Add §§151-a & 151-b, Work Comp L; add §99-tt, St Fin L
Establishes a fraud assessment commission; directs the chair of the workers' compensation board, in consultation with the workers' compensation fraud inspector general and the fraud assessment commission, to establish an assessment for workers' compensation fraud investigations to fund the investigation and prosecution of workers' compensation fraud, willful failure to secure payment of workers' compensation, and failure to keep true and accurate records; establishes the workers' compensation fraud investigation fund in the joint custody of the chair of the workers' compensation board, the commissioner of labor, and the comptroller, which shall consist of monies received from the imposition of the assessment for workers' compensation fraud investigations.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8429B
SPONSOR: Bronson TITLE OF BILL:
An act to amend the workers' compensation law, in relation to establish-
ing a fraud assessment commission and an assessment for workers' compen-
sation fraud investigations; and to amend the state finance law, in
relation to establishing the workers' compensation fraud investigation
fund
PURPOSE OR GENERAL IDEA OF BILL::
This bill would create a Fraud Assessment Commission that will advise
the Workers Compensation Board Chair and the Workers Compensation Inves-
tigator General on necessary Assessments and allocation of funds to
support local prosecutors in the investigation and prosecution of work-
ers compensation fraud.
SUMMARY OF SPECIFIC PROVISIONS::
The bill amends Article 8 of the Workers Compensation law, adding a neW
Section 151-A.
Establishes legislative intent regarding rampant workers compensation
Fraud in the Construction industry and the need to fund investigations
and prosecutions at the local level.
Section one establishes a Fraud Assessment Commission and outlines
composition of the board.
Section two establishes an Assessment for Workers Compensation Fraud
Investigations to be established by the Chair of the Workers Compen-
sation Board and the Workers Compensation Investigator General in
consultation with the Fraud Assessment Commission no later than November
1, 2025.
Section three establishes the Workers Compensation Fraud Investigation
Fund in joint custody of Chair the Workers Compensation Board and
Commissioner of the Department of Labor, as well as outlines the Admin-
istration of funds and the process for grants to district attorneys and
local prosecutors.
Section four establishes the process by which the Chair of the Workers
Compensation Board or the Workers Compensation Investigator General can
discontinue funds to district attorneys unwilling or unable to investi-
gate and prosecute workers compensation Fraud.
Section five establishes reporting process for the Fraud Assessment
Commission on the Workers Compensation Investigation Fund.
Section six establishes effective date.
JUSTIFICATION::
Workers' Compensation Fraud is a growing problem in the construction
industry. Nationwide, up to 19% (2.1 million) of construction workers
are paid off the books or misclassified as independent contractors,
which has resulted in a net premium loss of $5 billion.1 In New York
State, the annual loss in premiums is estimated at $616.4 Million annu-
ally; which resulted in an estimated loss in Workers Compensation
Assessments of $57 million in 2024, and $44 million in 2025 (based on
Workers' Compensation Assessments of 9.2% in 2024 and 7.1% in 2025).
The Assessment in New York State supports several important special
funds, including one that compensates volunteers who were injured or
disabled during the World Trade Center rescue, recovery, or cleanup.
While the Workers Compensation Board and Workers Compensation Investi-
gator General have worked hard to combat fraud throughout New York
State's Workers Comp Program, there need to be resources available for
prosecutors at the local level. The structures in the construction
industry that facilitate Workers Comp Fraud are exceedingly complex and
sophisticated and limit liability on Owners, General Contractors,
Construction Managers, and Specialized Subcontractors. They hinge on
facilitated relationships with shadowy shell companies and labor
brokers, which facilitate cash payments off the books to workers, thus
allowing rampant premium fraud through employee misclassification as
well as fraudulent (and minimal) certificates of insurance.
