Who Is Exempt From Workers' Compensation in New York? Coverage Rules and Forms for Employers
We explain who is exempt from workers' compensation in New York, and which form proves it, using the Workers' Compensation Board's own rules, so you can confirm your status before a Board inquiry or an audit settles the question for you.
Does Your New York Business Need Workers' Comp Coverage?
Start with the rule. The Workers' Compensation Board states that
virtually all employers in New York State must provide workers' compensation coverage for their employees, under Workers' Compensation Law sections 2 and 3.
A workers' comp exemption in NY is the exception, and it depends on how your business is structured and who does work for it. Check the categories below against your actual setup, then the situations right after them, where owners most often assume they are exempt and are not.
Inquiry Notice → The state requests proof of coverage or exemption
Proof Review → Documentation is evaluated against the requested period
Penalty Notice →
Issued if proof is missing, incomplete, or not accepted
If no action is taken, penalties may continue to increase. Acting early with the correct documentation helps stop the issue from escalating.
Who Is Exempt From Workers' Compensation in New York?
These are the situations where the Board does not require coverage. Each one has conditions, and the exemption ends the moment your setup stops meeting them.
Do I Need Workers' Comp If I Have No Employees in New York?
A sole proprietor with no employees is not required to carry workers' comp, though you can choose to buy a policy for yourself. Once anyone else works for you, the rules on who counts as an employee apply, including family members.
Do Partnerships and LLCs Without Employees Need Coverage?
Partnerships, LLCs and LLPs with no employees are not required to carry coverage, because partners and members are not counted as employees. Bringing on even one worker who is not a partner or member changes that.
Does a One-Person Corporation Need Workers' Comp in New York?
A for-profit corporation with one or two owner-officers does not need coverage when all of these are true:
- Each officer holds an office in the corporation.
- Each officer owns at least one share of stock.
- The officers together own all of the stock.
- There are no other employees, volunteers or subcontractors.
Coverage is required once there are more than two officers or shareholders, or when the officers do not own all of the shares.
Do Household Domestic Workers Need to Be Covered?
A household does not need coverage for a domestic worker who works fewer than 40 hours a week for that household and does not live on the premises. Hours are counted per worker, per household.
Do Kids Doing Yard Work or Chores Need Coverage?
Minors doing casual yard work or household chores are not required to be covered. That changes if the work involves power-driven machinery, such as a power lawnmower.
Are Clergy and Members of Religious Orders Exempt?
Clergy and members of religious orders are not required to be covered when they perform only religious duties. Other work they do for the organization may fall under the standard rule.
Do Nonprofit Volunteers and Amateur Athletes Need Coverage?
Unpaid volunteers doing charitable work for a nonprofit are not required to be covered, and neither are athletes in supervised nonprofit amateur athletics. The exemption applies only as long as no one is paid for the work.
Are Licensed Real Estate Agents Exempt?
Licensed real estate agents are not required to be covered when they meet New York's conditions on commission-based pay and working independently of the brokerage. If you run a brokerage, we check your agent agreements against those conditions before you rely on the exemption.
When Coverage Is Required, Even If It Feels Like You're Exempt
These are the setups owners most often assume are exempt. Under the Board's rules, each one needs coverage:
Family members who work in a for-profit business count as employees, whether they are paid or not.
Student interns at a for-profit business must be covered, whether the internship is paid or unpaid.
Domestic workers who work 40 or more hours a week for a household must be covered.
Out-of-state employers with employees or subcontractors working in New York need a New York policy.
Nonprofits that pay anyone for their services must carry coverage.
If a relative helps out on weekends or a student spends the summer with you, that alone can mean your business needs a policy. We check your real setup against these rules so you know where you stand before the state asks.
From a Noncompliance Notice to a Documented Response
Every notice and every penalty depends on the employer's own records and circumstances. Results differ from case to case, and a past outcome does not promise a similar result.
– Owner and Partner, Richmond North and Associates, Amherst, NY
"This client has 20+ years of payrolling in NYS when they received a Workers Comp Non Compliance Notice. The company had recently lost a partner and the other partners had no idea who was handling what or where to turn. I reached out to Karen for her help and expertise. Karen reviewed the policies, past processes and responded to NYS on our behalf with some delicate facts and documentation."
