A business is required to carry workers’ compensation insurance in New Jersey for employees. If an employee is injured on the job, the insurance protects both the employer and the employee.
Every business that has employees in New Jersey is required to carry workers’ compensation insurance. State law provides some exceptions for employers covered by federal programs and members of limited liability corporations (LLCs), partners in partnerships, and sole proprietors who don’t employ other people.
Part-time and seasonal employees must be covered by workers’ compensation insurance if they are paid wages or salaries and have taxes deducted. Coverage is not required for contractors, interns, and volunteers.
A self-employed person does not need workers’ comp insurance. New Jersey requirements do not mandate this coverage for sole proprietors with no employees, freelancers, or independent contractors. However, if the individual is in a high-risk occupation, coverage could still protect the worker with lost-wage insurance and other benefits if there is an on-the-job injury.
There are specific guidelines for when an injury must be covered under workers’ compensation. New Jersey law indicates that the requirements are as follows:
The State of New Jersey Department of Labor and Workforce Development regulates and enforces workers’ compensation. Failure to carry appropriate workers’ comp insurance for your business can result in penalties that range from administrative fines to criminal charges as severe as fourth-degree felonies.
The financial penalties are up to $5,000 for the first 20 days of noncompliance and up to $5,000 for each 10-day period thereafter. These penalties are delivered in the form of liens against the employer, and prosecution is through seizure of property.
The workers’ compensation cost for each employee depends on the nature of his or her job. Estimated employer costs for workers’ compensation in New Jersey are $1.51 per $100 in covered payroll, according to the National Academy of Social Insurance [PDF].
The New Jersey Department of Banking and Insurance establishes regulations and rates for workers’ compensation insurance. Rates are established, in part, with a set of class codes that are based on the level of risk of a particular job. New Jersey has a single rate for each code.
New Jersey workers’ comp coverage offers advantages to both employers and employees. For employees, it provides:
For employers, workers’ comp insurance typically covers financial liability and the cost of legal representation.
Workers’ compensation death benefits in New Jersey could be awarded to a surviving spouse and dependent children if an employee dies after a work injury or illness. Children are dependents until age 18, or until age 23 if they are full-time students. There could be additional benefits provided to a dependent child who is physically or mentally disabled.
However, if the surviving spouse remarries, he or she would no longer be able to receive benefits unless there are surviving children who still require support. In that case, benefits could continue for up to two years.
A civil union partner could also qualify to receive death benefits, and parents and siblings of the deceased are eligible if they can prove dependency.
Workers’ compensation death benefits in New Jersey include:
It can be beneficial to both employees and employers to reach workers’ comp settlements. New Jersey has two types of settlement arrangements:
Section 20 settlement. If the insurance company denied all or part of a claim, the employee and the insurance company could still agree to a full and final settlement as a lump sum. That would mean that the employee gives up all rights to future claims related to that injury, including future medical care.
Section 22 settlement. In this situation, the insurance company agrees to pay permanent disability benefits in installments. This would not require the employee to give up rights to future medical care, and if the condition worsens, the claim could be reopened and additional benefits requested. This additional claim can be made for two years from the final payment of the original settlement.
Several factors affect the outcome of a workers’ compensation settlement. New Jersey claims can be contingent upon the severity of the injury, needs for ongoing medical care, pre-injury wages, ability to return to work, and other pieces of evidence presented.
An injured employee must file a claim within a specific workers’ compensation statute of limitations. New Jersey’s time period is two years from the date of injury or the date of the last payment of compensation, whichever is later. If the injury is an ongoing occupational illness, the claim must be filed within two years of the date the worker became aware of the condition.
If you are ready to explore workers’ comp insurance options for your New Jersey business, start a free online application today to compare quotes from multiple carriers.