These labor broker/shell company/facilitator relationships are complex
and require extensive resources from local prosecutors to effectively
prosecute. The only way to truly target Workers Compensation Fraud is by
giving local prosecutors the tools and wherewithal to do so. First and
foremost, New York needs to incentivize effective strategies and dedi-
cate resources for prosecuting Workers Compensation Fraud as it is iden-
tified.
We are proposing a model based on the California Workers Compensation
Insurance Fraud Program that incentivizes local prosecutors to target
workers compensation premium fraud at its root.
Sources:
"Up to 2.1 Million U.S. Construction Workers Are Illegally Misclassified
or Paid off the Books." The Century Foundation, 13 Nov. 2023,
tcf.org/content/report/up-to-2-1-million-u-s-construction-workers-are-il
legally-misclassified-or7paid-off-the-books/.
Admin. "New York Reduces Workers' Compensation Assessment Rate for
2025." Insurance Journal, 31 Oct. 2024,
www.insurancejournal.com/news/east/2024/10/31/799250.htm :-:text=The%2Or
ate%20asse
ssed%20on%20standard,on%20its%20estimated%20annual%20expenses.
PRIOR LEGISLATIVE HISTORY::
New bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS::
None. Workers Compensation Fraud Investigation Fund will be funded
thrdugh by additional assessment for workers compensation fraud investi-
gations.
EFFECTIVE DATE::
Immediately.
STATE OF NEW YORK
________________________________________________________________________
8429--B
2025-2026 Regular Sessions
IN ASSEMBLY
May 15, 2025
___________
Introduced by M. of A. BRONSON, JACOBSON -- read once and referred to
the Committee on Labor -- reported and referred to the Committee on
Ways and Means -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee
AN ACT to amend the workers' compensation law, in relation to establish-
ing a fraud assessment commission and an assessment for workers'
compensation fraud investigations; and to amend the state finance law,
in relation to establishing the workers' compensation fraud investi-
gation fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative intent. The legislature hereby finds that
2 construction employers shave a significant amount off their labor costs
3 through workers' compensation premium fraud. They do that by taking
4 advantage of workers' compensation insurer practices that enable fraud.
5 Employer workers' compensation premium fraud is costing insurers $5
6 billion a year and it's costing law-abiding employers and their employ-
7 ees jobs. The Century Foundation hired economists to study and write a
8 report on fraud in the U.S. construction industry that has detailed the
9 impacts of these practices extensively; 10 to 19 percent of construction
10 workers who should be treated as employees are not. That's 1.1 to 2.1
11 million workers, ultimately resulting in $10 billion or more in unpaid
12 federal and state taxes.
13 The legislature finds that New York state must generate additional
14 resources to ensure that the workers' compensation fraud inspector
15 general and local prosecutors have the resources available to investi-
16 gate and prosecute employer workers' compensation fraud cases and cases
17 relating to the willful failure to secure the payment of workers'
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11529-04-5
A. 8429--B 2
1 compensation. This will help combat broader rampant wage theft through-
2 out the construction industry.
3 § 2. The workers' compensation law is amended by adding two new
4 sections 151-a and 151-b to read as follows:
5 § 151-a. Fraud assessment commission. There is hereby established a
6 fraud assessment commission, which shall consist of ten members
7 appointed by the governor as follows: three members from a bona fide
8 labor organization, two members from self-insured employers, two members
9 from insured employers, two members from insurers, and one claimant
10 attorney. The term of office shall be four years, and a member shall
11 hold office until the appointment of a successor. The chair of the work-
12 ers' compensation board, the commissioner of labor, and the inspector
13 general shall be ex officio voting members of the commission.
