Bill S3364-2013

Creates a private right of action against non-compliant employers

Creates a private right of action against non-compliant employers.

Details

Actions

  • Jan 8, 2014: REFERRED TO LABOR
  • Feb 1, 2013: REFERRED TO LABOR

Memo

BILL NUMBER:S3364

TITLE OF BILL: An act to amend the workers' compensation law, in relation to establishing a private right of action against non-compliant employers

PURPOSE: To grant and allow for a plaintiff or plaintiffs the right to file a civil suit against an employer based on certain factors.

SUMMARY OF PROVISIONS:

Section 1: Workers' Compensation law is amended with the addition of section 138, whereby establishing "private right of action" for employees, employee's dependents and insurance carriers for the filing of a civil suit against an employer.

If a claim for compensation is filed by either an employee, an employee's dependents or insurance carrier, and the employer has failed to secure payment of compensation in accordance with sections 26, 26-A and 50 of the Workers' Compensation law, such employee, employee dependent or insurance carrier may institute an action in a court of competent jurisdiction and file an action against such employer.

A notice shall be issued beginning ninety days after the employee or insurer has provided notice of complaint and served such notice.

A plaintiff that commences an action shall be entitled to 25% of the employer's unpaid premium or twenty-five thousand dollars. In addition, plaintiff is entitled to all court costs and reasonable attorney's fees.

Section 2: Effective date of bill.

JUSTIFICATION: This bill amend the State's Workers' Compensation article 7 and gives employees, business competitors and others the power to sue a New York State employer for failing to pay its Workers' Compensation insurance premiums. This amendment to the workers' compensation law creates a private right of action if an employer violates the Workers' Compensation statute, which in effect allows for workers and businesses to not have to rely on the state to take legal action against these companies. Though the state insurance fraud bureau is responsible for taking action against companies, the amendment to this bill will assist them in going after employers cutting corners on Workers' Compensation Insurance.

Indications are that problems exist in many industries where such costs are high, such as construction, janitorial, domestic help and certain health care services. There are also indications where the problem is most acute in risky specialty areas like steel erecting, bridge painting, and logging, where workers' compensation insurance premiums can run between 50 to 80 percent of a company's total payroll. In addition, there are companies that are trying to be the lowest bidder on a

contract and are sometimes tempted to pare costs by misclassifying workers as independent contractors to avoid coverage. Also, a misclassification of workers in high-risk jobs exist as these workers are doing less dangerous work in order, to save on premiums and assisting in omitting some workers from payroll logs despite actually working or not paying for insurance at all.

This amendment will permit cases to be filed against an employer 90 days after notifying both the employer and insurer of the complaint and intent to file. A suit can only move forward if the insurance carrier does not attempt to collect what is owed during the 90 day notice period. Plaintiffs who can show that an employer violated the workers' compensation statue are entitled to recover 25% of the full value of that is owed, up to a $25,000 maximum. They are also entitled to an additional $25,000 or 25% of what is owed, whichever is less, in compensatory and liquidated damages, along with attorney's fees and cost.

The balance of funds recovered will go into the state's Workers' Compensation Security Fund for insured workers whose companies did not pay for insurance. This new amendment will not apply to existing workers' compensation insurance policies since it could take up to a year before the first suits are filed since most workers, compensation policies run for a year.

LEGISLATIVE HISTORY: 2012: S. 5604 - Referred to Labor

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Shall take effect one year after becoming law.


