NY Workers' Comp Coverage Requirements

The Basic Rule: Almost All Employers Must Have Coverage

New York's Workers' Compensation Law has one of the broadest coverage mandates in the United States. Under WCL §10, virtually every employer who has employees working in New York State must maintain workers' compensation insurance. This requirement applies regardless of:

• The number of employees (even one part-time employee triggers the requirement)
• The type of business (service, retail, construction, professional services, etc.)
• How employees are paid (hourly, salary, commission, piece-rate)
• The duration of employment (seasonal, temporary, or permanent)
• Whether the employer is a corporation, LLC, partnership, or sole proprietor

The Limited Exemptions

New York's workers' comp exemptions are narrow and strictly interpreted. The main exemptions are:

Sole Proprietors and Partners Without Employees

A sole proprietor who has no employees and performs all work personally is not required to obtain workers' comp insurance for themselves. However, the moment they hire even one employee — including family members — the requirement applies to all workers.

Similarly, partners in a general partnership who have no employees may be exempt from covering themselves, though the partnership must cover any non-partner employees.

One or Two-Person Corporations

Corporate officers who are the sole shareholders (or own at least a certain percentage of shares) may elect to be excluded from workers' comp coverage by filing Form CE-200 with the WCB. This exclusion applies only to the officers themselves — any other employees must be covered. Filing CE-200 incorrectly or missing renewal is a common source of penalties.

Family Members in Certain Circumstances

Family members of sole proprietors — spouse, child, parent — working in the family business may be exempt in some circumstances under WCL §3(1). However, this exemption is narrow and does not apply in all situations. If in doubt, maintaining coverage is always the safer choice.

Certain Domestic Workers

Household employees working fewer than 40 hours per week for any single employer are generally exempt from mandatory coverage, though employers may choose to provide coverage voluntarily.

Who Is an “Employee” Under New York Workers' Comp Law?

New York defines “employee” broadly for workers' comp purposes. The key question is whether someone is an employee or an independent contractor. New York applies an economic reality test that looks at the totality of the relationship:

• Who controls how the work is done (not just the result)?
• Does the worker set their own hours?
• Does the worker provide their own tools and equipment?
• Does the worker work for multiple clients?
• Is the relationship permanent or project-by-project?
• Is the work integral to the employer's core business?

Workers who fail this test — even if you call them “independent contractors” or “1099 workers” — are legally employees for workers' comp purposes. See our comprehensive guide: Independent Contractor vs. Employee in New York.

Coverage for Specific Situations

Construction Industry

New York's workers' comp rules for construction are among the strictest in the nation. Under WCL §25-aand related provisions, general contractors have a heightened responsibility to ensure that their subcontractors also maintain coverage. If a subcontractor has no coverage, the general contractor may be liable for any injuries to that subcontractor's workers.

Staffing Agency Workers

Workers provided by a staffing agency are typically the agency's employees for workers' comp purposes — meaning the staffing agency, not the client business, is responsible for their coverage. However, the arrangement should be clearly documented.

Out-of-State Businesses

If your business is based outside New York but has employees working in New York, you are required to maintain New York workers' comp coverage for those employees. Out-of-state coverage does not satisfy New York's requirements unless it specifically includes a New York endorsement.

How to Verify Your Coverage Is Adequate

Maintaining workers' comp coverage is not just about having a policy — it must be the right policy:

• The policy must cover all employees in all locations where they work
• Payroll estimates must be accurate (underreporting leads to audit adjustments)
• Classification codes must match actual job duties
• The policy must be with a licensed insurer or NYSIF
• Form C-105.2 must be properly filed with the WCB

Frequently Asked Questions