DISCLAIMER: This post is a general overview of the defenses to WC penalties for failure to secure WC, DB, and PFL insurance. It is not legal advice. Past success is never a guarantee of a future outcome. If you require information or advice applied to your unique situation, please consult an employment attorney in each of the jurisdictions where you have workers.
In New York State, ensuring proper workers compensation (WC) coverage is crucial for employers. However, navigating potential coverage errors can be daunting. Here’s a concise guide to help employers correct coverage errors effectively and promptly.
Understanding Common Errors
The New York State (NYS) Workers’ Compensation Board (WCB) does not currently have a voluntary disclosure program for employers who discover that their:
- WC insurance policies lapsed
- Out-of-state WC insurance policies do not include employees who are working remotely from NYS
- Independent contractors are actually misclassified employees
- Vendors are not truly independent businesses
- Homeowners insurance policies do not cover their full-time nannies
Responding to Notices
Employers must wait for a penalty notice before the Board can resolve any potential penalties. You will often receive an inquiry notice:
- Immediately after your WC carrier files the C-105 Notice of Compliance
- After you file your first NYS-45 Unemployment Insurance tax return with the State
- If one of your independent contractors files for UI benefits and lists you as an employer, instead of a client
If you act quickly to respond to inquiry notices and to correct any errors, penalties can often be:
- Avoided
- Reduced
- Rescinded
But you must first prove compliance with WC, disability, and Paid Family Leave insurance requirements.
Taking Immediate Remedial Actions
If no WC claims are filed during uninsured periods and your compliance history is clear of prior coverage lapses, we can often help you negotiate manageable penalties. However, you must first:
- Purchase a new WC insurance policy
- Provide a justified excuse for coverage lapses
Requesting Audit and Correction
In the event you had coverage and mistakenly let it lapse, an explanation for the lapse will be required. Explanations might include:
- The insurance carrier improperly cancelled coverage.
- The Notice of Cancellation was not properly served on you.
- The business was winding down after years of compliance.
Legal Assistance
When clients come to us with penalty notices, they have sometime relied on accountants’ advice, and those accountants were misinformed about WCB and DOL criteria. At other times, they challenged higher premium bills due to their carrier’s re-categorization of some workers. Regardless, you will need to show actions were taken to insure your workers as soon as you discovered the error or lapse.
Conclusion
Navigating workers’ compensation coverage errors in New York can be complex, but proactive measures and timely corrections can mitigate penalties.