What's happening
This bill requires more frequent workers' compensation audits for employers, especially in construction, and imposes penalties for noncompliance or fraud.
Why it matters
Increases audit frequency for employers. All employers, except those in self-insurance or group self-insured trusts, will face regular workers' compensation audits—at least every two years for most, and annually for those in construction with higher premiums, which could lead to more accurate risk assessment and premium calculation.
Imposes strict requirements on records access. Employers must provide auditors with full access to detailed payroll, employee, and financial records, as well as allow physical inspections; failure to comply results in a hefty surcharge (double the estimated annual premium), emphasizing the importance of transparency.
Targets fraud and misclassification. The bill specifically defines fraudulent practices (like understating payroll or misclassifying employees) and mandates that carriers report suspected fraud to state authorities, raising the stakes for employers who attempt to game the system.
Focuses enforcement on higher-risk sectors. By singling out construction (a high-risk industry for workers’ comp claims) for annual, in-depth audits, the bill aims to address sectors with greater potential for abuse or error, possibly leading to safer workplaces and fairer insurance costs.
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Who cares
Headline styles
Require Regular Workers' Comp Audits
Plain English, a few words. Used as the page title.
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History
- Referred to labor
- Referred to labor
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
7473
2017-2018 Regular Sessions
IN ASSEMBLY
April 26, 2017
Introduced by M. of A. CAHILL -- read once and referred to the Committee on Labor
AN ACT to amend the workers' compensation law, in relation to providing incentives for productive workers' compensation audits
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The workers' compensation law is amended by adding a new section 112-a to read as follows:
§ 112-a. Audits of employers. 1. (a) Employers in all classes other than the construction class shall be audited not less frequently than biennially and the chair or board may provide for more frequent audits of employers in specified classifications based on factors such as amount of premium, type of business, loss ratios, or other relevant factors. In no event shall employers in the construction class, generating more than the amount of premium required to be experience rated, be audited less frequently than annually. The annual audits required for construction classes may be a physical, onsite review of original payroll records, employee records, checkbooks, cash book (disbursements and receipts), general ledger, contracts, tax returns including quarterly payroll filings, and original certificates of insurance. The audit of all employers shall be conducted no more than one hundred twenty days after the expiration of a policy period. At the completion of an audit, if requested by the auditor, the employer or officer of the corporation must print and sign their names on the audit document affirming the accuracy of the information provided therein. As required by section one hundred twelve of this article, employers shall make available all books and records necessary for the payroll verification audit and permit the auditor to make a physical inspection of the employer's operation. If an employer fails to provide reasonable access to all such books and records necessary for a payroll verification audit, including a physical inspection of the employer's operation, the employer shall pay a
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04820-02-7
A. 7473 2
surcharge to the carrier of two times the most recent estimated annual premium.
(b) Employers that fail to provide reasonable access to the carrier for the purpose of conducting an audit shall be reported to the New York compensation insurance rating board.
(c) If an employer knowingly understates or knowingly conceals payroll, knowingly misrepresents or knowingly conceals employee duties so as to avoid proper classification for premium calculations, or knowingly misrepresents or knowingly conceals information pertinent to the computation and application of an experience rating modification factor, said knowing misrepresentations or knowing concealments shall be considered fraudulent practices in violation of applicable provisions of section one hundred fourteen of this article and insurance fraud in violation of applicable provisions of section 176.05 of the penal law.
(d) If during the course of an audit conducted under this section, an insurance carrier obtains information indicating a violation of the provisions of paragraph (c) of this subdivision, then the carrier shall report such information to the board.
2. This section shall not apply to employers that self-insure or employers that are members of a workers' compensation group self-insured trust.
3. For the purposes of this section, "construction class" means the work or occupation described in "Group 3" of subdivision one of section three of this chapter.
§ 2. This act shall take effect January 1, 2018.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
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