WCL §52(5) Penalties: The Law Explained

The Legal Foundation: Workers' Compensation Law §52

New York Workers' Compensation Law §52is the primary enforcement provision of New York's mandatory workers' compensation coverage system. It establishes both the civil and criminal consequences for employers who fail to maintain required coverage.

Section 52 has multiple subsections addressing different aspects of employer non-compliance:

• §52(1)–(4): Criminal penalties for willful failure to secure coverage
• §52(5): Civil penalty for any failure to secure compensation (regardless of intent)
• §52(6): Additional provisions for corporations and individual liability

For most NY businesses facing WCB penalties, §52(5) is the operative provision.

The §52(5) Civil Penalty: How It Works

Under WCL §52(5), any employer who fails to “secure compensation” as required by the Workers' Compensation Law is subject to a civil penalty of $2,000 for each 10-day period during which the failure continues.

Let's break down the key elements:

“Employer”

The law applies to any employer required to maintain workers' comp coverage under the Workers' Compensation Law. This includes corporations, LLCs, partnerships, sole proprietors with employees, and any other entity with covered employees. There are narrow exceptions — primarily for certain sole proprietors and partnerships with no employees — but these exceptions are interpreted narrowly.

“Fails to Secure Compensation”

“Securing compensation” means maintaining a valid, active workers' compensation insurance policy with a licensed insurer, or qualifying as a licensed self-insurer under WCL §50. Any gap in this coverage — even one day — triggers potential §52(5) liability.

“$2,000 per 10-Day Period”

The penalty accrues in 10-day increments. Each 10-day period of non-compliance is assessed at $2,000. Partial 10-day periods may be assessed a partial penalty. Here is a table showing how penalties accumulate:

• 10 days: $2,000
• 30 days: $6,000
• 60 days: $12,000
• 90 days: $18,000
• 180 days: $36,000
• 1 year: $73,000

How the WCB Calculates Penalties in Practice

In practice, the WCB calculates §52(5) penalties by:

1. Determining the date coverage lapsed (usually the cancellation date from the insurer)
2. Determining the date new coverage was obtained
3. Calculating the number of days between those dates
4. Dividing by 10 (rounding up) to get the number of penalty periods
5. Multiplying by $2,000

For example: Coverage cancelled on January 1, new coverage obtained on April 1. That is 90 days ÷ 10 = 9 penalty periods × $2,000 = $18,000 base penalty.

Use our free penalty calculator to estimate your potential liability.

Criminal Penalties Under WCL §52(1)–(4)

Beyond the civil §52(5) penalty, willful failure to secure compensation is also a criminal offense under WCL §52(1)–(4):

• First offense (misdemeanor): Criminal fine of $1,000–$5,000 and/or up to 1 year imprisonment
• Second or subsequent offense (felony): Criminal fine of $5,000–$50,000 and/or up to 4 years imprisonment
• For corporations: Criminal fines up to $50,000 per offense

Criminal prosecution under §52 is relatively rare for isolated lapses, but becomes significantly more likely for repeat violations or where there is clear evidence of deliberate non-compliance.

The Uninsured Employers Fund (UEF)

Section 52 liability interacts with the Uninsured Employers Fund (UEF) in an important way. If an employee is injured while an employer has no workers' comp coverage:

• The UEF pays the injured worker's benefits
• The UEF then seeks reimbursement from the uninsured employer
• This reimbursement obligation is in addition to the §52(5) civil penalty

In cases involving injured workers, total liability can be dramatically higher than the base §52(5) penalty calculation.

Mitigation Under §52(5)

The WCB has discretionary authority to reduce §52(5) penalties based on mitigating factors. This is the basis for the penalty negotiation process. See our comprehensive guide on the WCB Penalty Reduction Program for detailed information on how to build your mitigation case.

Frequently Asked Questions