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NY Businesses Face Increase in Workers’ Comp Premiums for Code Rule 59 Noncompliance

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  • Last Updated: 12/19/2022


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New York state addresses workplace safety, focusing on evaluating business with poor claims records and mandating implementation of training programs to improve outcomes or face penalties.

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Some businesses in New York state might be subject to a workplace safety and loss prevention mandate that carries a financial penalty for noncompliance. Impacted businesses will have obligations that include evaluation and reporting.

Industrial Code Rule 59 (CR 59) resulted from a five-year study by the New York Compensation Insurance Review Board (NYCIRB) that reviewed workers’ compensation claims of various-sized businesses and any penalties. On Oct. 1, 2022, the state implemented its own Experience Modification Rating (EMR) system in order to have businesses address higher EMRs through evaluation and remediation. Failure to comply would ultimately result in penalties, which would mean an increase in premiums.

What is an Experience Modification Rating (EMR)?

An Experience Modification Rating is the calculation that insurance firms use to determine the cost of workers’ compensation insurance premiums. Some factors that impact an EMR include claim history, injury costs, expected loss, to name a few. An EMR of 1.0 or less is considered good, with 1.0 meaning your business is no more or less risky than other businesses. So, an EMR of greater than 1.0 denotes more risk.

What Businesses Must Comply with Code Rule 59?

Any business located in New York state with an annual payroll of more than $800,000 and a workers’ compensation experience modification rating of 1.20 or higher is required to comply with CR 59.

What are the Requirements Under Code Rule 59?

Any business subject to CR 59 is required to implement a Safety and Loss Prevention program, which they must file with the state. There are also deadlines associated with the establishment of the program, which starts with receiving notification from the NYCIRB that your business is required to participate in the CR 59 program.

  • Within 30 days of notification, a business must schedule an appointment to have their workplace reviewed by a certified consultant.
  • Within 10 days of scheduling the appointment for a certified consultant’s visit, a business must contact its insurance provider and the state Department of Labor to provide the date of evaluation, as well as the name, address, and certification number of the consultant.
  • A business has 75 days to complete the consultation and workplace evaluation

A business has additional obligations after the review, including sending a copy of the consultant’s report to their insurance carrier and the state Labor Department, as well as a letter indicating their plans to comply with the consultant’s recommendations. The letter requires certain details, including how the business plans to enact any changes and a deadline for when they will do so.

Finally, after a business completes the recommended changes, which must take place within six months of receiving the report, an additional onsite review must be conducted by the insurance company within 60 days of the end of the six-month period. Insurers will assess whether the business has complied with the recommendations and then provide a copy of the inspection report to the business and the state Department of Labor within 45 days of the re-inspection.

What is the Penalty for Noncompliance with CR 59?

Under the mandate, businesses that do not comply with Code Rue 59 will be penalized with a 5 percent surcharge on their workers’ compensation renewal premiums, and further be subject to an additional 5% surcharge each year they fail to comply. 

Paychex Can Help

Businesses that receive notification need to act in a timely fashion. They might need help implementing a safety program or with additional instruction on staying compliant with safety protocols. They also might have questions about insurance. Paychex provides services and solutions, including Professional Employer Organization services to help businesses run more efficiently while staying compliant. 

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* Este contenido es solo para fines educativos, no tiene por objeto proporcionar asesoría jurídica específica y no debe utilizarse en sustitución de la asesoría jurídica de un abogado u otro profesional calificado. Es posible que la información no refleje los cambios más recientes en la legislación, la cual podrá modificarse sin previo aviso y no se garantiza que esté completa, correcta o actualizada.

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