§ 213. Non-compliance or default. 1. Whenever a covered employer does not comply with this article by providing for the payment of disability and family leave benefits to his or her employees in one or more of the ways provided in section two hundred eleven of this article or whenever a carrier fails to pay the benefits required by this article to employees of a covered employer, then such employer shall be fully and directly liable to each of his or her employees for the payment of benefits provided by this article. The amount of the benefits to which employees of such employers are entitled under this article and attendance fees of any attending physicians or attending podiatrists or health care provider fixed pursuant to subdivision two of section two hundred thirty-two of this article shall, on order of the chair, be paid out of the fund established under section two hundred fourteen of this article. In case of non-compliance of the employer, such employer shall forthwith pay to the chair, for credit to the fund, the sum so expended or one percent of his or her payroll for his or her employees in employment during the period of non-compliance, whichever is greater; provided, however, that if it shall appear to the satisfaction of the chair that the default in payment of benefits or the non-compliance of the employer otherwise with his or her obligation under this article was inadvertent, the chair may fix the sum payable in such case for non-compliance or default at the amount paid out of the fund and a sum less than one percent of such payroll, and in addition the penalties for non-compliance imposed under this article. In case of failure of the carrier to pay benefits, the employer shall forthwith pay to the chair, for credit to the fund, the sum so expended.

2. Where a carrier authorized by the superintendent of financial services to do business in this state has failed to pay benefits on behalf of an employer pursuant to this article solely because an order of rehabilitation, conservation or liquidation has been issued by a court of competent jurisdiction of this or any other state or jurisdiction, the provisions of subdivision one of this section shall not apply as they relate to: (a) the payment of benefits to an employee if the policy of the employer's carrier is subject to the protection afforded by any guaranty fund pursuant to the insurance law; or (b) the reimbursement to the fund, created under section two hundred fourteen of this article, by an employer whose carrier has failed to pay benefits.

3. The provisions of section one hundred forty-one-b of this chapter shall not apply to violations of this section after January first, two thousand eighteen and before January first, two thousand twenty. Thereafter, in the event an employer is subject to debarment solely due to a penalty for violation of this section, the chair may, in the interests of justice, restore the employer's eligibility to submit a bid on or be awarded any public work contract or subcontract. The chair may exercise this authority only if it is the employer's first time violation of section one hundred forty-one-b of this chapter; the employer is not liable for any outstanding workers' compensation, disability or family leave claims as a result of the lack of coverage; and the employer has paid all fines, assessments, and penalties associated with the lack of coverage.