New Jersey's Workers' Compensation Insurance Law

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Who needs workers’ comp insurance in New Jersey?

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.

Is workers’ comp mandatory for part-time employees?

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.

Do you need workers’ compensation if you are self-employed?

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.

When is an injury covered by workers’ comp?

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 employee’s injury took place while he or she was performing a job.
  • The employee’s injury was too serious to be treated with basic first aid.
  • The employee receives a standard paycheck that has taxes deducted each pay period.

 

What are the penalties for not having workers’ comp insurance in New Jersey?

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.

 

What is the average cost for workers’ compensation insurance in New Jersey?

The workers’ compensation cost for each employee depends on the nature of his or her job. The average cost for workers’ compensation insurance in New Jersey is $1.51 per $100 in wages.

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.

 

Workers’ compensation benefits in New Jersey

New Jersey workers’ comp coverage offers advantages to both employers and employees. For employees, it provides:

  • Financial assistance for reasonable medical services necessary for treatment
  • Temporary disability benefits to replace lost wages
  • Permanent disability benefits for long-term injuries or illness
  • Death benefits, including burial expenses, if the employee dies as a result of an on-the-job injury

For employers, workers’ comp insurance typically covers financial liability and the cost of legal representation.

Workers’ compensation death benefits

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:

  • Approved medical bills
  • Up to $3,500 for funeral or burial expenses
  • 50 percent of the deceased employee’s wages to one dependent
  • That amount increases by 5 percent for each additional dependent, up to a maximum of 70 percent of the worker’s wages
  • Up to 450 weeks of payments to the surviving spouse; there is a maximum set each year by the Commission of Labor
  • Up to 450 weeks of payments to mentally or physically disabled children

 

Workers’ comp settlements in New Jersey

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.

Workers’ compensation statute of limitations in New Jersey

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.

 

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Workers' compensation insurance: Further reading

See workers' comp laws where you live