If you run a business and have employees, you’ll need to purchase New Jersey workers’ compensation insurance. In fact, this type of insurance is a requirement in most states, including New Jersey, with some exceptions. It helps pay your employees’ medical bills if they sustain an injury on the job. It also limits your liability for workplace accidents, is a requirement in most states, including New Jersey, with some exceptions.
In New Jersey, business owners can expect to pay around $1.45 for every $100 of covered payroll. That means, for example, if your company’s total annual payroll is $100,000, workers’ compensation insurance would cost you $1,450 per year, or around $120 a month. Numerous factors can influence these rates, though.
One of the biggest factors in determining your rates for workers’ compensation insurance is your employees’ risk, or the likelihood of a workplace injury occurring at your business. So, to assist insurers in determining risk exposure, and to get the best rates for your business, you can use a variety of workers’ compensation class codes. This is important because it costs more to insure certain employees. For example, office employees may have lower workers’ compensation costs than those who work outside of your office and face more risks.
If an employee sustains an injury on the job or becomes ill due to workplace conditions, workers’ compensation in New Jersey will help them with their medical bills. The average weekly wage of the employee determines the workers’ compensation benefits. The amount depends on the type of claim.
In general, workers’ compensation in New Jersey covers:
- Accidents and injuries – If your employee needs medical attention, workers’ compensation will cover any medical expenses from a workplace injury.
- Illness – If an employee becomes sick from exposure to allergens or other hazardous materials at work, they can also receive workers’ comp benefits to help pay for treatment.
- Repetitive injury – It’s not just accidents that are covered: treatment for repetitive injuries, like carpal tunnel syndrome, are also covered by workers’ compensation.
- Ongoing care – If your employee still has medical needs as a direct result of their accident or illness, even after they return to work, they can get benefits for ongoing care. This includes additional doctor’s appointments or additional surgeries.
In addition, if their accident or illness results in permanent or temporary disability, your employee will receive weekly or lump sum payments. If they have a temporary disability, their injury prevents your employee from performing their job. But they can return to work as normal once they recover. If a doctor diagnoses them with an injury from which they will not fully recover, they have a permanent disability.
These categories fall into the following classifications:
- Temporary total disability (TTD) – These payments will be made if your employee is not able to work at all while recuperating.
- Temporary partial disability (TPD) – TPD payments will be made if your employee can still work, but only with certain limitations, such as needing to perform lighter duties or work fewer hours. If your company does not provide work that meets these requirements, the employee may still be eligible for these payments.
- Permanent total disability (PTD) – Employees who are unable to work due to an accident or illness, even after they have recovered as much as they are likely to, will be eligible for PTD payments.
- Permanent partial disability (PPD) – Employees who have permanent difficulties but can work with them will be eligible for PPD.
New Jersey’s Workers’ Compensation Death Benefits
If an employee passes away as a result of a work illness or accident, workers’ compensation death benefits may be given to their surviving spouse and dependent children. Children are dependents until they turn 18 or, if they are full-time students, until they turn 23. A dependent child who is physically or mentally disabled may receive additional benefits.
The surviving spouse will no longer be eligible for benefits if they remarry, unless there are still children who need support. Benefits might then last for a maximum of two more years.
Death benefits may also be given to a civil union partner. In addition, dependent parents and siblings of the employee may also qualify for compensation if they can prove they were dependent on your employee.
In New Jersey, workers’ compensation death benefits consist of:
- Payment of approved medical bills
- Up to $3,500 for burial or funeral expenses
- 50% of the employee’s wages to one dependent
- 5% more for each additional dependent, up to a maximum of 70% of the worker’s wages for five or more dependents
- Up to 450 weeks of payments to the surviving spouse, up to a maximum amount set each year by the Commission of Labor
- Up to 450 weeks of payments to mentally or physically disabled children
New Jersey’s Workers’ Compensation Laws
Every employer has to carry workers’ compensation insurance under New Jersey law. You’ll need workers’ compensation insurance in New Jersey even if your company is a limited liability company (LLC). Or only employs seasonal or part-time workers. You could face fines or criminal charges if you cannot show proof of insurance.
