In almost every U.S. state, employers are required by law to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in New Jersey, you must carry workers’ comp insurance if you have at least one employee. Like most states, New Jersey specifies a few employee types that are exempt from compulsory coverage.

Workers’ compensation is one of many small business insurance types all New Jersey entrepreneurs should consider.

In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.


How does workers’ compensation insurance in New Jersey work?


The state of New Jersey requires you to carry workers’ compensation insurance as soon as you have one employee, including sole proprietorships. You can purchase coverage via the private market through either a licensed insurance broker or directly through an insurance company.

Employers can also qualify to become self-insurers. To become a self-insurer, a company must periodically submit proof that it has the financial capability to handle injury claims from any and all of its employees.


Who needs workers’ compensation insurance in New Jersey?


Nearly every employee in New Jersey must be covered by workers’ compensation insurance, with some exceptions. Individuals who are exempt from mandatory coverage include:

  • Federal workers
  • Sole proprietors, as long as they have no employees
  • Partners in partnerships
  • Independent contractors
  • Unpaid workers, such as volunteers or interns

As a business owner or sole proprietor, you don’t have to purchase workers’ compensation insurance for yourself. That doesn’t mean you shouldn’t get coverage. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.


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


Failing to provide workers’ compensation insurance in New Jersey is considered a disorderly persons offense. If you’re found to be non-compliant you can be faced with a $5,000 fine for every 10-day period in which your employees are uninsured. Wilful non-compliance can result in criminal penalties. Additionally, if one of your employees gets injured on the job and you don’t have workers’ comp, you could be liable for all the expenses related to their injuries as well as any civil penalties.


What does workers’ comp cover?

Medical costs

If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.

For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.

Lost Wages

Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.

If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.

Ongoing Care

Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who must receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.

Death Benefits

If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.