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 initially attempts to foster quick agreements between injured workers and employers.
If no agreement is reached, the Board holds a hearing before a Workers’ Compensation Law Judge (Judge). Before the Judge issues a decision, they gather and analyze all evidence and testimony.
The Judge’s decision is binding, but parties can request an administrative review through the Administrative Review Division.
A panel of three Board Commissioners reviews the Judge’s decision. If the panel does not reach a unanimous decision, either party can request a full Board review involving all 13 Commissioners, within 30 days of the panel’s decision filing date.
If the panel reaches a unanimous decision, a party can still apply for discretionary full Board review, though the Board may grant or deny this request.
Finally, decisions from the full Board can be appealed to the State Appellate Division, Third Department under 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. The 2007 Workers’ Compensation Reform Legislation also allows authorities to penalize employers (WCL §131) when they fail to keep proper or sufficient records on worker compensation and classification.
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.
Under the guidelines of the Insurance Law, the Superintendent of Insurance works with the WCL to designate an organization to collect loss, premium, and payroll data for every carrier, summarize the information, and determine an acceptable rate structure.
Since the law’s enactment, the state has licensed CIRB as the official organization responsible for 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.
The NYS Insurance Department approves rates, which carriers determine using their own Loss Cost Multipliers. Each carrier files these multipliers to reflect its unique underwriting skill and expense structure.
A majority of states currently use this cost approach, and experts expect it to 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
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. New York State established it in 1914 under the WCL to provide a guaranteed, low-cost source of workers’ compensation insurance coverage for 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.
Self-Insurers
Employers who prove their financial ability to pay compensation to the Chair of the Board can qualify as self-insurers. To self-insure, an employer must either become an individual self-insurer or join 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. Employers who perform similar activities in a given industry form group self-insurers and contractually agree to assume each member’s workers’ compensation liabilities. A board of trustees (of which two-thirds must be representatives of employer members) controls each group. Many trustees hire a group administrator and a licensed third-party administrator to manage most daily operations. The group also maintains a dedicated trust fund to cover workers’ compensation obligations for its employer members.
Counties, cities, towns, school districts, and other political subdivisions can choose to self-insure for workers’ compensation coverage. To do so, they must file a notice of election with the Board and submit a resolution from their governing body confirming this decision. 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 Reform Legislation assigned numerous responsibilities to the Department of Labor.
The Department of Labor calculates the average weekly wage to set maximum workers’ compensation benefits after July 1, 2010.
The Commissioner of Labor grants hardship safety net benefits for claimants over 80% disabled who have exhausted their payments.
Who Is Covered by the Workers’ Compensation Law?
In short, almost every New York State employer must provide workers’ compensation coverage to their employees (WCL §2 and §3).
📌 Employers must also display a workers’ compensation notice in their workplace (WCL §51).
Covered Employees Include:
All employees at for-profit businesses, including part-time, leased, borrowed employees, family members, and volunteers (WCL §3 Groups 1-14-a).
County or municipal employees performing work classified as “hazardous” (WCL §3 Groups 15, 15-a, and 17).
Public school teachers and aides, except those employed by New York City (WCL §3 Groups 15, 15-a, and 17).
New York State employees, including certain volunteer workers (WCL §3 Group 16).
Domestic workers employed 40 hours or more per week by the same employer. This includes live-in maids and full-time companions (WCL §3 Group 12).
Farm workers whose employer paid at least $1,200 in farm labor wages in the previous calendar year (WCL §3 Group 14-b).
Other workers classified as employees by the Board and not excluded under WCL (WCL §3 Groups 1-14-a and 18).
Corporate officers if there are more than two officers or stockholders (WCL §54 [6]).
Officers of small corporations (1–2 persons) who employ other individuals. These officers may opt out of coverage (WCL §54 [6]).
Most employees working for nonprofit organizations (WCL §3 Group 18).
Volunteer firefighters and ambulance workers receive benefits for injuries or death sustained in the line of duty.
Who Is Not Covered?
The following employees are generally not covered under New York’s Workers’ Compensation Law:
Unpaid volunteers for nonprofits, including those receiving stipends, room and board, or non-cash perks (WCL §3 Group 18).
Members of religious orders, including ordained ministers, priests, rabbis, sextons, and Christian Science readers (WCL §3 Group 18).
Participants in supervised amateur athletic activities that operate on a nonprofit basis, unless employed elsewhere (WCL §3 Group 18).
Teachers working solely in teaching roles at nonprofit religious, charitable, or educational institutions (501(c)(3) organizations) (WCL §3 Group 18).
Non-manual workers at nonprofits, excluding tasks like filing, cleaning, manual labor, or performing music (WCL §3 Group 18).
People who work in exchange for charitable aid, without a formal employment contract, do not qualify for workers’ compensation coverage.
Employees covered by other systems, including maritime, railroad, federal workers, or those under federal compensation laws.
Spouses and children under 18 working for family-run farms without a formal employment contract (WCL §2 [4]).
Certain employees of Native American Nations or foreign governments.
NYC police, firefighters, and sanitation workers already covered under General Municipal Law. Other municipalities may also exclude these roles.
Real estate agents, media sales reps, and insurance brokers classified as independent contractors under written agreements (WCL §2 [4]).
Sole proprietors, partners, and certain corporate officers do not need workers’ compensation coverage if they have no other employees. However, they may choose to obtain coverage voluntarily.