S3364-2013 Actions

• Feb 1, 2013: REFERRED TO LABOR

S3364-2013 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 employ-
ees, 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 employ-
ee'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 arti-
cle 7 and gives employees, business competitors and others the power to
sue a New York State employer for failing to pay its Workers' Compen-
sation insurance premiums. This amendment to the workers' compensation
law creates a private right of action if an employer violates the Work-
ers' Compensation statute, which in effect allows for workers and busi-
nesses 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' Compen-
sation 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 paint-
ing, 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 work-
ers as independent contractors to avoid coverage. Also, a misclassifica-
tion 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 peri-
od. 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 compen-
satory and liquidated damages, along with attorney's fees and cost.

The balance of funds recovered will go into the state's Workers' Compen-
sation 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.

S3364-2013 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    3364

                         2013-2014 Regular Sessions

                              I N  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

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD00657-01-3

 S. 3364                             2

  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.