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Today I would like to provide a little information about the Workers Compensation Laws in New
York State.
The following information can be found directly on the Workers Compensation Board site, and
a link will be provided in the video description.
Who Is Covered By The Workers' Compensation Law?
Virtually all employers in New York State must provide workers' compensation coverage
for their employees (WCL �2 and 3).
Employers must post notice of coverage in their place(s) of business (WCL �51).
Employers must cover the following workers for workers' compensation insurance:
1.
Workers in all employments conducted for-profit.
Part-time employees, borrowed employees, leased employees, family members and volunteers working
for a for-profit business must also be covered under the Workers' Compensation Law (WCL �3
Groups 1-14-a);
2.
Employees of counties and municipalities engaged in work defined by the law as "hazardous"
(WCL �3 Groups 15, 15-a and 17);
3.
Public school teachers, excluding those employed by New York City, and public school aides,
including New York City (WCL �3 Groups 20, 20-a and 22);
4.
Employees of the State of New York, including some volunteer workers (WCL �3 Group 16);
5.
Domestic workers employed forty or more hours per week by the same employer, including full-time
sitters or companions, and live-in maids (WCL �3 Group 12) (see Domestic Workers)
6.Farm workers whose employer paid $1,200 or more for farm labor in the preceding calendar
year (WCL �3 Group 14-b) (see Farms)
7.
Any other worker determined by the Board to be an employee and not specifically excluded
from coverage under the WCL (WCL �3 Groups 1-14-a and 18);
8.
All corporate officers if the corporation has more than two officers and/or two stockholders
(WCL �54 [6]) (see Corporate Officer Coverage Requirements);
9.
Officers of one-or-two person corporations if there are other individuals in employment.
These officers may choose to exclude themselves from coverage (WCL �54 [6]) (see Corporate
Officer Coverage Requirements); and
10.
Most workers compensated by a nonprofit organization (WCL �3 Group 18) (see Nonprofit Organizations).
Volunteer Firefighters and Volunteer Ambulance Workers are provided benefits for death or
injuries suffered in the line of duty under the Volunteer Firefighters' Benefit Law and
Volunteer Ambulance Workers' Benefit Law.
Who Is Not Covered By The Workers' Compensation Law?
1.
Individuals who volunteer their services for nonprofit organizations and receive no compensation.
Please note that compensation includes stipends, room and board, and other "perks" that have
monetary value (WCL �3 Group 18).
Money used solely to offset expenses incurred while performing activities for the nonprofit
is not counted as a stipend (WCL �2 [9]);
2.
Duly ordained, commissioned or licensed ministers, priests and rabbis; sextons; Christian Science
readers; and members of religious orders (WCL �3, Groups 18);
3.
Members of supervised amateur athletic activities operated on a nonprofit basis, provided that
such members are not otherwise engaged or employed by any person, firm, or corporation
participating in such athletic activity (WCL �3 Group 18);
4.
People engaged in a teaching capacity in or for a nonprofit religious, charitable or educational
institution (Section 501(c)(3) under the IRS tax code).
(WCL �3 Group 18) To be exempt, the teachers must only be performing teaching duties;
5.
People 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 such tasks as filing; carrying materials such
as pamphlets, binders, or books; cleaning such as dusting or vacuuming; playing musical
instruments; moving furniture; shoveling snow; mowing lawns; and construction of any sort;
6.
Persons receiving charitable aid from a religious or 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 certain persons receiving rehabilitation services in a sheltered workshop (Mental Hygiene
Law �33.09);
7.
People who are covered for specific types of employment under another workers' compensation
system such as those employed in certain maritime trades, interstate railroad employees, federal
government employees and others covered under federal workers' compensation laws;
8.
The spouse and minor children (under 18 years old) of an employer who is a farmer as long
as they are not under an express contract of hire (WCL �2 [4]);
9.
Certain employees of foreign governments and Native American Nations (Foreign Government
Employees and Native American Enterprises);
10.
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 in other municipalities may also be excluded;
11.
People, including minors, doing yard work or casual chores in and about a one-family,
owner-occupied residence or the premises of a nonprofit, noncommercial organization (WCL
�2 [4]).
Casual means occasionally, without regularity, without foresight, plan or method.
Coverage is required if the minor handles power-driven machinery, including a power
lawnmower;
12.
Certain real estate salespersons who sign a contract with a broker stating that they
are independent contractors (WCL �2 [4]) (Real Estate Brokers);
13.
Certain media sales representatives who sign a contract stating that they are independent
contractors (WCL �2 [4]) (Media Sales Representatives);
14.
Certain insurance agents or brokers who sign a contract stating that they are independent
contractors (WCL �2 [4]) (Insurance Agents); and
15.
Sole proprietors, partners, and certain one/two person corporate officers with no other individuals
providing services integral to the business (although coverage may be obtained voluntarily)
(WCL �2 [4]).
