Running a business can be very expensive. Especially when the economy isn’t strong, companies often look for any way to cut costs. Choosing not to carry workers’ compensation insurance to save some money is a gamble that some companies knowingly take.
They may operate in a low-risk industry and have a history of perfect workplace safety. Although they could face financial consequences if a worker gets hurt or legal consequences if they get caught operating without mandatory insurance, these companies may need the resources that would have paid for the insurance to cover other costs.
Some companies don’t intentionally make a decision to forego workers’ compensation insurance. They may just misplace a bill after an accountant retires or not understand the requirement for coverage. What are the consequences for companies that don’t have workers’ compensation coverage in New York?
The state assesses fines against companies without coverage
If the discovery of your lapsed insurance policy stems from enforcement efforts, the consequences you face will likely be charges that carry fines levied by the state. The number of employees you have impacts the penalties as well.
Those accused of a first-time lapse with five or fewer employees will face misdemeanor charges that carry a fine of between $1,000 and $5,000. If the company has more than five employees, those charges increase to a Class E felony carrying a fine of between $5,000 and $50,000.
Subsequent violations will cost even more. If your company has already had one workers’ compensation coverage violation in the last five years, you could face a Class D felony charge with a fine of between $10,000 and $50,000.
Your company could face claims by an injured worker, too
A worker getting hurt when their employer doesn’t have active workers’ compensation insurance is a worst-case scenario for everyone involved. The worker doesn’t have the protections for their medical and financial needs that they expect. The employer may find themselves facing enforcement efforts by the state and civil action by the worker.
Workers often need disability benefits to cover some of their missed wages after an injury on the job, as well as medical benefits to get care. If your company doesn’t have an active policy, an injured worker could try to sue you for their losses. A company with disputes regarding workers’ compensation coverage or claims has the right to defend against both enforcement charges and civil lawsuits.
