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Junior Member
What is the name of your state (only U.S. law)? NY
My wife has two jobs, my daughter has three jobs none of which pay health insurance. In order to get them health insurance through my company (a sole proprietor DBA) I am required to have an employee.

1. Is it legal for me to hire my daughter or my wife and have them not provide services integral to the business?
2. If the answer to 1. is YES, then should I be required to have worker’s compensation insurance and / or disability insurance?

A couple of months ago I received a penalty of around $800 for not having disability insurance. I worked with the NYS Workers’ Compensation Board and had my penalty reduced to $250 and had to acquire insurance.

As a result of getting that insurance, last week I was assessed a retroactive penalty of $66,250 for not having worker’s comp insurance.

In accordance with the WCB web page titled “The Workers' Compensation Noncompliance Process” the forth paragraph states that “. The penalty accrues for the time period in which the employer had no workers' compensation coverage and had individuals providing services INTEGRAL to the business.” If the answer to #1 above is YES, should I be assessed this penalty?

The spirit of the WC law is to protect workers. The reason my “employees” were “hired” was to provide them (my family) with benefits. There is no way they could ever legally submit a worker’s comp claim as they never provide a “service integral to the business”. (This is the opposite of paying someone off the books.)

In my latest discussions with the WCB, the penalty will be reduced to $1,000. I still have to pay $250 a year for WC insurance but have filed a DB212-5 to get a waiver for disability insurance for my wife.

I would appreciate your input if I have grounds to:

1. have all fines rescinded and those already paid refunded and
2. cancel the workers comp policy I was required to obtain.


Senior Member
So you claimed your spouse and daughter as employees of your company when they did not work for you in order for them to get insurance coverage.

WC then fined you for not having WC insurance because you had employees. Your upset because they are not 'really' employees.

You want advice on how not to get out of paying for WC insurance while at the same time keeping your wife and daughter as paper employees of your company so you defraud your insurance company.

Yeah. Good luck with that.

I think it would be cheaper just to buy insurance then pay all the lawyer fees, past medical bills (rejected by insurance company due to fraud), and fines (if not prision).


Junior Member
Thank you for your reply Ozark_Sophist.
Is it fraud for me to hire my daughter or my wife to have them provide services not integral to the business?


Senior Member, Non-Attorney
Thank you for your reply Ozark_Sophist.
Is it fraud for me to hire my daughter or my wife to have them provide services not integral to the business?
You can't have your cake and eat it too.
You can't have them be employees for Health Insurance, but not employees for WC. You're defrauding SOMEBODY


Junior Member
Thank you for your reply Zigner
I was basically seeking a job description that might not be required to be covered by WC. My intension is not fraud, but providing benefits.


I'm a Northern Girl
Yes. If they are not employees and not providing any services to the company, it is fraud to add them.

Now, if they were actually providing services to the company, you can add them to the insurance BUT you will also have to provide workers comp for them. At least in my state, you will have to give the workers comp people some idea of what services they are providing so don't think you can just claim they are providing services without them actually doing so.

They're either employees and have workers comp as well as being eligible for the insurance, or they're not employees, you don't have to pay workers comp, and they're not eligible for the insurance.


I'm a Northern Girl
There are no job descriptions for which WC is not required. Either they're employees and they are covered by workers comp or they are not.

You Are Guilty

Senior Member
There are no job descriptions for which WC is not required. Either they're employees and they are covered by workers comp or they are not.
100% correct, but maybe easier to understand this way. ALL employees are required to be covered, only independent contractors are not.

And, although it's way too late now, one way to achieve what the OP wanted would have been to structure the business as a partnership with the family member, as opposed to employing them. (It's been a while but I'm fairly sure that's one of the few exceptions to the SC procurement requirement).


Junior Member
Thank you all so much for your input. When you’re a very small company like I am, it’s not easy to get the suggestions and direction you provided. Is there any situation in which an employee making phone calls or working from their own residence could file a WC claim?


Junior Member
Thank you all so much again. Based on what you’re all saying, I will continue the WC insurance and deal with the penalties of being ignorant.


I'm a Northern Girl
You may find that buying an individual policy is cheaper than providing family coverage on your group policy AND paying workers compensation that you don't need.


Not every employee is covered. The law indicates all employees are covered for work comp except the following

domestic employees working less than 40 hrs/week
charitable or educational institutes
employees of municipalities that are not engaged in hazardous employment
uniformed sanitation workers
police officers
babysitters and minors over the age of 14 engaged in casual employment ina nad about one-family owner-occupied residences or the premises of non-proft, non-commercial organizations, non involving the use of power drive machinery
harbor workers
railroad employees
federal employees
anyone engaged in yard work or household chores

With regard to supplying workers' compensation coverage to employees, you are required if you have one or more employee at least 30 days in an calendar year - unless this person qualifies as one of the above.

Also, I would be careful before doing away with your health coverage and relying on work comp benefits. With work comp insurance, you don't get to decide what will be paid. Your insurance company does. So if a claim is denied, you could be left with no medical coverage.


I'm a Northern Girl
I don't think anyone has suggested (or the OP has indicated an intent for) doing away with health insurance in favor of workers comp - at least I hope that's not what he's suggesting.

What we're trying to get across to him is that he doesn't get to pick and choose - if he wants them to be employees so they can get the health insurance, then he's stuck with them being employees when it comes to workers comp. He gets both coverages or neither. He can't make them be employees when it comes to getting them health insurance, but then say no, they're not employees, when workers comp wants their premiums.

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