Text

STATE OF NEW YORK ________________________________________________________________________ 3364 2013-2014 Regular Sessions IN SENATE February 1, 2013 ___________
Introduced by Sen. ADDABBO -- read twice and ordered printed, and when printed to be committed to the Committee on Labor AN ACT to amend the workers' compensation law, in relation to establish- ing a private right of action against non-compliant employers THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The workers' compensation law is amended by adding a new section 138 to read as follows: S 138. PRIVATE RIGHT OF ACTION. 1. RIGHT ESTABLISHED. NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, EMPLOYEES, OR IN THE CASE OF DEATH OF THE EMPLOYEE, SUCH EMPLOYEE'S DEPENDENTS AND INSURANCE CARRIERS SHALL HAVE THE RIGHT TO FILE A CIVIL SUIT, IN A COURT OF COMPETENT JURISDICTION, AGAINST AN EMPLOYER AS PROVIDED HEREIN. 2. CLAIMS. (A) WHEN A CLAIM FOR COMPENSATION IS FILED BY AN EMPLOYEE, OR IN THE CASE OF DEATH OF THE EMPLOYEE, BY THE EMPLOYEE'S DEPENDENTS, AND THE EMPLOYER HAS FAILED TO SECURE THE PAYMENT OF COMPENSATION IN ACCORDANCE WITH SECTION FIFTY OF THIS CHAPTER, TO MAKE DEPOSIT OF SECU- RITY IN ACCORDANCE WITH SECTION TWENTY-SIX OF THIS CHAPTER, TO MAKE PAYMENT OF COMPENSATION INTO THE FUND CREATED UNDER SECTION TWENTY-SIX-A OF THIS CHAPTER ACCORDING TO THE TERMS OF ANY AWARD INCLUDING, WITHOUT LIMITATION, AWARDS MADE PURSUANT TO SUBDIVISION FIVE OF SECTION THIR- TEEN-G, SUBDIVISION TWO OF SECTION THIRTEEN-F, SUBDIVISION FIVE OF SECTION THIRTEEN-K, SUBDIVISION FIVE OF SECTION THIRTEEN-L AND SUBDIVI- SION SIX OF SECTION THIRTEEN-M OF THIS ARTICLE, OR TO MAKE PAYMENT ON A PREMIUM IN THREE CONSECUTIVE CALENDAR MONTHS, PROVIDED, THAT PARTIAL PAYMENT SHALL CONSTITUTE NON-PAYMENT, SUCH EMPLOYEE OR EMPLOYEE'S DEPEN- DENTS MAY INSTITUTE AN ACTION IN A COURT OF COMPETENT JURISDICTION, SUBJECT TO THE LIMITATIONS SET FORTH IN SUBDIVISIONS THREE AND FOUR OF THIS SECTION. (B) WHEN A CLAIM FOR COMPENSATION IS FILED BY AN EMPLOYEE, OR IN THE CASE OF DEATH OF THE EMPLOYEE, BY THE EMPLOYEE'S DEPENDENTS, AND THE
EMPLOYER HAS FAILED TO SECURE THE PAYMENT OF COMPENSATION IN ACCORDANCE WITH SECTION FIFTY OF THIS CHAPTER, TO MAKE DEPOSIT OF SECURITY IN ACCORDANCE WITH SECTION TWENTY-SIX OF THIS CHAPTER, TO MAKE PAYMENT OF COMPENSATION INTO THE FUND CREATED UNDER SECTION TWENTY-SIX-A OF THIS CHAPTER ACCORDING TO THE TERMS OF ANY AWARD INCLUDING, WITHOUT LIMITA- TION, AWARDS MADE PURSUANT TO SUBDIVISION FIVE OF SECTION THIRTEEN-G, SUBDIVISION TWO OF SECTION THIRTEEN-F, SUBDIVISION FIVE OF SECTION THIR- TEEN-K, SUBDIVISION FIVE OF SECTION THIRTEEN-L AND SUBDIVISION SIX OF SECTION THIRTEEN-M OF THIS ARTICLE, OR TO MAKE PAYMENT ON A PREMIUM IN THREE CONSECUTIVE CALENDAR MONTHS, PROVIDED, THAT PARTIAL PAYMENT SHALL CONSTITUTE NON-PAYMENT, AN INSURER OR INSURERS THAT HAD PREVIOUSLY INSURED SUCH EMPLOYER MAY INSTITUTE AN ACTION IN A COURT OF COMPETENT JURISDICTION, SUBJECT TO THE LIMITATIONS SET FORTH IN SUBDIVISIONS THREE AND FOUR OF THIS SECTION AND PROVIDED THAT IN THE CASE OF NON-PAYMENT OF A PREMIUM ONLY THE INSURER AT THE TIME OF NON-PAYMENT MAY INSTITUTE AN ACTION AND PROVIDED FURTHER, THAT IN SUCH INSTANCE AN EMPLOYEE DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION MAY ALSO FILE AN ACTION AGAINST SUCH EMPLOYER. 3. NOTICE. (A) A PROCEEDING COMMENCED UNDER THIS SECTION MAY ONLY BEGIN NINETY DAYS AFTER THE EMPLOYEE OR INSURER HAS PROVIDED NOTICE OF COMPLAINT AND SERVED SUCH NOTICE CONSISTENT WITH THE APPLICABLE PROVISIONS OF THE CIVIL PRACTICE LAW AND RULES ON SERVICE OF PROCESS. (B) WHENEVER AN ACTION IS BROUGHT UNDER THIS SECTION FOR THE EMPLOY- ER'S FAILURE TO MAKE PAYMENTS ON A PREMIUM FOR THREE CONSECUTIVE CALEN- DAR MONTHS, NO CAUSE OF ACTION SHALL BE SUSTAINED IF THE INSURER COLLECTS, OR ATTEMPTS TO COLLECT THE UNPAID PREMIUM DURING THE NOTICE PERIOD PROVIDED FOR IN PARAGRAPH (A) OF THIS SUBDIVISION. 4. PENALTIES. (A) A PLAINTIFF THAT COMMENCES AN ACTION UNDER THIS SECTION SHALL BE ENTITLED TO TWENTY-FIVE PERCENT OF THE EMPLOYER'S UNPAID PREMIUM OR TWENTY-FIVE THOUSAND DOLLARS, PROVIDED THAT IN THE CASE OF AN EMPLOYER SUBJECT TO SECTION TWENTY-SIX-A OF THIS CHAPTER, THE PREMIUM SHALL BE CALCULATED USING THE PREVAILING RATES OF COVERAGE IN THE GEOGRAPHICAL AREA IN WHICH THE EMPLOYER OPERATES, PROVIDED THAT, SHOULD SUFFICIENT FACTS EXIST TO SHOW THAT THE EMPLOYER OPERATES STATE- WIDE, THE PREVAILING RATES OF THE STATE INSURANCE FUND SHALL BE USED. (B) A PLAINTIFF THAT COMMENCES AN ACTION UNDER THIS SECTION SHALL BE ENTITLED TO PUNITIVE DAMAGES UP TO TWENTY-FIVE THOUSAND DOLLARS. (C) A PLAINTIFF THAT COMMENCES AN ACTION UNDER THIS SECTION SHALL BE ENTITLED TO ALL COURT COSTS AND REASONABLE ATTORNEY'S FEES. (D) THE BALANCE OF ANY SETTLEMENT UNDER THIS SECTION SHALL BE DEPOSIT- ED IN THE UNINSURED EMPLOYER'S FUND ESTABLISHED PURSUANT TO SECTION TWENTY-SIX-A OF THIS CHAPTER. S 2. This act shall take effect one year after it shall have become a law.

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