New York has enacted some of the most significant Workers’ Compensation reforms in recent years, expanding coverage, increasing benefits, and modernizing medical treatment rules. These changes affect employers, insurers, HR professionals, and injured workers alike — and failure to understand them could result in higher claim costs or compliance exposure.

Below is a breakdown of the most important updates that took effect in 2025 and moving into 2026–2027.

Thank you SilverLine Insurance for keeping us up to date.

1. Mental Health Injuries Are Now Compensable for All Workers

Historically, Workers’ Compensation claims for mental injuries in New York were limited primarily to first responders experiencing trauma tied to specific emergency events.

Beginning January 1, 2025, that changed dramatically.

New legislation now allows any employee in New York to file a Workers’ Compensation claim for:

• Work-related mental injury
• PTSD
• Major depressive disorder
• Acute stress disorder

…when caused by “extraordinary work-related stress.”

This represents a major shift in how workplace injury is defined in New York:

Mental health challenges resulting from extraordinary work stress may now qualify as compensable workplace injuries.

Employer Impact

• Increased exposure to stress-based claims
• Need to review Workers’ Comp policies for mental-health coverage
• Potential rise in litigation over what constitutes “extraordinary” stress
• Higher claim frequency in high-pressure industries (finance, healthcare, tech, logistics)

Insurance policies written under older standards may exclude these claims — creating uninsured liability risk for employers if policies are not updated.

2. Increased Minimum Weekly Benefit Payments

Effective January 1, 2025, New York increased the minimum weekly Workers’ Compensation indemnity benefit from:

• $275 → $325 per week

This provides greater wage protection for lower-income employees who suffer workplace injuries.

Additionally:

• Maximum weekly benefit amounts continue to be adjusted annually
• These limits are tied to the New York State Average Weekly Wage (NYSAWW)
• Adjustments take effect every July 1

Employers should expect:

• Higher indemnity payouts
• Increased experience-rating impact
• Possible premium adjustments based on claim severity

3. Expanded Medical Treatment Access for Injured Workers

New legislation signed in May 2025 introduced an important procedural change:

Workers’ Compensation insurers may now:

✔ Pay for medical treatment
❌ Without accepting liability

for up to one year after the claim is filed
(Effective January 1, 2027)

Why This Matters

Previously, insurers often delayed treatment authorization while investigating claims. This change:

• Improves early access to care
• Reduces recovery time
• Limits prolonged disability
• Encourages return-to-work outcomes

However, it may also:

• Increase short-term claim costs
• Require earlier employer reporting
• Lead to faster claim development timelines

4. Protection Against Labor Market Withdrawal Arguments

Pending reforms in the 2025–2026 legislative cycle also aim to prevent insurers or employers from denying benefits based on claims that an injured worker:

“Voluntarily withdrew from the labor market.”

If enacted, this would:

• Limit benefit suspensions
• Reduce disputes over job search requirements
• Strengthen income continuity for partially disabled workers

5. Stop-Work Orders for Non-Compliant Employers (Proposed)

Introduced in January 2026, proposed legislation would authorize:

• The NY Commissioner of Labor
• The Workers’ Compensation Board

to issue Stop-Work Orders against employers who fail to carry required Workers’ Compensation coverage.

Potential penalties include:

• Immediate business shutdown
• Civil fines
• Compliance enforcement actions

This signals a shift toward stricter enforcement against uninsured employers.

Keep in Mind: Since 2016, the New York State Workers’ Compensation Board has had the authority to issue stop-work orders. What’s new for 2026 is a proposal to extend that same authority to the Department of Labor, pending approval. Given that the DOL already carries out a wide range of enforcement actions, granting this additional authority would be a logical next step.

What Employers Should Do Now

To prepare for these changes, New York employers should:

✔ Review Workers’ Compensation insurance policies
✔ Confirm mental health claims are covered
✔ Train HR teams on new compensable injury categories
✔ Update injury reporting procedures
✔ Monitor indemnity cost trends
✔ Conduct compliance audits on required coverage

Final Thoughts

New York’s Workers’ Compensation system is evolving to reflect modern workplace realities — particularly the recognition that psychological injuries can be just as debilitating as physical ones.

While these reforms expand employee protections, they also introduce:

• Greater compliance responsibilities
• Increased claim complexity
• Potentially higher insurance costs

Employers that proactively adapt will be best positioned to manage risk under New York’s updated Workers’ Compensation framework.

Need Help?

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