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Explainer: Special Categories of Employment for New York Workers’ Compensation Coverage

Wrap-Up Policies

On large construction projects the main general contractor may obtain a workers’ compensation insurance policy to cover all workers on a the job site – this policy is called a “wrap-up” policy. A wrap-up policy has an expiration date that coincides with the planned completion date of the project.

All the subcontractors should be listed as policyholders on the wrap-up policy. The general contractor and the majority of the sub-contractors should each also have their own separate workers’ compensation insurance policy.


As a general rule, all for-profit unions in New York State need coverage – no exceptions.

​Taxi cab operators.

A taxi driver, operator or lessee is an employee, and so must be covered for workers’ compensation purposes. For the lessee to be considered an independent contractor, the owner-operator may not control, direct, supervise, or have the power to hire or fire such lessee.

​Student Interns.

Student interns are individuals that are providing services to gain work experience. Workers’ Compensation Law Judges have ruled that the training received by student interns constitutes compensation – in lieu of wages – and that workers’ compensation coverage must be obtained for even unpaid interns. Exception: Student interns (paid or unpaid) doing “non-manual” work for a religious, charitable or educational institution (covered under § 501(c)(3) of the IRS tax code) are exempt from mandatory coverage.


Except for the spouses of farmers, spouses providing paid or unpaid services to a for-profit business are counted as employees for workers’ compensation coverage purposes under the Workers’ Compensation Law (regular owner/officer exclusions apply).

​Sole Proprietorships

Workers’ compensation coverage is not required for a sole proprietor who does not have employees. If a sole proprietor has no employees but obtains a workers’ compensation policy, the sole proprietor is automatically included in that policy, unless the sole proprietor elects himself out of that coverage.

Real Estate Brokers

Licensed real estate brokers or real estate sales associates are independent contractors if the licensed real estate broker or sales associate meets all of the following requirements:

  1. Has income based upon sales and not on the number of hours worked (i.e., not salaried);
  2. There is a written contract that outlines the services that they are to perform – this contract may be terminated by either party at any time upon notice given to the other party (For the written contract requirements, refer to WCL § 2);
  3. Work any hours they choose;
  4. Can engage in outside employment;
  5. Incur their own expenses including automobile, travel and entertainment (office facilities and supplies may be provided by real estate firm); and
  6. Shall not be treated as an employee for state and federal tax purposes.


Workers’ compensation coverage IS NOT required for partners of a partnership under the laws of New York State if there are no employees.

​Out-of-state Employers Working in New York State.

As of September 9, 2007, all out-of-state employers with employees working in New York State are required to carry a full, statutory New York State workers’ compensation insurance policy. To be considered a full, statutory New York State workers’ compensation insurance policy, “New York” must be listed under Item “3A” on the Information Page of the policy.

Other States’ Government Employees.

New York’s Workers’ Compensation Law does not cover the government employees of any other states.

​LLCs & LLPs.

Members of a Limited Liability Company (LLC) or a Limited Liability Partnership (LLP) are treated the same as partners of a business that is a partnership under the laws of New York State. WCL § 54. Workers’ compensation coverage is not required for members of a LLC or LLP that does not have employees.

​Leased Employees: Professional Employer Organization.

Leased employees are the employees of the company that is paying to lease them and that company must have a workers’ compensation policy in its name. Leasing firms (PEOs) must be licensed by the New York State Department of Labor. Article 31 Section 922 of the Labor Law defines the relationship between the PEO and the client employer. The employer generally recruits and hires its employees and contracts with the leasing firm to handle the payroll, taxes and benefit packages for its employees.
Clients of PEOs may be covered by either of the following methods:

  • Each business using leased employees may procure its own workers’ compensation insurance policy to cover its leased employees (as well as any non-leased employees), or
  • The leasing firm can procure a separate workers’ compensation insurance policy to cover the leased employees of each of its client firms. The policy should identify the insured as: XYZ Leasing Company Inc. L/C/F ABC Business Entity, Inc.

​Independent Contractors and Subcontractors.

A business cannot require employees working for that business to obtain their own workers’ compensation insurance policy or contribute towards a workers’ compensation insurance policy.

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