What is Workers’ Compensation Insurance? And Why Is It Important?

1. New York State Workers’ Compensation and Disability Benefits Insurance Requirements for Government Contracts, Permits and Licenses Steve Carbone NYS Workers’ Compensation Board

2. What is Workers’ Compensation Insurance? And Why Is It Important? Office of Operations 2009 Fall Conference

3. Key NYS Workers’ Compensation Organizations • NYS Insurance Department • Compensation Insurance Rating Board • NYS Workers’ Compensation Board • Insurers - Insurance Carriers Self-Insurers Group Self-Insurers Office of Operations 2009 Fall Conference

4. Strategy for Enforcing Compensation Compliance • WCB Insurance Compliance Database • Automated Penalty Process • Appeal Process • Outside Collection Agencies • Judgments • Investigators • Educational Outreach • External Enforcement (Section 57 of WCL) Office of Operations 2009 Fall Conference

5. NONCOMPLIANCE PENALTIES • $2,000 for each 10 days of noncompliance • Misdemeanor – 5 or less employees – Up to $5,000 • Felony – More than 5 employees – Up to $50,000 • Felony – for filing false documents – Up to 4 years in prison • $1,000 fine for each 10 days for failure to keep accurate payroll records and/or correctly classifying employees Office of Operations 2009 Fall Conference

6. NONCOMPLIANCE PENALTIES (Continued) • Stop Work Orders • Inability to Bid on Public Works Projects • Liability for any claims that occur while uninsured • Sole proprietor, partner, or president, secretary and treasurer are personally liable for penalties, claims, medical payments and assessments; or can be directly sued. Office of Operations 2009 Fall Conference

7. Who Needs to Be Covered? Office of Operations 2009 Fall Conference

8. Employee Definition • Basically anyone providing any services to a for-profit business can be determined to be an employee of that business. • Basically any compensated individuals providing services to a nonprofit; the exceptions are clergy, and teachers in a 501(c)(3) nonprofit. Office of Operations 2009 Fall Conference

9. Who Isn’t Required to Carry Workers’ Compensation Insurance • Sole proprietors with no employees; • Partners in partnerships with no employees; and • One/two person owned corporations with no employees. BUT…… Office of Operations 2009 Fall Conference

10. WCL Section 56 • General contractors are liable for the workers’ compensation claims of all uninsured subcontractors. • General contractors MUST obtain a workers’ compensation insurance policy if they have any subcontractors working on a job site. Office of Operations 2009 Fall Conference

11. Out-of-State Companies Working in NYS • Effective September 9, 2007, any out-of-state employer with employees working in NYS needs a full NYS workers’ compensation insurance policy. • NY must appear on Item 3A on the information page of a policy. Office of Operations 2009 Fall Conference

12. Independent Contractor?10 Indicators Indicators to identify if an individual is an independent contractor and not an employee: • Obtain a Federal Employer Identification Number from the Federal Internal Revenue Service (IRS) or have filed business or self-employment income tax returns with the IRS based on work or service performed the previous calendar year; • Maintain a separate business establishment from the hiring business; • Perform work that is different than the primary work of the hiring business and perform work for other businesses; Office of Operations 2009 Fall Conference

13. Independent Contractor?10 Indicators (Continued) • Operate under a specific contract, and is responsible for satisfactory performance of work and is subject to profit or loss in performing the specific work under such contract, and be in a position to succeed or fail if the business’s expenses exceed income; • Obtain a liability insurance policy (and if appropriate, workers’ compensation and disability benefits insurance policies) under its own legal business name and federal employer identification number; • Have recurring business liabilities and obligations; Office of Operations 2009 Fall Conference

14. Independent Contractor?10 Indicators (Continued) • If it has business cards or advertises, the materials must publicize itself, not another entity; • Provide all equipment and materials necessary to fulfill the contract; • Control the time and manner in which the work is to be done; and • The individual works under his/her own operating permit, contract or authority. Office of Operations 2009 Fall Conference

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18. What Is A Legal Name Of An Employer? And Why Is It Important? Office of Operations 2009 Fall Conference

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21. Proof of Workers’ Compensation Compliance (For Businesses) • CE-200 Business Does Not Require Workers’ Compensation and/or Disability Benefits Coverage • C-105.2 Certificate of Workers’ Compensation Insurance Coverage • U-26.3 State Insurance Fund Version of Certificate of Workers’ Compensation Insurance Coverage • SI-12 Certificate of Workers’ Compensation Self-Insurance or GSI-105.2 Certificate of Workers’ Compensation Group Self-Insurance Office of Operations 2009 Fall Conference

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24. Proof of Workers’ CompensationCompliance (For Homeowners) • BP-1 Homeowner Does Not Require Workers’ Compensation Coverage • CE-200 Business Does Not Require Workers’ Compensation and/or Disability Benefits Coverage • C-105.2 Certificate of Workers’ Compensation Insurance Coverage • U-26.3 State Insurance Fund Version of Certificate of Workers’ Compensation Insurance Coverage Office of Operations 2009 Fall Conference

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26. Proof of Disability Benefits Compliance • CE-200 Applicant Does Not Require Workers’ Compensation and/or Disability Benefits Coverage • DB-120.1 Certificate of Disability Benefits Insurance Coverage • DB-155 Certificate of Disability Benefits Self-Insurance Office of Operations 2009 Fall Conference

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28. Verifying Workers’ Compensation Insurance Proof of Coverage • Ensure coverage is on Board’s website • Go to www.wcb.state.ny.us Office of Operations 2009 Fall Conference

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32. Filing of Workers’ Compensation InsuranceProof of Coverage • Accept only the approved forms. • Make sure legal name on the approved form matches the legal name on the permit, license or contract. • FEIN numbers — make sure FEIN on the approved form matches FEIN on the permit, license or contract. • Ensure coverage is on Board’s website. Office of Operations 2009 Fall Conference

33. THANK YOU! Office of Operations 2009 Fall Conference