N.Y. Workers' Compensation Law § 52: Effect of failure to secure compensation

§ 52. Effect of failure to secure compensation. 1. (a) Failure to

secure the payment of compensation for five or less employees within a

twelve month period shall constitute a misdemeanor, and is punishable by

a fine of not less than one thousand nor more than five thousand

dollars. Failure to secure the payment of compensation for more than

five employees within a twelve month period shall constitute a class E

felony, and is punishable by a fine of not less than five thousand

dollars nor more than fifty thousand dollars in addition to any other

penalties otherwise provided by law. It shall be an affirmative defense

to any criminal prosecution under this section that the employer took

reasonable steps to secure compensation.

(b) Where any person has previously been convicted of a failure to

secure the payment of compensation within the preceding five years, upon

conviction for a subsequent violation such person shall be guilty of a

class D felony, and fined not less than ten thousand nor more than fifty

thousand dollars in addition to any other penalties including fines

otherwise provided by law.

(c) Where the employer is a corporation, the president, secretary and

treasurer thereof shall be liable for failure to secure the payment of

compensation under this section. It shall be an affirmative defense to

any action against any officer of a corporation under this section that

the officer took reasonable steps to ensure that the corporation secured

compensation, that proper internal procedures were in effect to do so,

and that proper internal controls existed to monitor compliance with

said procedures.

(d) If at any time an employer intentionally and materially

understates or conceals payroll, or intentionally and materially

misrepresents or conceals employee duties so as to avoid proper

classification for calculation of premium paid to secure compensation,

or intentionally and materially misrepresents or conceals information

pertinent to the calculation of premium paid to secure compensation,

such employer shall be deemed to have failed to secure compensation and

shall be subject to the sanctions applicable to this section.

(e) A stop-work order issued because an employer is deemed to have

failed to secure compensation under section one hundred forty-one-a of

this chapter shall have no effect upon an employer's or carrier's duty

to provide benefits under this chapter or upon any of the employer's or

carrier's rights and defenses.

2. All fines imposed under this chapter, except as herein otherwise

provided, shall be paid directly and immediately by the officer

collecting the same to the chairman, and shall be paid by him into the

uninsured employers' fund created under section twenty-six-a of this

chapter, provided, however, that all such fines collected by justices of

towns and villages shall be paid to the state comptroller in accordance

with the provisions of section twenty-seven of the town law and section

4-410 of the village law respectively.

3. In any prosecution hereunder the failure of the employer to file

with the chairman, within ten days after demand, a statement subscribed

by the employer and affirmed by him as true under the penalties of

perjury showing specifically (a) the name of the stock company, mutual

corporation or reciprocal insurer in which such employer is insured and

the number and the date of issuance and term of such policy of

insurance, or (b) that the said employer is insured with the state fund

in which case he shall give the number of such policy of insurance, the

date of issuance and term thereof, or (c) that the said employer has

been authorized to do business as a self-insurer pursuant to section

fifty of this article, giving the date of said authorization, or (d) a

legal reason, if any, why said employer is not required to secure

compensation, shall constitute prima facie evidence that the employer

has failed to secure compensation as herein required. The statement to

be filed herein shall be subscribed by the employer or if the employer

is a corporation by one of the officers herein named in which he shall

state that he has read such statement subscribed by him and knows the

contents thereof and that same is true of his own knowledge.

4. If, however, there has been an accident and the board shall have

made an award against the employer as a non-insured employer, the making

of such award, except in a case where the employer had secured

compensation insurance which was in effect at the time of the accident

but the carrier later became insolvent, shall constitute prima facie

evidence of an employment by the employer of an employee in an

occupation in which the said employer was required to carry compensation

and of the failure of the employer to secure the payment of workers'

compensation on the date of the accident involved in said award. A

certified copy of such award shall be received as competent evidence of

the making thereof in any criminal prosecution hereunder.

5. The chair, upon finding that an employer has failed for a period of

not less than ten consecutive days to make the provision for payment of

compensation required by section fifty of this article, may impose upon

such employer, in addition to all other penalties, fines or assessments

provided for in this chapter, a penalty of up to two thousand dollars

for each ten day period of non-compliance or a sum not in excess of two

times the cost of compensation for its payroll for the period of such

failure, which sum shall be paid into the uninsured employers' fund

created under section twenty-six-a of this chapter. When an employer

fails to provide business records sufficient to enable the chair to

determine the employer's payroll for the period requested for the

calculation of the penalty provided in this section, the imputed weekly

payroll for each employee, corporate officer, sole proprietor, or

partner shall be the New York state average weekly wage, multiplied by

1.5. Where the employer is a corporation, the president, secretary and

treasurer thereof shall be liable for the penalty. If the employer shall

within thirty days after notice of the imposition of a penalty by the

chair pursuant to this subdivision make an application in affidavit form

for a redetermination review of such penalty the chair shall make a

decision in writing on the issues raised on such application.