(Sole Proprietorships, Partnerships, and Corporate Officer Coverage Requirements).
Also read Independent Contractors and Subcontractors for exceptions.
Who Is An Employee Under the Workers' Compensation Law?
Employees in For-profit Businesses
Under the Workers' Compensation Law, most individuals providing services to a for-profit
business will be deemed an employee of that business and therefore must be covered by
the employer for workers' compensation insurance.
This applies unless those services are specifically excluded as employment under the WCL.
For workers' compensation insurance purposes, the term employee generally includes day labor,
leased employees, borrowed employees, part-time employees, unpaid volunteers (including family
members) and most subcontractors (specific exclusions listed under Identifying an Independent
Contractor).
Many factors are used to decide whether an individual is an employee under the Workers'
Compensation Law.
If a business meets any of the criteria listed below, and the individual hired does not meet
the criteria listed under independent contractors, or the services rendered are not specifically
exempted as employment under the WCL, then that business must obtain a workers' compensation
insurance policy.
The factors that are considered to determine whether an individual is an employee within
the meaning of the WCL and thus must be provided with workers' compensation insurance coverage
by the employer include:
Right to Control- The degree of direction and control a person or organization exercises
over someone they contract with to perform a task is always a central issue in determining
an employer-employee relationship.
A person or organization controlling the manner in which the work is to be performed indicates
that the task is being performed by an employee.
If the person doing the labor controls the time and manner in which the work is to be
done this may indicate that the task is being done by an independent contractor.
If an individual is truly independent, the individual generally works under his/her own
operating permit, contract or authority.
Character of Work Is the Same as Employer- Work being done that is consistent with the
primary work performed by the hiring business indicates that the labor is being done by
an employee.
Work done by a person that is different than the primary work of the hiring business may
indicate the task is being performed by an independent contractor.
(For example, someone installing shingles for a roofer is generally considered the employee
of that roofer.
Conversely, a plumber hired on a one time basis to fix a broken pipe for a retail store
owner is generally considered an independent contractor,)
Method of Payment- Employees tend to be paid wages on an hourly, daily.
weekly, or monthly basis.
Naturally, employment is indicated if the hiring business withholds taxes and/or provides
other employee benefits (Unemployment Insurance, health insurance, pensions, FICA, etc.)
Whether the labor is paid using a W2 or 1099 Form for tax purposes does not matter in determining
an employer/employee relationship for workers' compensation purposes.
A business paying cash to an individual for services usually indicates that the individual
is an employee.
Payment made for performance of the task as a whole may indicate the task is being done
by an independent contractor.
Furnishing Equipment/Materials- A business providing the equipment and/or materials used
by people in performing the work tends to indicate an employer-employee relationship.
Right to Hire/Fire- A business retaining the authority to hire and fire the individuals
performing the work indicates an employee is performing the work.
An independent contractor retains a degree of control over the time when the work is
to be accomplished and is not subject to be discharged by the hiring entity because of
the method he chooses to use in performing the work.
Naturally, an independent contractor's services may be terminated if the services rendered
do not meet contractual requirements,)
All factors may be considered and no one factor alone determines whether a person will be
considered an employee under the WCL.
Note: A workers' compensation law judge determines whether a person is considered an employee
at a hearing following a work related accident or illness.
Identifying an Independent Contractor
2010 Construction Industry Fair Play Act
Overview
On August 27, 2010, the New York State Construction Industry Fair Play Act was signed into law
(Chapter 418).
This new law amended the Labor Law and the Workers' Compensation Law to establish a presumption
of employment in the construction industry.
The new statute took effect on October 26, 2010, and for workers' compensation purposes,
applies to accidents which occur on or after that date.
The heart of the new law is Labor Law � 861-C which provides that any person performing
services for a contractor is presumed to be an employee of that contractor.
Contractor is broadly defined to include any sole proprietor, partnership, firm, corporation,
limited liability company, association or other legal entity permitted to do business
within the state who engages in construction work.
Labor Law � 861-C is incorporated by specific reference into Workers' Compensation Law � 2(4).
Therefore, any worker performing services for a contractor who is injured on or after
October 26, 2010, will be presumed the employee of that contractor for workers' compensation
purposes, subject to the independent contractor test contained in the statute.
Application
Under the Fair Play Act, any person working in construction is presumed to be the employee
of the person or business for whom he or she is working.
a.
For a person to be an independent contractor, the alleged employer must demonstrate ALL
three of the following criteria: 1.
The person is free from control and direction in performing the job, both under contract
and in fact, 2.
The person is performing services outside of the usual course of business for the company,
and; 3.
The person is engaged in an independently established trade, occupation or business
that is similar to the service s/he performs.
b.
