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What employer types must have workers’ compensation coverage?

On Behalf of | Oct 2, 2023 | Workers' Compensation

New Jersey has a law requiring employers to have workers’ compensation coverage or self-insurance if not part of typical federal programs. This policy ensures employees can seek benefits if they ever suffer an injury or illness because of their job.

The following employer types must comply with this requirement based on the circumstances:

  • Corporations: These companies must provide workers’ compensation insurance or self-insurance if they have at least one employee, including those who might receive nonmonetary forms of remuneration.
  • Limited Liability Companies (LLCs) or Partnerships: These businesses must offer workers’ compensation or self-insurance to their employees, excluding partners or LLC members.
  • Sole proprietorship: This type must also have coverage, either from workers’ compensation or self-insurance, if they have at least one employee who is not the business owner.

Other employers, such as the government, must also meet this requirement. They may also choose to participate in other forms of insurance coverage if they do not have workers’ compensation, such as alternative insurance pools.

If they obtain workers’ compensation insurance, they must only acquire them from authorized sources in New Jersey. Additionally, employers outside the state might also need to seek coverage if they have employees performing work or active contracts within the state.

Penalties for not having coverage

Employers who fail to meet these coverage requirements could face grave penalties. This violation could be a disorderly persons offense, potentially becoming a fourth-degree crime. It may result in a $5,000 fine for the initial ten days, accumulating $5,000 for each subsequent ten-day period of noncompliance.

Uninsured employers may also be liable for costs if an employee sustains a work-related injury, including payments for disability, dependency benefits and civil penalties for any claims. Victims of this offense should seek legal counsel to determine their options and hold violators accountable for their negligence.