may receive a stop-work order, terminating all operations of the company.

How to Avoid Penalties and Keep Your Business Afloat

Since penalties for not having a workers’ compensation coverage are so severe, it’s vital to make sure your company has it.  Purchasing a workers’ compensation policy suitable for your employees and their families is the only way to avoid penalties.

To prevent unexpected punishment, you have to be careful about maintaining accurate records about employee duties and payroll. Even if concealing information is unintentional, it may be hard to prove it to the authorities.

And finally, if for some reason you’ve received an inquiry notice from the Workers’ Compensation Board, you must react as soon as possible.  You can respond to the notice on the Board’s official website.

Other Reasons Why Workers’ Compensation Coverage is Important

While abiding by the law and avoiding penalties seem to be sufficient reasons for purchasing workers’ compensation policy, they are hardly the only ones.

Accidents happen even in the safest workplace. Workers’ compensation insurance reimburses medical expenses and lost wages to your employees.

The potential costs of medical services and lost wages are gigantic. Having them covered by insurance could save your business. Furthermore, according to some policies, when employees take advantage of workers’ comp insurance-related benefits they agree not to sue your business for additional financial compensation related to the incident.

For more information about workers’ compensation insurance in New York and beyond, please contact us at any convenient time.