In the state of New York, most for-profit business with payroll employees are required to have Workers’ Compensation Insurance coverage.

How can I tell if my company is required?

In New York, nearly all employers must provide workers’ compensation insurance for employees, even part-time staff. Certain exemptions apply (see the NY Workers’ Compensation Board).

• Workers’ compensation coverage is not required for a sole proprietor who does not have employees. However, a sole proprietor may voluntarily cover themselves under a workers’ compensation policy.

• Workers’ compensation coverage IS NOT required for partnerships, LLCs, and LLPs that do not have employees. Members and partners are not considered employees for the purposes of obtaining workers’ compensation insurance, but may voluntarily cover themselves under a workers’ compensation policy.

• Workers’ Compensation coverage is not required if the business is a one or two person owned corporation, with those individuals owning all of the stock and holding all offices of the corporation (each individual must hold an office and own at least one share of stock). Other than the corporate officer(s), there are no employees, day labor, leased employees, borrowed employees, part-time employees, other stockholders, unpaid volunteers (including family members) or subcontractors.

• Workers’ Compensation coverage is required if the corporation has more than two corporate officers or more than two shareholders, or where the one or two corporate officers do not own all the shares of stock (each owning at least one share).

Source: https://www.wcb.ny.gov/content/main/coverage-requirements-wc/for-profit-business.jsp

Workers’ Compensation Insurance coverage is pretty straightforward. There is a basic formula used to calculate the premium using a couple key pieces of information:

Worker’s Class Code Rate X Claims Experience Modifier X Payroll/$100 = Premium*

Worker’s Class Code – The National Council on Compensation Insurance (NCCI) assigns these codes. The insurance company looks up the code in a standardized document called the National Council on Compensation Insurance (NCCI) Scopes Manual.

Claims Experience Modifier – This is where the claims history is taken into account.

Payroll/ $100 – The insurance company takes the payroll for all employees who will be covered by Workers’ Compensation Insurance and divide that amount by $100.

*This is a simplified calculation for educational purposes only. Actual premium calculations can be more complex. Experience modifiers are subject to state requirements and do not apply to every policy.

At the end of every coverage period, the insurance company will conduct an audit to make sure your coverage was correct. If you overpaid, you will be credited or issued a refund for the overpayment. Along the same line, you will be required to pay the difference if more premium was required during the coverage period. Differences in the amounts is typically du to staffing changes during the policy period.

Additionally, you can add endorsements to customize the policy for your specific needs, including Voluntary Compensation – to cover employees who typically would not be covered by worker’s comp and/or Foreign Coverage.

As always, Workers’ Compensation needs analysis is complementary. Call (716) 402-8686 or email Andria@NationalHeritageRisk.com