Most New Jersey businesses with employees are required to pay for workers' compensation insurance (WC or workers' comp insurance). The insurance provides compensation to employees who suffer work-related injuries. Here are some basic facts that you need to know about workers' comp insurance in New Jersey as a business owner and employer.
All New Jersey businesses with employees – except for those covered by federal programs – are required to carry workers' compensation insurance. Workers' comp insurance isn't required for members of LLCs, partners in partnerships, and sole proprietors.
The New Jersey Division of Workers' Compensation (DWC) is the primary state agency that handles workers' comp claims. Most of the law for WC insurance is contained in New Jersey's Workers' Compensation Law (Title 34, Chapter 15, Articles 1-10 of the New Jersey Revised Statutes). In addition to the Law, there are also administrative rules that cover workers' compensation in New Jersey.
In New Jersey, workers' compensation insurance is available through private insurance companies. If your business is unable to obtain coverage through a private insurer, you can get coverage through the New Jersey Compensation Rating & Inspection Bureau's Assigned Risk Plan. There is also an option to self-insure, but this may not be advisable for smaller businesses, in part because it requires that a lot of money be set aside to cover potential claims.
You should immediately report any work-related injuries to your WC insurance carrier. Within three weeks of learning of the injury, your insurer will file a Form IA-1, First Report of Injury or Illness, with the DOL. If your carrier accepts the claim, they will direct your employee regarding authorized medical treatment.
Beyond these initial steps, there are subsequent steps to the WC claims process not covered here.
Usually your insurer will decide if a claim is valid. If your insurer denies an employee's claim, the employee may choose to file either a formal Claim Petition or an Application for an Informal Hearing with the DOL's Division of Workers' Compensation (DWC). The employee has two years to file a petition or application.
Informal hearings take place before a judge of compensation within the DWC. Disputes handled through these hearings usually are resolved at the first or second hearing. Formal hearings also are heard before a judge of compensation. As the name indicates, the process is more formal and, if settlement is not reached beforehand, results in a trial. You can appeal the decisions of a formal hearing to the Appellate Court of the Superior Court. You can find more information on the Filing a Claim webpage within the Workers' Compensation section of the DOL website.
If you don't carry workers' compensation insurance you may be subject to various penalties and possibly criminal prosecution. For example, you may be required to pay up to $5,000 for the first 20 days without WC insurance, and an additional $5,000 for each subsequent 10-day period without insurance. In the case of corporations, corporate officers might be held individually liable. Many of the penalty rules are contained in Section 34:15-79 of New Jersey's Workers' Compensation Law.
There are other workers' compensation requirements for New Jersey employers that are not covered here, such as putting up posters about workers' compensation coverage where employees can see them. For more information, see the Nolo website section on workers' compensation and the New Jersey Division of Workers' Compensation website.