19 Nov All About Workers Compensation
As a business owner, keeping your employees safe is an important part of your job. And as a New York State employer of one or more employees, you are required by law to provide your employees with a workers’ compensation policy. A workers’ compensation insurance policy ensures your employees receive monetary relief and medical benefits in the of an on-the-job injury or job-related illness as well as survivor benefits to families in case of death. Workers’ Compensation protects you, the employer, from liability.
Who Are the Players?
There are a number of key parties that play an important role in Workers Compensation and who are responsible for how it works:
New York State Workers’ Compensation Board
The Workers’ Compensation Board (Board) was established to ensure the New York State Workers’ Compensation Law (WCL) is carried out. The major responsibility of the Board is the adjudication of claims. It also makes sure employers provide employees with the required coverage.
The mission of the Workers’ Compensation Board is to “equitably and fairly administer the provisions of the New York State Workers’ Compensation Law, including Workers’ Compensation Benefits, Disability Benefits, Volunteer Firefighters’ Benefits, Volunteer Ambulance Workers’ Benefits § Volunteer Civil Defense Workers’ Benefits Law on behalf of our customers, New York’s injured workers and their employers.”
The Board fairly and equitably administers the programs and laws of New York State. It receives and processes claims and at first, attempts to foster expedient agreements between injured workers and employers. If a consensus cannot be reached, then the Board conducts hearing before a Workers’ Compensation Law Judge (Judge). Before the Judge renders a decision, evidence and testimony are gathered and analyzed. The decisions of the Judge are binding but parties may ask for an administrative review of the decision by the Administrative Review Division. If this step is taken, a panel of three Board Commissioners will rule on the validity of the Judge’s decision. If there is no unanimous decision made by the panel, a full Board review of all 13 Commissioners may be requested within 30 days of the filing date of the Board panel’s decision. When the panel’s decision is unanimous, a party may also seek discretionary full Board review. When a party files a discretionary full Board application, the Board may grant or deny full Board review. The decision of the full Board may be further appealed to the State Appellate Division, Third Department (WCL §23).
It is a requirement of the WCL that nearly all employers in New York State have workers’ compensation insurance coverage for their employees ((WCL §3). The WCL also gives the Board statuary authority to make sure employers obtain and maintain the required workers’ compensation insurance (WCL §50). To ensure employers obtain and maintain the required insurance, New York has a comprehensive system is in place, including a database to identify employers and their insurance coverage, investigators, educational outreach, an automated penalty process, an appeal process, outside collection agencies and the issuance of judgments. The WCL also provides an external enforcement tool: Proof of workers’ compensation compliance must be provided before receiving a permit, license of contract from a municipality or State agency (WCL §57).
When an employer has no coverage, or does not pay workers’ compensation penalties (WCL §141-a), the WCL (as amended by Chapter 6 of the Laws of 200&) may issue stop work orders. Also, that 2007 Workers’ Compensation Reform Legislation allows employers to be penalized (WCL §131) when they do no keep proper or sufficient records regarding compensation and classification of workers.
New York State Insurance Department
Another major player is the NYS Insurance Department, which is directly responsible for giving insurance carriers the authority to write NYS workers’ compensation insurance policies. It is also responsible for the underwriting rules for workers’ compensation insurance in NYS. This includes reviewing the recommended revisions to workers’ compensation rates for approval or disapproval each year. The Insurance Department has authorized the New York Compensation Insurance Rating Board (CIRB) to initially develop the revised workers’ compensation insurance rates and to oversee the underwriting rules for workers’ compensation insurance policies.
Compensation Insurance Rating Board (CIRB)
The third major player is the New York Compensation Insurance Rating Board or CIRB. A nonprofit, unincorporated association of insurance carriers, CIRB also includes the State Insurance Fund. Working with the WCL, the Superintendent of Insurance, under the guidelines of the Insurance Law, is allowed to designate an organization to collect the loss, premium and payroll data for every carrier, recap all of the information and determine an acceptable rate structure. Since the law was enacted, CIRB has been licensed as the official organization for the tasks of collecting data and setting workers’ compensation rates. It analyses that data and makes recommendations as to annual reductions or increases in premium rates to the Insurance Department.
