New Jersey employers with three or more employees must provide workers’ compensation insurance. With over 900,000 small businesses, that’s a considerable percentage of the state’s employers that must comply with its workers’ comp laws.
Like most states in the US, New Jersey does require most businesses to provide workers’ compensation insurance to their employees. However, the state differs from others in some key ways. For instance, part-time and full-time employees must be covered by workers’ compensation insurance if taxes are deducted from their wages or salaries.
In addition, the state takes a very different stance from others when it comes to interns, volunteers, and contractors – none of these individuals are required to be covered.
However, there’s a good argument for carrying workers’ compensation insurance even if you’re not required to by the law. It’s the only way to protect employees injured on the job, and if you’re a sole proprietor or self-employed professional, you cannot count on your health insurance to cover the medical costs of work-related injuries or lost time at work.
Self-employed professionals do not need workers’ comp coverage if they are considered independent contractors. However, if the state decides that a contractor is an employee, coverage is required. How do you tell if you have a contractor or an employee? Just answer these questions.
If you’re the one in control, then the worker is an employee and not an independent contractor.
Many people are exempt from the workers’ comp requirements in New Jersey, including the following:
Again, while you might not be required to have coverage by the law, it’s still a smart decision to purchase workers’ compensation coverage. That applies to business owners, but also to freelancers and independent contractors who might traditionally think that they don’t need this type of coverage.
Understanding how workers’ compensation insurance works in New Jersey is an important part of being an informed, prepared business owner. The process is relatively simple.
If an employee is injured in a work-related task or on the job or develops a work-related disease, workers’ compensation insurance will pay for the medical costs involved, including physical therapy/rehabilitation. It will also pay for at least some of the employee’s lost wages. In the event of a fatal workplace injury, the insurance will pay death benefits to the employee’s survivors.
In New Jersey, workers’ comp will cover 70% of an employee’s weekly wages during recovery, but only if the employee is disabled/unable to work for over seven days.
New Jersey law stipulates situations where workers’ compensation must cover an injury or work-related disease. For instance, workers’ comp would cover injuries that took place while performing a job, if the employee’s injury could not be treated with basic first aid, and if the employee has taxes deducted from their paycheck.
Workers’ compensation benefits, will also cover lost wages while the person is recovering, as well as permanent total and partial disability benefits, temporary partial and total disability benefits.
In the unfortunate case of a fatal injury, workers’ comp insurance will provide death benefits and funeral costs. For further information, read the Injured Worker’s Benefits Guide published by the New Jersey Workers’ Compensation Commission.
Workers' comp coverage will also cover legal costs for employers in the event of legal action against the business.
Obtaining workers’ compensation insurance in New Jersey is available from many private insurance companies. Business owners can compare coverage options and terms to get the right fit. However, not all insurance carriers offer workers’ compensation coverage.
Large businesses in the state may qualify to self-insure, and smaller businesses can join a licensed self-insurance group association or work with a professional employer organization (PEO).
The NCCI can also help insure businesses that cannot find workers’ comp coverage elsewhere. Kickstand Insurance also offers affordable, comprehensive workers’ comp coverage for businesses throughout New Jersey.
Don’t have worker’s compensation insurance? It’s important to rectify that immediately because it can lead to negative outcomes for your business. Under the state’s Department of Labor and Workforce Development’s Division of Workers’ Compensation guidelines, businesses could face:
Note that the fines are nontraditional and take the form of liens. Property seizures are the primary means of prosecution.
Workers’ comp death benefits vary across the US. In New Jersey, they include weekly payments to the surviving dependents of up to two-thirds of the lost average weekly wages for up to 450 weeks from the date of the injury (not the date of death). Up to $3,500 is set aside for burial costs. A single dependent receives 50% of the deceased employee’s wages, with an additional 5% per additional dependent up to 70% of the employee’s wages.
Workers’ comp settlements are beneficial for both the employee and the employer and prevent a case from going to court. In New Jersey, these can be either Section 20 settlements or Section 22 settlements.
Section 20 is for situations where the insurance company denied all or part of the employee’s claim but allows a full and final settlement as a lump sum in exchange for the employee giving up all rights to future claims related to the injury.
Section 22 settlements allow insurance companies to pay permanent disability benefits in installments and the employee retains the right to make additional claims for up to two years from the final payment in the original settlement.
Unlike some states, New Jersey draws a firm line – employees have two years to file a workers’ comp claim from the date of the injury or the last payment of compensation. For work-related illnesses, employees have two years to file from the date they became aware of the condition.
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