New Jersey Workers’ Compensation Explained

Worker’s compensation provides a useful safety net for business owners. It provides benefits to employees for work-related accidents, injuries or illnesses. The product may also be referred to as workers’ comp or workman’s comp. 

In the State of New Jersey, workers’ compensation dates back to 1911 and is a mandatory requirement for all employers. As such, you need workers’ comp to remain legally compliant. 

In this article, we’ll discuss some of employers’ most commonly asked questions. 

What Type Of Injury Is Covered Through NJ Workers’ Compensation Policies? 

Workers’ compensation in New Jersey will provide financial support if an injury or accident happens on the job. For example, if an employee gets hurt and visits the emergency room because a piece of metal falls on them while working in a warehouse. This would be covered by your workers’ compensation policy.

It can also provide financial support for those who suffer from an illness due to the work environment. For instance, it’s widely known that asbestos is linked with the development of mesothelioma. 

Furthermore, workers’ compensation for New Jersey employees may also provide financial support for those suffering from Repetitive Stress Injury (RSI). RSI is quickly becoming the most common type of injury sustained by workers across America. Repetitive stress injuries are caused by repeating the same action multiple times. For instance, typing for long periods can lead to pain in the wrists.

How Does Workers’ Compensation Support The Employee In New Jersey? 

NJ workers’ compensation can benefit employees in numerous ways. For instance, it can be used to provide medical treatment and ensure that an injured worker improves over time. Under New Jersey law, the insurer or employer can select the right healthcare provider to provide treatment for an injured team member. 

Workers’ comp can also be used to support lost wages or the cost of ongoing medical care if an individual cannot return to work for an extended period. This can include surgery and physical therapy depending on the requirements of the individual. 

Benefits depend on the injury/illness. Below are the workers’ compensation disability classifications: 

  • Temporary Total Disability – a worker’s ability to earn is totally lost, but only temporarily. 
  • Temporary Partial Disability – a worker’s ability to earn is partially lost, but only temporarily.
  • Permanent Total Disability – a worker’s ability to earn is permanently and totally lost with no chance of returning to work.
  • Permanent Partial Disability – a worker’s ability to earn has been partially lost. The benefits are temporary and depend on the injury or illness and the body part.

Do You Require Workers’ Compensation In New Jersey?

As stated before, if you are running a business in the State of New Jersey workers’ comp is a legal requirement. It is a mandate that every employer operating a business carries this type of insurance. 

This is true regardless of the type of business you are running. You will still need to arrange workers’ comp for anyone operating within your business, including part-time, full-time or seasonal. 

If you fail to provide this level of coverage, then you could be required to pay a fine or face criminal charges. Penalties differ depending on the decisions made by the court. 

Are There Any Exceptions That You Should Be Aware Of As A Business Owner? 

There are exceptions to New Jersey workers’ compensation laws. This includes:

  • Unpaid volunteers
  • Unpaid interns
  • Independent contractors*
  • Sole proprietors

*If you have contractors/1099 employees you are still responsible for paying for workers’ comp coverage for them unless they have their own policy.

If you have workers who are not paid or have no workers, you likely do not require workers’ compensation. However, it’s still best to check with a legal or insurance advisor to guarantee you are in compliance. 

How Are Premiums Calculated? 

To understand the worker’s compensation premiums, you need to understand how they are calculated. Insurance companies explore a range of factors when deciding the workers’ compensation rates. The best way to work this out is to follow the formula:

Employee Classification Rate X Employer Payroll (Per $100) X Experience Mod Rate (Mod) = Your Workers’ Comp Premium

Employee Classification Rates depend on your industry, which you can find at NJCRIB

Experience Modification Rating is a calculation used by insurance companies to price the cost of your workers’ compensation premiums. It’s calculated using claim history and injury costs to predict future costs. 

What Is The Minimum And Maximum Payroll For Workers’ Compensation?

The State of New Jersey has a minimum and maximum payroll for workers’ compensation coverage. The minimum is $34,320 per year and the maximum is $137,280 per year. 

Where Can You Arrange New Jersey Workers’ Compensation?

To get workers’ comp insurance, you can contact individual insurance companies or work with one of our insurance advisors to get a quote. We work with dozens of carriers and have decades of experience working with businesses in NJ. With our experience, we can save you time and money when shopping for a workers’ comp policy.