Ten years ago, New York State transitioned to a loss cost system for workers’ compensation rates. In this type of system, CIRB will continue to collect and analyze data but it will not file a manual rate with the New York state Insurance Department for approval. It will, however, submit the loss costs, which is the portion of the rate that does not include such general expenses as overhead, taxes or profit. Rates, which are subject to NYS Insurance Department’s approval, will thus be determined using carrier-specific ‘Loss Cost Multipliers.’ These are filed by each carrier and will reflect each individual carrier’s underwriting skill and expense structure. This type of cost approach is currently being used by a majority of states. It is expected that this process will increase price competition among insurance companies.
CIRB also develops experience modification factors for employers with premiums over $5,000. It determines the rules and procedures, and classifications that govern the underwriting of workers’ compensation insurance and employer liability insurance.
Insurers, which include private insurance carriers, the State Insurance Fund, self-insured employers and employers who do not participate in group self-insurance, are the fourth major player in the workers’ compensation system:
Private Insurance Carriers—These insurers collect premiums from employers to play for claims and other related medical expenses of employees who become injured on the job. Currently, there are more than 200 private carriers who are authorized by the Insurance Department to provide workers’ compensation insurance to employers.
State Insurance Fund—Also known as SIF, this is a not-for-profit agency of the State of New York. It was established in 1914 pursuant to the WCL in order to provide a guaranteed source of workers’ compensation insurance coverage at as low a cost as possible to New York State employers. Although it is an agency of the State, it is self-supporting and competes with private insurers. It collects premiums from employees and these are required by law to be fixed at the lowest possible rates. SIF must provide insurance to any employer who is seeking coverage, no matter the employer’s type of business, safety record or size. If an employer owes SI money from a previous bill or account, SIF may deny that employer coverage. SIF is a separate and distinct entity form the NYS Workers’ Compensation Board.
If an employer is able to provide proof of its financial ability to pay compensation to the Chair of the Board, then that employer qualifies as a self-insurer. An employer who wants to self-insure, must either (1) become an individual self-insurer or (2) become a member of a self-insured group.
Most larger employers who are able to meet the financial standards to self-insure on their own use individual self-insurance. Each one must post with the Board a security deposit equal to their outstanding indemnity and medical obligations. These deposits may be a surety bond, letter of credit, cash and/or certain types of securities. The amounts are updated every year. If an employer defaults on its obligations, the Board will use the deposit to ensure claimants receive their entitled benefits.
For smaller employers, joining a group allows them to receive the benefits of self-insurance. Group self-insurers are made up of employers who perform similar activities in a given industry and who contractually agree to assume the workers’ compensation liabilities of each member. A board of trustees (of which two-thirds must be representatives of employer members) controls each group. Many trustees also hire a group administrator as well as a licensed third-party administrator to handle the most of the day-of-day operations of the group. A trust fund that is dedicated to the payment of the workers’ compensation obliations of the employer members, must be maintained by the group.
Counties, cities, villages, towns, school districts, fire districts or other political subdivisions of the State may also obtain compensation for its employees by choosing to self-insure. In order to do this, it must file a notice of election to self-insure with the Board, as well as a resolution from its governing body that states they have chosen to provide workers’ compensation benefits through self-insurance. Political subdivisions that elect to self-insure are exempt from posting security deposit or maintaining dedicated trust funds. This is because political subdivisions are able to use their taxing authority to guarantee the payment of their claims.
New York State Department of Labor
The Department of Labor, under the Reform Legislation, was assigned numerous responsibilities. This includes developing the State’s average weekly wage for purposes of determining maximum weekly workers’ compensation benefits for accidents that occur after July 1, 2010. For claimants who are more than 80% disabled but have exhausted their benefit timeframe, the Commissioner of Labor will also determine hardship safety net benefits under the Reform Legislation for receiving Permanent Partial Disability payments.
Who Is Covered by the Workers’ Compensation Law?
