Penalties for noncompliance with the workers’ comp. or workers compensation can range from a few thousand dollars to egregious amounts in the tens of thousands of dollars. When you open a business in New York and have employees, acquiring workers compensation insurance is not a step that you can skip. Ask some of my business clients and they will tell you how much I harp on this. Yes, it is somewhat costly depending on the size of your business, but it is imperative you do not skip this step when starting a business. It will cost you. How much?
What is the law and what are the possible penalties?
Failure to secure coverage can be prosecuted both civilly and criminally.
Criminal: – Section 52 [1] (a) of the Workers’ Compensation Law provides that a failure to secure the payment of compensation for five or less employees within a 12 month period shall constitute a misdemeanor punishable by a fine of not less than $1,000 nor more than $5,000. Failure to secure the payment of compensation for more than five employees within a 12 month period shall constitute a class E felony punishable by a fine of not less than $5,000 nor more than $50,000 and is in addition to any other penalties otherwise provided by law.
Civil: Section 52 [5] of the Workers’ Compensation Law provides that the Chair, upon finding that an employer has failed for a period of not less than ten consecutive days to make the provision for payment of compensation may impose upon such employer, in addition to all other penalties, fines or assessments, a penalty of up to $2,000 dollars for each ten day period of non-compliance or a sum not in excess of two times the cost of compensation for its payroll for the period of such failure, which sum shall be paid into the uninsured employers’ fund. When an employer fails to provide business records sufficient to enable the chair to determine the employer’s payroll for the period requested for the calculation of the penalty provided in this section, the imputed weekly payroll for each employee, corporate officer, sole proprietor, or partner shall be the New York state average weekly wage, multiplied by 1.5. Where the employer is a corporation, the president, secretary and treasurer thereof shall be liable for the penalty.
There are also fines and levies that can be collected for failure to maintain accurate payroll (both civilly and criminally), and heavy fines for mis-respresentation. When thinking mis-representation think:
- Paying workers “off the books,”
- Not reporting wages paid to illegal aliens,
- Misclassifying employees as “independent contractors,” and
- Misclassifying the work of a business to a classification that is less hazardous (identifying all roofers as secretarial staff), and/or
- Intentionally, materially misrepresenting or concealing information pertinent to calculation of premium paid.
See http://www.wcb.ny.gov/content/main/Employers/nonCompliancePenalties.jsp for the full run down or click NY workers comp fines
I just received a letter from the workers compensation board stating that I owe $22,000.
Maybe you’re reading the above text too late, or thought it wasn’t going to catch up with you. You receive a letter stating that you owe a very large amount of money from the New York State Workers Compensation Board. What do you do? Call me. I am a big advocate of do-it-yourselfing when it’s possible, but here I recommend an attorney to negotiate with the board. Sometimes these fines are so large it would put a company out of business. This is one of the times in life where it’s worth getting an attorney involved.
If you’re looking at a large fine, we have successfully negotiated these dollar amounts down truly significant amounts of money on a contingent basis. Most businesses are ok with this arrangement.