Do You Need Workers' Comp for 1099 Employees in NY?
Often, yes. Issuing a 1099 does not by itself make someone an independent contractor. New York looks at how the work is actually done, not at the tax form you send at the end of the year.
Outside construction and commercial goods transportation, a worker may be independent when they control their own work and keep a separate business establishment of their own. Construction follows a stricter rule. Under the Construction Industry Fair Play Act, in effect since October 26, 2010, a worker performing services for a contractor is presumed to be that contractor's employee. To treat an individual as independent, the contractor has to show all three of these:
- The worker is free from control and direction in performing the job.
- The work is outside the usual course of the contractor's business.
- The worker is engaged in an independently established trade, occupation or business similar to the service performed.
The same question comes back at audit. Payments to subcontractors who cannot show their own workers' comp coverage are commonly added to your payroll, which is why a current certificate of insurance for every sub matters. Our
contractors workers' comp audit help keeps those certificates in order, and our
class code and payroll review makes sure the people you do cover are classified correctly.
Which Form Proves Workers' Comp Coverage in New York?
New York uses specific forms to show that a business has coverage or is exempt, most often when you apply for a permit, license or contract with a government agency. Each form has one job:
C-105.2, the Certificate of Workers' Compensation Insurance, is sent by your insurance carrier to show your policy is in place.
U-26.3 is the New York State Insurance Fund's version of that certificate, for NYSIF policyholders.
SI-12 is the proof of coverage for self-insured businesses.
SIG-105.2 is the proof of coverage for group self-insured businesses.
CE-200, the Certificate of Attestation of Exemption, is for businesses that are not required to carry coverage.
Using the right form for your situation keeps a permit or contract moving and keeps your records consistent with what the Board has on file.
Which Form Proves Workers' Comp Coverage in New York?
New York uses specific forms to show that a business has coverage or is exempt, most often when you apply for a permit, license or contract with a government agency. Each form has one job:
C-105.2, the Certificate of Workers' Compensation Insurance, is sent by your insurance carrier to show your policy is in place.
U-26.3 is the New York State Insurance Fund's version of that certificate, for NYSIF policyholders.
SI-12 is the proof of coverage for self-insured businesses.
SIG-105.2 is the proof of coverage for group self-insured businesses.
CE-200, the Certificate of Attestation of Exemption, is for businesses that are not required to carry coverage.
Using the right form for your situation keeps a permit or contract moving and keeps your records consistent with what the Board has on file.
What Is a CE-200, and Who Can Get One?
A CE-200 is a Certificate of Attestation of Exemption. It tells a government agency issuing a license, permit or contract that your business is not required to carry workers' comp. Only two types of businesses can get one:
Businesses operating in New York with no employees.
Out-of-state businesses where all the work on the contract or license is performed outside New York.
You apply online through New York Business Express. Each certificate is valid only for the specific license, permit or contract it was issued for, and every building permit needs its own certificate.
What a CE-200 Cannot Do
A CE-200 cannot be used to respond to the Board about periods of noncompliance or penalties for not having coverage, so filing one will not answer a penalty notice. It also cannot be used to show another business, or that business's insurance carrier, that you do not need coverage. For those situations, you need proof that matches the dates and the business in question.
What Happens If Your Business Needs Coverage and Goes Without It?
When a business that does not fit an exemption has no policy, the Board treats the gap as noncompliance. That can lead to:
A penalty of up to $2,000 for each 10-day period without coverage.
A
stop-work order that halts operations until coverage is in place.
Debarment from bidding on public work projects.
Responsibility for the full cost of any claim filed during the gap.
If the Board has already sent you an inquiry about a coverage gap, our
NYS workers' comp noncompliance help walks you through answering it with the right proof.
Not Sure Which Category Your Business Falls Into?
Tell us how your business is set up and who works in it, and we will tell you whether you need coverage and which form fits. Karen Catalano has worked in insurance since 1998, across personal lines, underwriting and commercial insurance, and our guidance follows WCB, NYSIF and DOL processes and forms. We review your records before anything is submitted, for employers in Buffalo, Rochester, Syracuse, Albany and across New York. If you already have a letter from the Board, our noncompliance help is the place to start.