New Jersey does have some exceptions to workers’ compensation requirements, including:
- Unpaid interns
- Unpaid volunteers
- Independent contractors
- Self-employed with no employees
How to Buy Workers’ Compensation Insurance
Workers’ compensation insurance is offered by private insurance companies in New Jersey, and this will generally be your best option. EZ’s agents can help you compare insurers and policies to find the best coverage for you.
If your business is unable to get workers’ comp through a private insurer (for example, if you are considered high-risk because of a high number of previous claims). You can obtain coverage through the Assigned Risk Plan of the New Jersey Compensation Rating & Inspection Bureau.
Self-insurance is also an option in New Jersey. This means that, instead of paying a premium and submitting claims to an insurance company, you would pay any claims out-of-pocket as they arise. It may not be wise for smaller businesses to do so, though, in part because it requires getting approval from the Division of Insurance. To be eligible you have to prove that you can afford to pay out-of-pocket for any potential claims, which requires having a large and consistent net worth.
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How to Get the Most Savings
The majority of the cost of workers’ compensation comes from factors beyond your control. However, there are still ways to save. Implementing a safety program is a great way to reduce workplace injuries and claims, which will lower your premiums. So regardless of your industry, it is important to have safety and standard operating procedures in place. Employees who have safety training are less vulnerable to injuries, lowering your workers’ compensation costs.
It is also a good idea to regularly review your claims history. Evaluating your claims history on a regular basis can help you identify and correct patterns. You might discover that certain aspects of your business operations are frequently causing claims. This allows you to adjust the operation to make it safer. You can also save money by keeping an eye on potentially dangerous operations.
Correctly classifying your employees is one of the most effective ways to save money. When you apply for your workers’ compensation policy, you will classify each of your employees depending on their job’s risk. And this risk classification influences the cost of your workers’ compensation. For example, you might pay less to insure an office worker than you would a manual laborer. It’s also important to correctly classify your employees because you may receive a fine if you fail to do so.
Begin a free online application today to compare workers’ compensation insurance quotes for your small business from leading U.S. insurers. EZ’s agents specialize in insurance for a wide range of small businesses. Working with our agents can save you hundreds of dollars a year on coverage.
New Jersey Workers’ Compensation FAQs
Are you required to have workers’ compensation insurance in New Jersey?
In New Jersey, workers’ compensation insurance is mandatory for every business with employees. If your business doesn’t have the proper workers’ compensation insurance, you could face a variety of penalties, from administrative fines to serious criminal charges amounting to fourth-degree felony.
The maximum financial penalties for failing to carry coverage are $5,000 for the first 20 days of noncompliance and $5,000 for each additional 10-day period. These fines are assessed as liens against the employer, and the prosecution is carried out by the confiscation of assets.
In New Jersey, workers’ compensation is governed by and subject to enforcement by the Department of Labor and Workforce Development.
How do workers’ compensation settlements work in New Jersey?
There are two different type of workers’ comp settlement agreements in the state of New Jersey:
- Section 20 settlement: With this type of agreement, the employee and insurance company agree to a full and final payment in the form of a lump sum. In this case, the employee would have to waive any rights to other claims arising from the same accident, including payments for any additional medical treatment.
- Section 22 settlement: In this instance, the insurance company consents to provide permanent disability compensation over time. The employee would not have to give up their right to receive compensation for medical care in the future, and the claim could be reopened and further benefits requested if the employee’s condition gets worse.
What is the statute of limitations in New Jersey?
In New Jersey, your employees have two years from the date of the injury or the last payment of compensation, whichever comes first, to file a claim. If they are suffering from a chronic ailment, the claim must be made within two years of the worker’s discovery of the illness.
Why Use EZ
We do everything in our power to make shopping for workers’ compensation insurance as easy and stress-free as possible. And we give each of our customers our undivided attention. As soon as you fill out our form, you will receive instant, free quotes from your dedicated agent. Who will give you personalized service and will work to understand your needs. We want to ensure that you get the best coverage at the best price. Our services are completely free so check out your quotes today!
If you still have questions, feel free to give us a call at 877-670-3538. You will speak to a local insurance agent who can answer all of your questions. We can also help you find the workers’ compensation policy that works best for your business.