In short, just about every employer in New York State must provide their employees with workers’ compensation coverage (WCL §2 and 3). A notice of the coverage must be posted by the employer in their place or places of business (WCL §51). The following workers must be covered for workers’ compensation insurance by employers:
- All employees who work at for-profit businesses. This also includes part-time employees, borrowed or leased employees, family members and volunteers (WCL §3 Groups 1-14-a).
- Any employee of a county or municipality who is engaged in worked defined as ‘hazardous’ by law (WCL §3 Groups 15, 15-a and 17).
- Teachers at public schools, excluding those employed by New York City and public school aids, including New York City (WCL §3 Groups 15, 15-a and 17).
- New York State employees, including some volunteer workers (WCL §3 Group 16).
- Domestic workers who work more 40 hours or more per week by the same employer. This includes full-time sitters or companions, and live-in maids (WCL §3 Group 12).
- Farm workers whose employer paid $1,200 or more for farm labor in the preceding calendar year (WCL §3 Group 14-b).
- Other workers the Board determines to be an employee and not specifically excluded from coverage under the WCL (WCL §3 Groups 1-14-a and 18).
- Corporate officers if the corporation employees more than two officers and/or two stockholders (WCL §54 ).
- Officers of businesses that are one-or-two person(s) corporations if there are other individuals employed. The officers may choose to exclude themselves from coverage WCL §54 ).
- Most workers compensated by a nonprofit organization (WCL §3 Group 18).
- Additionally, under the Volunteer Firefighters’ Benefit Law and Volunteer Ambulance Workers’ Benefit Law, volunteer firefighters and ambulance workers are provided benefits for death or injuries suffered in the line of duty.
Who Is Not Covered?
The following employees are not covered by the Workers’ Compensation Law:
- Anyone who volunteers their services for nonprofits and are not compensated. This compensation includes stipends, room and board, and other perks that do not have any monetary value (WCL §3 Group 18). Money used just to offset expenses incurred while performing activities for the nonprofit in not counted as a stipend (WCL §2 ).
- Members of religious orders; duly ordained, commissioned or licensed ministers; priests and rabbis; sextons; and Christian Science readers (WCL §3, Groups 18).
- Members of supervised amateur athletic activities that operate on a nonprofit basis, as long as these members are not also engaged or employed by any person, firm or corporation participating in such athletic activity (WCL §3 Group 18).
- Those individuals employed in a teaching role at or for a nonprofit religious, charitable or educational institution (Section 501(c)(3) under the IRS tax code). (WCL §3 Group 18) The teachers must only be performing teaching duties in order to be exempt.
- Individuals engaged in a non-manual capacity in or for a nonprofit religious, charitable or educational institution (Section 501(c)(3) under the IRS tax code (WCL §3 Group 18). Manual labor includes, but is not limited to, the following tasks: filing; carrying supplies and materials such as pamphlets, binders or books; cleaning, including dusting or vacuuming; playing an instrument; moving furniture; shoveling snow; mowing lawns; and any sort of construction.
- People who receive charitable aid from a religious of charitable institution who perform work in return for such aid and who are not under any express contract of hire (WCL §3 Group 18), and those individuals receiving rehabilitation services in a sheltered workshop ((Mental Hygiene Law §33.09).
- Persons who are covered for specific types of employment under another workers’ compensation system, including those employed in some maritime trades, interstate railroad employees, federal government employees and those covered under federal workers’ compensation laws.
- The spouse and children under the age of 18 of an employer who is a farmer, as long as they are not under an express contract of hire (WCL §2 ).
- Certain employees of Native American Nations and foreign governments.
- New York City police officers, firefighters and sanitation workers who are covered under provisions of the New York State General Municipal Law. Uniformed police officers and firefighters from other municipalities may also be excluded.
- Real estate salespersons who sign contracts with brokers stating they are independent contractors; media sales representatives who sign contracts stating they are independent contractors; and Insurance agents or brokers who sign contracts stating they are independent contractors (WCL §2 ).
- Sole proprietors, partners and certain one/two person(s) corporate officers with no other individuals providing any type of service that is integral to the business (although coverage may be obtained voluntarily) (WCL §2 ).