Paul Sanchez
New York State Disability Insurance (SDI) is a mandatory insurance program that provides short-term cash benefits to eligible wage earners in the state of New York. The program is designed to offset lost wages caused by off-the-job illnesses, injuries, or pregnancies. Employers with one or more employees are required by law to provide SDI coverage, which can be obtained through private insurance companies, the New York State Insurance Fund (NYSIF), or self-insurance. The SDI program is separate from workers' compensation and does not cover medical expenses. Employers may choose to pass on a portion of the costs of SDI to their employees through payroll deductions, and non-compliance with the law can result in fines and criminal charges.
| Characteristics | Values |
|---|---|
| What is New York State Disability Insurance (SDI)? | A state-mandated disability insurance that provides short-term cash benefits to eligible wage earners to offset lost wages caused by off-the-job illness, injury, or pregnancy. |
| Who does it apply to? | All employers in the State of New York with one or more employees on each of 30 days in a calendar year, including employers of one or more domestic employees working in a private home for at least 40 hours per week. |
| Who is exempt? | Independent contractors and companies are not required to provide disability insurance for independent contractors. |
| When does it apply? | After the 30th day of covered employment. |
| How is it paid for? | Employers may pay DBL premiums in full, or employees may contribute up to 0.5% of their wages, up to $0.60 per week. |
| What are the penalties for non-compliance? | Failure to provide disability benefits insurance is a misdemeanor in New York State, punishable by a fine of $100 to $500, imprisonment for up to one year, or both. A second violation within five years may result in a fine of $250 to $1,250. |
| How do employees file a claim? | Covered workers should file a complete claim on the 8th day after the date of disability, although they have up to 30 days to file. Forms are submitted to the Disability Benefits Office of the Workers' Compensation Board. |
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What You'll Learn
Employee eligibility
Since 1 January 2018, New York law has mandated that all employers based in the state provide disability benefits for employees. This applies to injuries or illnesses that occur outside of work, including disabilities from pregnancies. The coverage supplements workers' compensation, providing payment for disabilities that are not job-related.
Companies are not required to provide disability insurance for independent contractors, who are defined as those who operate under their own Federal Employer Identification Number, pay self-employment taxes, work according to their own contract or authority, and have full control over their schedule and work arrangement.
Employees are entitled to disability benefits for an injury incurred in an auto accident. However, the amount of the disability benefit may reduce any no-fault insurance benefit for which the employee is eligible. Employees can receive disability benefits and Social Security retirement benefits simultaneously. If an employee has received less than 26 weeks of benefits and is still disabled, they can submit further medical evidence to request additional benefits. If an employee quits their job, their right to disability benefits may be affected.
There are limited exceptions to the rule. Employees may be eligible for both disability benefits and paid family leave when subject to a quarantine order due to COVID-19. In any 52-week period, the combined total disability leave and paid family leave may not exceed 26 weeks. Employees must file their claim within 30 days of becoming disabled. The claim is filed with the employer or insurance carrier, using a Notice and Proof of Claim for Disability Benefits (Form DB-450). If the claim is rejected, the employee will receive a Notice of Rejection from their employer, insurance carrier, or the Special Fund for Disability Benefits within 45 days of receipt of the claim.
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Employer obligations
New York State requires employers to provide disability benefits coverage to employees for off-the-job injuries or illnesses. This is known as the SDI New York law, and it mandates that all employees receive specific disability insurance benefits. The New York Disability Benefits Law outlines the requirements for the program, and it has been in effect since January 1, 2018.
Businesses that must comply with SDI New York requirements are called “covered employers” by the state. Companies are not required to provide disability insurance for independent contractors, defined as those who operate under their own Federal Employer Identification Number and have control over their schedule and work arrangement.
Covered employers can obtain SDI coverage through the NY State Insurance Fund (NYSIF), a public insurance carrier and not-for-profit agency that offers workers' compensation, New York State disability benefits, and Paid Family Leave insurance. NYSIF must provide insurance to any employer seeking coverage, regardless of the employer's type of business, safety record, or size. However, coverage can be denied if an employer owes NYSIF money from a previous bill or account. Alternatively, employers can obtain insurance through private companies licensed to operate in New York. Large corporations may also apply to self-insure, but they must meet all obligations under WCB laws, rules, and regulations, and maintain an adequate security deposit in the event of a default.
Employers may provide New York State Disability and Paid Family Leave benefits to their eligible employees under a Board-approved Plan. All Plans must be accepted by the Board and will need to adhere to the statutory requirements of the New York State Disability and Paid Family Leave Law (WCL Section 211). Once a Plan has been accepted, the employer must provide administration of these benefits from a licensed NYS insurance carrier or by obtaining approval to administer benefits as a Self-Insured employer. An employer may choose to provide enhanced benefits, such as increased monetary pay-out or a shorter waiting period to collect benefits.
