Underreporting Payroll and Misclassifying Employees Now Felonies

A key provision of the new workers’ compensation reform law toughening the penalties for employers who cheat on information used to calculate premiums is now in effect.

Employers who intentionally understate or conceal payroll or misrepresent the duties of employees to avoid proper classification are deemed to have not secured workers’ compensation coverage and are therefore subject to the same penalties as a business that does not have workers’ compensation coverage for its workers.

For employers with more than five employees, the crimes of concealment or misrepresentation are now class E felonies with fines ranging from $5,000 to $50,000.

For smaller employers, the first violation remains a misdemeanor carrying fines of $1,000 to $5,000. Second offenses are felonies regardless of the number of employees.

Under the new law, employers without coverage or who fail to pay penalties are considered a serious danger to public health and safety and the Workers’ Compensation Board is authorized to issue immediate stop-work orders.

The law also bars companies from all public works projects if found guilty of a misdemeanor for one year. In the case of a felony conviction, offenders are barred for five years

New Benefit Rates

The following weekly rates are applicable to new accidents occurring on or after 7/1/2007:

• $500.00 for accidents or deaths on and after 7/1/07
• $550.00 for accidents or deaths on and after 7/1/08
• $600.00 for accidents and deaths on and after 7/1/09
• Two-thirds of the New York State average weekly wage for accidents or deaths on and after 7/1/10, reindexed to the State average weekly wage annually on 7/1 thereafter

The minimum weekly rate is raised from $40.00 to $100.00 for accidents on and after 7/1/07. If the claimant's wages are less than $100.00 per week, claimant will receive his or her full wages.

Caps on Permanent Partial Disability Indemnity Benefits

(Applicable to accidents on or after 3/13/07)

Compensation for claimants classified with permanent partial disabilities is to continue to be two-thirds of the difference between the average weekly wage and the claimant's wage earning capacity. For accidents and dates of disablement on and after the legislation's effective date (3/13/07), weekly benefits for permanent partial disabilities are capped based on percentage loss of wage earning capacity according to the following schedule:

% Loss of Wage Earning Capacity	Maximum Benefit Weeks	Number of Years
1% - 15%	225	4.33
16% - 30%	250	4.81
31% - 40%	275	5.29
41% - 50%	300	5.77
51% - 60%	350	6.23
61% - 70%	375	7.21
71% - 75%	400	7.69
76% - 80%	425	8.17
81% - 85%	450	8.65
86% - 90%	475	9.13
90% - 95%	500	9.62
96% - 99%	525	10.10

Comments: The caps on indemnity benefits for PPD apply only to cases with dates of accident or disablement on or after 3/13/07. Since in practice claims are not stable for classification until two or more years after the date of injury, this means that any savings to employers or carriers that may be realized from the caps will not accrue until some years from now.

For more information, call:

Rick Mege at (516) 488-2800 x21, or
Paul Garritan at (516) 488-2800 x22