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NY Workers' Compensation Insurance Requirements

The U.S. workers’ compensation system was actually born out of a New York state tragedy: the worst factory fire in New York City’s history, at the Triangle Shirtwaist Factory in 1911. Today, the state upholds strict requirements for employers.

The state upholds harsh penalties for workers’ compensation violations. Not carrying workers’ compensation insurance for more than five employees is a felony in New York state, and penalized businesses can be debarred from public work contracts.

All New York businesses with employees (full- or part-time) must carry workers’ compensation insurance. As of 2007, any out-of-state businesses with employees working in New York state must also have a fully compliant workers' compensation insurance policy.

New York employers are required to provide workers' compensation insurance for:

The employees of any for-profit business. This includes part-time employees, borrowed or leased employees, family members and volunteers. (Most non-profit employees must also be covered.)
Domestic workers employed 40 hours or more.
Farm workers paid $1,200 or more over 12 months.

Business Owners

Sole proprietors, partners and one- and two-person corporations do not have to carry coverage, but may include themselves on a policy.

Contractors

A worker under direct control of the employer may be considered an employee, regardless of their tax status.

Are they an employee or an independent contractor? 10 ways to tell >>

Keep in mind that your policy covers employees only when they are working in-state; additional coverage might be needed for out-of-state work.

How Much Does Workers Comp Cost in New York?

Workers' compensation costs in New York are high relative to other states in the U.S.

According to a 2020 report by the Oregon Department of Consumer and Business Services, NY workers' compensation rates are among the highest in the nation, ranging from $2.00 - $2.49 per $100 in payroll. (This is, however, a decrease from the top spot and rates in the $3.00 - 3.49 range in 2018's study.)

This means that a New York company with $100,000 in payroll might pay around $2,000 in annual workers' compensation insurance premiums. A $50,000 payroll, closer to $1,000. However, this will vary depending on:

Classification codes: Which class codes are assigned to the business based on the type of work employees do. This is a major factor in rate, and therefore cost.
Experience Modifier: This adjusts premiums based on prior history, but is often not applicable to new businesses.
Credits and Debits: Other possible credits and debits applied by individual insurance companies when calculating the final premium.

While most states use the National Council on Compensation Insurance (NCCI) to collect workplace data and set rates, New York uses its own rating bureau, the New York Compensation Insurance Rating Board. This non-profit, unincorporated association of insurance carriers collects loss, premium and payroll data, and recommends rates. Workers' compensation rates are set by class code, or industry.

As we mentioned above, this base rate is multiplied by company payroll, and then Experience Modifier and other discounts may be applied by an insurance carrier to calculate the final premium. The rating bureau also sets Experience Modifier factors for employers with premiums above $5,000. Learn more about how much workers’ compensation insurance costs.

Workers' Compensation Limits in New York

A work comp policy has two parts:

Employee benefits (Part A) covers medical expenses and lost wages as a result of being unable to work. Employee benefits generally have no limits and no exclusions, and claims cannot be declined or denied, unless proof of fraud can be established.
Employer liability (Part B) addresses a lawsuit related to a work comp claim. If the employee believes the injury was the result of employer negligence, they might choose to sue their employer for damages in addition to workers' comp benefits. In this case, the policy would cover the employer’s legal defense for the employer. This portion of the policy does have limits, which you can choose when you purchase the insurance.

More on New York Workers' Compensation

New York has an office dedicated to answering workers’ compensation questions, particularly for small business owners. The Advocate of Business is the liaison between businesses and the state work comp systems, and can help with coverage and compliance issues.

Workers’ compensation regulation: New York Workers’ Compensation Board
Rating bureau: New York Compensation Insurance Rating Board
State fund: New York State Insurance Fund
Advocate of Business office

Editor's note: Last updated in October 2021.

The state has a private market for workers' compensation insurance. Employers can purchase a workers' compensation policy from any insurance carrier or agency that is licensed to write in New York.

New York also has a state fund that competes with the private market. You can contact the New York State Insurance Fund if you are unable to secure coverage from a private insurance carrier. State funds accept higher-risk businesses, and their rates are often higher. Large employers might consider self-insurance options.

How to Get Workers' Compensation Insurance in NY

To buy workers compensation insurance, you need to request a quote from a licensed insurance agent and provide some details about your business.

Here’s what to have in front of you:

Number of employees in each class code.
Total payroll for all employees. You may be able to exclude yourself if you don't wish to be covered under the policy.
Federal ID Number. If you are a sole proprietor, you can use your Social Security Number.
Copy of your workers comp insurance policy, if you've had coverage or claims in the past few years. If you know your company's experience mod, please have your experience mod rating sheet or policy in front of you. Otherwise, you will be assigned a default rating of 1.0.

NY Workers' Comp Insurance Companies

Workers' compensation insurance can sometimes be hard to find for companies with a small payroll and only a few employees.

But as the fourth most populated state in the U.S., the New York work comp market is served by a number of licensed insurers. While some commercial insurance carriers write multiple lines of business, some specialize in a particular line (workers' compensation) or business type (small business).