The law gives employers the option to fully cover the cost of temporary disability insurance for their employees or to pass along a portion of the costs as a payroll deduction. Employers can withhold 0.50% of wages paid up to $0.60 per week, resulting in employees paying no more than $31.20 for disability insurance per year. The New York SDI tax law includes penalties for non-compliance, including fines, criminal charges, and payment equal to the total value of any claims made to the NYSIF.
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Exemptions
New York State requires employers to provide disability benefits coverage to employees for off-the-job injuries or illnesses. However, there are certain exemptions to this rule. Companies are not required to provide disability insurance for independent contractors. An independent contractor is defined as someone who operates under their own Federal Employer Identification Number and pays self-employment taxes, works according to their contract with full control over their schedule and work arrangement.
Additionally, sole proprietorships, regular partnerships, individual trustees, individual receivers, and legal representatives may be eligible for spousal exemptions from the coverage requirements. To revoke spousal inclusion, the employer must notify the Board and their insurer with an updated Form DB-212.5. Paid Family Leave coverage can be waived if the employee works fewer than 20 hours per week and works fewer than 175 days in a year, or if they are scheduled to work 20 or more hours per week but will not be employed for 26 consecutive weeks.
For persons with disabilities and limited incomes, there is an exemption from property tax. To be eligible, one must own the property or be a tenant with a life interest in the property, have documented evidence of a disability, and meet income and residency requirements. The property must be the legal residence of the disabled person and be occupied by them, except when the owner is receiving health services as an inpatient at a residential health care facility.
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Penalties for non-compliance
New York State Disability Insurance (SDI) is a state-mandated disability insurance that came into effect on January 1, 2018. The law mandates that all employers in New York provide disability benefits to their employees for off-the-job injuries or illnesses. However, companies are not required to provide disability insurance for independent contractors.
Non-compliance with the SDI law can result in several penalties for employers:
- Monetary fines: A fine of 0.5% of the employer's payroll during the period of non-compliance, up to a maximum of $500 per period of non-compliance. This fine is separate from and in addition to any claims associated with the non-compliance.
- Criminal charges: Misdemeanor criminal charges with potential fines ranging from $100 to $500, imprisonment of up to one year, or both.
- Payment of claims: The employer may be required to pay the total value of any claims made to the NYSIF or an additional 1% of the total payroll during the non-compliance period, whichever amount is greater.
- Personal liability: Sole proprietors, partners in a partnership, and the president, secretary, and treasurer of a corporation may be held personally liable for the employer's failure to secure disability benefits insurance.
It is important to note that these penalties are specific to the state of New York and may vary in severity and enforcement. Employers in New York should ensure they understand their obligations under the SDI law to avoid any potential penalties and maintain compliance with state regulations.
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Paid Family Leave
In 2016, New York enacted a comprehensive Paid Family Leave (PFL) policy, ensuring that working families need not choose between caring for their loved ones and risking their economic security. The policy provides eligible employees with job-protected, paid time off to bond with a newborn, adopted, or fostered child, care for a family member with a serious health condition, or assist loved ones when a spouse, domestic partner, child, or parent is deployed abroad on active military service. Notably, PFL may also be available when an employee or their minor, dependent child is under a quarantine or isolation order due to COVID-19.
Under the PFL policy, eligible workers can avail of up to 12 weeks of paid time off to care for their family, receiving up to 67% of their average weekly wage. Importantly, this leave does not need to be taken all at once but must be taken for full days. The job protection aspect of the policy ensures that employees can take this time off without risking their economic security or job stability.
The PFL insurance coverage is typically provided as a rider on an employer's disability benefits insurance policy. Employers may obtain this coverage through a private insurance carrier authorized by the New York State Department of Financial Services or the NYSIF, a public insurance carrier. NYSIF is a not-for-profit agency that offers workers' compensation, New York State disability benefits, and PFL insurance. Employers also have the option to provide these benefits through self-insurance, after obtaining approval from the Board.
To apply for Paid Family Leave, employees can visit the NYS Paid Prenatal Leave webpage or utilize the search function on the Workers' Compensation Board website to find their employer's Paid Family Leave insurance carrier. Additionally, the Paid Family Leave Helpline can be contacted for assistance in determining the insurance carrier.
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Frequently asked questions
NYSDI is a state-mandated disability insurance that provides short-term cash benefits to eligible wage earners to offset lost wages caused by off-the-job injuries, illnesses, or pregnancy.
To qualify for NYSDI, a worker must be working for a "covered" employer and be disabled by an off-the-job illness or injury preventing them from working for at least 7 days.
Employers in New York with one or more employees are required to provide NYSDI coverage. They can obtain coverage through a private insurance carrier, the New York State Insurance Fund (NYSIF), or by self-insuring.
To file a claim for NYSDI, you need to submit a complete claim form to the Disability Benefits Office of the Workers' Compensation Board within 30 days of the date of disability. Payments can begin within four business days after the 14th day of disability or four business days after receipt of the claim, whichever is later.
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