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Comment by awad | Hacker News Reader

At previous company incorporated in New York (oh, to be young and naive) with just 3 technical co-founders we were slapped with a ~30kish fine for not having worker's compensation. When trying to explain the situation to the state, that the only 3 employees were the owners who typed in front of a computer all day but were still interested in resolving the issue, we were no less threatened by the official on the other end that we had no leverage and they were going to go after our personal assets. Quite a terrifying time for a 21 year old to be honest.

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In New York, almost any employer with employees must have workers compensation insurance. This requirement is the result of a compromise. In New York, the law takes away the right of workers to sue for workplace injuries in most circumstances. In return, employers pay for workers compensation insurance, and claims are paid out on a "no fault" basis. The purpose of this compromise is to reduce the cost of litigating fault for workers compensation claims. Sure, it's unlikely that your office worker employees will hurt themselves in the course of their jobs, but it's not impossible, and that minimal risk is reflected in the low cost of insurance for office workers.

Editorializing: It is notable, though, that while these sorts of compromises tend to favor larger businesses for whom the administrative overhead is relatively insignificant. A smaller business would probably prefer to just be sued in the extremely unlikely event that anyone got hurt.

Oh man - I've been there. We moved from New Jersey to New York and the organization we hired for payroll and insurance botched the worker's compensation for half a day - it started on the first of the month and we moved into our office on the afternoon of the 31st, the day before. Bam, $11,000 fine.

That took months to sort out, the officials I spoke to treated me like some sort of Snidely Whiplash cartoon villain, and we still ended up having to pay the folks up in Albany $1,000. Such a hassle over nothing.

Why does something like that takes months to resolve? Shouldn't these systems be in place to be more efficient? :\

It's frustrating to be treated like a Snidely Whiplash cartoon villain over a mistake. But it's hard to distinguish willfully bad actions from mistakes, and the fact is that most people engage in at least some degree of willfully bad behavior: http://economix.blogs.nytimes.com/2009/02/03/how-common-is-t... ("Various estimates put the tax cheat rate at 80 to 95 percent of people who employ baby sitters, housekeepers and home health aides.") Enforcement keeps people civilized, and when enforcement is lax, the culture decays and civilization crumbles (see, e.g., Greece; almost any third-world country).

I agree - it's hard to distinguish some willfully bad actions from mistakes. I don't think missing a single day's worth of worker's comp insurance in the middle of a state-to-state office move qualifies as one of those hard-to-distinguish-from-willfully-bad-actions, though.

If the information you provided them was accurate, shouldn't the folks that botched the payroll be liable for that?

I've had a similar cartoonish experience talking with folks from the NY State Tax Department (specifically unemployment insurance & worker's comp). Brief backstory was I had a production company and we paid everyone as independent contractors and got caught.

The cartoonish aspect of this was actually negotiating the fine with them over the phone. I thought there would be a set fine or something, instead we spent about 20 minutes haggling about what I would have to pay.

In fairness to NYS, people who type in front of a computer all day still benefit from worker's compensation.

Carpel tunnel syndrome and computer elbow are becoming very common.

At a job of mine a long time ago, a programmer had a large lamp fall on his head from about 10 feet up. He had to go to the hospital and was out of work for 3 weeks.

A good reason to avoid having formal employees for such a small company. Wait until you can afford a good accountant or advisor.

That'll probably just get you slapped with even more fines. If you work for/on your company, you're an employee. The mere fact that you own 50% or even 100% of it is irrelevant.

Is this true even if you don't take any payment initially?

If so, how do all those bootstrapped startups manage to avoid minimum wage laws?

Nice thing about having a passthrough partnership is that founders aren't employees - you get distributions instead of salary and you're responsible for paying your personal taxes. Don't have to have the overhead of payroll or employer regulations that shouldn't apply to you.

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