The law also contains a 12-part test to determine when a sole proprietor, partnership, corporation
or other entity will be considered a "separate business entity" from the contractor.
If an entity meets ALL of the 12 statutory criteria, it will not be considered an employee
of the contractor.
Instead, it will be a separate business entity that is itself subject to the new law regarding
its own employees.
A separate business entity must: 1. be performing the service free from the
direction or control over the means and manner of providing the service subject only to the
right of the contractor to specify the desired result;
2.
not be subject to cancellation when its work with the contractor ends;
3. have a substantial investment of capital in the entity beyond ordinary tools and equipment
and a personal vehicle; 4.
own the capital goods and gain the profits and bear the losses of the entity;
5.
make its services available to the general public or business community on a regular
basis; 6. include the services provided on a federal
income tax schedule as an independent business; 7.
perform the services under the entity's name; 8.
obtain and pay for any required license or permit in the entity's name;
9.
furnish the tools and equipment necessary to provide the service;
10.
hire its own employees without contractor approval, pay the employees without reimbursement
from the contractor and 11.
report the employees' income to the Internal Revenue Service;
12. have the right to perform similar services for others on whatever basis and whenever
it chooses; and the contractor does not represent the entity
or the employees of the entity as its own employees to its customers.
Penalties
An employer that willfully violates the Fair Play Act by failing to properly classify its
employees will be subject to civil penalties of up to a $2,500 fine per misclassified employee
for a first violation and up to $5,000 per misclassified employee for a second violation
within a five-year period.
Employers also may be subject to criminal prosecution (a misdemeanor) for violations
of the act with a penalty of up to 30 days in jail, up to a $25,000 fine and debarment
from bidding on or being awarded any Public Works contracts for up to one year for a first
offense.
Subsequent misdemeanor offenses would be punishable by up to 60 days in jail, up to a $50,000
fine and debarment from bidding on or being awarded any Public Works contracts for up
to five years.
The term "willfully violates" means a contractor knew or should have known that his or her
conduct violated the law.
Workers' Compensation Law Judges will impose the civil penalties contained in the new law
based on the evidence presented at the hearing.
Workers' Compensation Law Judges and the Bureau of Compliance may impose the penalties contained
in the Fair Play Act.
Penalties under the act are in addition to all existing civil and criminal penalties
for misclassification, failure to provide required coverage or other violations of the
Workers' Compensation Law, Labor Law or Tax & Finance Law.
Identifying Independent Contractors in Non Construction Industries
The following are factors that a judge will consider to determine whether an individual
is an independent contractor, and thus not an employee:
1.
Control the time and manner in which the work is to be done; and
2.
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;
3.
Maintain a separate business establishment from the hiring business;
4.
Perform work that is different than the primary work of the hiring business and perform work
for other businesses; 5.
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.
6.
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; 7.
Have recurring business liabilities and obligations; 8.
If it has business cards or advertises, the materials must publicize itself, not another
entity; 9.
Provide all equipment and materials necessary to fulfill the contract; and
10.
The individual works under his/her own operating permit, contract or authority.
Special Note for the Trucking Industry:
To be considered an independent contractor, drivers must also be transporting goods under
their own bill of lading and under their own Department of Transportation Number.
For further information please see Subject Number 046-669.
When Coverage Can or Cannot be Required:
A business CANNOT require employees working for that business to obtain their own workers'
compensation insurance policy or contribute towards a workers' compensation insurance
policy (WCL �31, 32 and 32-a).
Independent contractors may be required to maintain their own workers' compensation insurance
policy if they intend to work for other businesses.
For proper risk management and to ensure that its insurance premiums are as low as possible,
a business that hires independent contractors should require those independent contractors
to provide proof of their own workers' compensation insurance policies prior to commencing work
(Certificate of NYS Workers' Compensation Insurance Coverage (C-105.2), NY State Insurance
Fund Certificate of Workers' Compensation Coverage (U-26.3), Certificate of Participation
in Workers' Compensation Group Board-approved self-insurance (GSI-105.2) and Affidavit Certifying
That Compensation Has Been Secured (SI-12)).
Therefore, a business may require an independent business that has its own employees to obtain
a workers' compensation insurance policy if the independent business is working as a subcontractor.
(An independent business usually has characteristics such as media advertising, commercial telephone
listing, business cards, business stationary or forms, its own Federal Employer Identification
Number (FEIN), working under its own permits or operating authority, business insurance
(liability � WC), and/or maintaining a separate establishment.
The independent business has a significant investment in facilities and means of performing
work.)
For example, if Business "A" contracts with Business "B" to perform services and Business
B is an independent business with its own employees, Business A can require Business
B to have its own workers' compensation insurance policy and obtain a certificate of insurance
for this policy.
This will help ensure that Business A's workers' compensation premiums are as low as possible
and shield business A from liability under the Workers' Compensation Law.