14 § 151-b. Assessment for workers' compensation fraud investigations. To
15 fund the investigation and prosecution of workers' compensation fraud,
16 willful failure to secure payment of workers' compensation punishable
17 under section fifty-two of this chapter, and failure to keep true and
18 accurate records as required under section one hundred thirty-one of
19 this chapter, the chair of the workers' compensation board, in consulta-
20 tion with the workers' compensation fraud inspector general and the
21 fraud assessment commission shall establish, by the first day of Novem-
22 ber, two thousand twenty-five, and annually thereafter, an assessment
23 for workers' compensation fraud investigations which shall be borne by
24 affected employers securing compensation for their employees pursuant to
25 section fifty of this chapter. The assessment for workers' compensation
26 fraud investigations shall be in addition to assessments for annual
27 expenses established in section one hundred fifty-one of this article.
28 All assessments collected pursuant to this section shall be credited to
29 the workers' compensation fraud investigation fund under section nine-
30 ty-nine-tt of the state finance law and shall be available for the uses
31 and purposes of such fund.
32 § 3. The state finance law is amended by adding a new section 99-tt to
33 read as follows:
34 § 99-tt. Workers' compensation fraud investigation fund. 1. There is
35 hereby established in the joint custody of the chair of the workers'
36 compensation board, the commissioner of labor, and the comptroller a
37 special fund to be known as the "workers' compensation fraud investi-
38 gation fund".
39 2. Such fund shall consist of monies received from the imposition of
40 the assessment for workers' compensation fraud investigations pursuant
41 to section one hundred fifty-one-b of the workers' compensation law, and
42 all other monies appropriated, credited, or transferred thereto from any
43 other fund or source pursuant to law.
44 3. Monies in the fund, pursuant to appropriation by the legislature,
45 issuance of a certificate of availability by the director of the budget,
46 and a determination by the chair of the workers' compensation board in
47 consultation with the inspector general, with the advice and consent of
48 the fraud assessment commission as to the most effective distribution of
49 monies, may be made available for purposes of the investigation and
50 prosecution of employer workers' compensation fraud cases, cases relat-
51 ing to the willful failure to secure the payment of workers' compen-
52 sation, and cases relating to the failure to keep true and accurate
53 records.
54 4. At least fifty percent of the workers' compensation fraud investi-
55 gation fund established pursuant to this section shall be distributed to
56 district attorneys for purposes of the investigation and prosecution of
A. 8429--B 3
1 workers' compensation fraud cases, cases relating to the willful failure
2 to secure the payment of workers' compensation, and cases relating to
3 the failure to keep true and accurate records. If a district attorney is
4 determined by the chair of the workers' compensation board or the
5 inspector general to be unwilling or unable to investigate and prosecute
6 workers' compensation fraud claims, claims relating to the willful fail-
7 ure to secure the payment of workers' compensation, or claims relating
8 to the failure to keep true and accurate records, the commissioner of
9 labor shall discontinue distribution of funds allocated for such county
10 and may redistribute such funds according to this section.
11 5. Monies shall be payable from the fund on the audit and warrant of
12 the comptroller on vouchers approved and certified by the commissioner
13 of labor.
14 6. Monies in the workers' compensation fraud investigation fund shall
15 be kept separate and shall not be commingled with any other monies in
16 the custody of the chair of the workers' compensation board, the commis-
17 sioner of labor and/or the comptroller.
18 7. To the extent practicable, the commissioner of labor shall ensure
19 that all monies received during a fiscal year are expended prior to the
20 end of such fiscal year.
21 8. By the thirtieth day of June, two thousand twenty-five, and annual-
22 ly thereafter, the chair of the workers' compensation board, in consul-
23 tation with the workers' compensation fraud inspector general or the
24 fraud assessment commission, shall develop and release a request for
25 proposals and application process for the funds outlined in this
26 section.
27 9. The fraud assessment commission shall provide quarterly reports to
28 the speaker of the assembly, the temporary president of the senate, the
29 chair of the senate finance committee and the chair of the assembly ways
30 and means committee, on the receipts and distributions of the workers'
31 compensation investigation fund, including an itemization of such
32 receipts and disbursements, the historical and projected expenditures,
33 and the projected fund balance.
34 § 4. This act shall take effect immediately.
