If your business has employees in the state of New Jersey, you’ll need to make sure you adhere to New Jersey’s Workers’ Compensation Insurance laws. Workers’ Compensation provides medical and financial benefits for employees who suffer work-related injuries or illnesses or for their survivors in the case of an employee death.

Who needs Workers’ Compensation Insurance in New Jersey?

New Jersey requires all employers with at least one employee to obtain Workers’ Compensation Insurance. In New Jersey, an “employee” is generally defined as any individual who performs services for another for wages and is not an independent contractor. 

The New Jersey Workers’ Compensation Act (WCA) defines all of the requirements for Workers’ Comp in New Jersey, and the New Jersey Division of Workers’ Compensation (DWC) monitors, enforces, and administers the program. Ensuring your company is in compliance is critical, as there are serious penalties and fines for those who fail to abide by state regulations.

What employees are covered under Workers’ Compensation in New Jersey?

Almost all workers are covered under Workers’ Compensation in New Jersey. If you provide work or services for an employer for wages, and you are not an independent contractor, you will likely be eligible for Workers’ Compensation Insurance. 

The following are categories of employees that are eligible for Workers’ Comp coverage:

• Full-time and part-time employees
• Undocumented workers
• Domestic workers
• Farm workers
• Minors

The following are categories of employees that are generally excluded from Workers’ Comp coverage:

• Independent contractors
• Unpaid interns
• Volunteers, except volunteers for certain emergency services
• Casual or occasional workers
• Self-employed individuals

What Workers’ Compensation benefits do employees receive?

Under Workers’ Compensation in New Jersey, employers are required to provide the following benefits to employees who are injured in the course of employment:

Medical Benefits

• Medical expenses for medical services and treatment, including chiropractic, surgical, and hospital treatment, medical apparatus and appliances, as well as nursing services.
• Repair or replacement of prosthetic devices, hearing aids, artificial members, dental appliances, or eyeglasses damaged in a work-related injury.

Temporary Total Disability Benefits

• If an injured employee is unable to return to work due to an injury for a period of more than seven days, he or she is eligible to receive Temporary Total Disability (TTD) benefits while recovering, which provides 70 percent of a worker’s weekly wage pre-injury. 
• The DWC establishes minimum and maximum benefit amounts, which change yearly. In 2021, the maximum TTD benefit was $969 per week, and the minimum benefit amount was $258 per week.
• TTD benefits are available until the injured employee has reached maximum medical improvement or the employee returns to regular or modified employment. The maximum amount of time a worker can receive TTD benefits is 400 weeks.

Permanent Partial Disability Benefits

• If an injured employee recovers from an injury but has a permanent partial impairment, he or she may be eligible for Permanent Partial Disability (PPD) benefits.
• The total amount that is paid out for PPD benefits depends on a number of factors, including a percentage of disability and whether the loss is “scheduled” or “non-scheduled.”
• Scheduled losses involve loss of use of arms, hands, fingers, legs, feet, toes, eyes, ears, or teeth. 
• Unscheduled losses involve body parts that aren’t classified as “scheduled,” such as the back, heart, or lungs. 
• The PPD rate is 70 percent of a worker’s weekly wage pre-injury.
• The DWC establishes minimum and maximum benefit amounts, which change yearly. In 2021, the maximum PPD benefit was $969 per week, and the minimum benefit amount was $35 per week.

Permanent Total Disability Benefits

• If an injured employee develops a permanent total disability precluding the possibility of earning any wages, he or she may be eligible for Permanent Total Disability (PTD) benefits. 
• Permanent total disability is presumed when the worker has lost two major members or a combination of members of the body such as eyes, arms, hands, legs, or feet. PTD can also result from a combination of injuries that render the worker unemployable.
• PTD benefits provide 70 percent of a worker’s weekly wage pre-injury, payable as long as the employee remains permanently and totally disabled and is unable to earn wages.
• The DWC establishes minimum and maximum benefit amounts, which change yearly. In 2021, the maximum PTD benefit was $969 per week, and the minimum benefit amount was $258 per week.
• PTD benefits are provided initially for 450 weeks. These benefits continue beyond the 450-week period as long as the employee is able to show that he or she remains disabled and unable to earn wages. Any wages earned after 450 weeks will reduce benefit payments.

Death Benefits

• Employers are required to pay up to $3,500 to cover funeral expenses.
• A worker’s surviving dependents may be eligible to receive 70 percent of the deceased employee’s weekly wages, up to the maximum set by the DWC. In 2021, the maximum death benefit was $969 per week.
• Death benefits are available for up to 450 weeks. 
• A surviving spouse will stop receiving benefits in the case of remarriage. Dependent children will receive benefits until they turn 18, or in the case of a full-time student, until they turn 23.

What are the penalties for breaking New Jersey Workers’ Compensation laws?

Failure to adhere to the Workers’ Compensation laws set out by the DWC can result in significant fines and even imprisonment. In order to avoid any costly penalties, it’s important to consult the DWC or your insurer to ensure you are in compliance. Below are the major ways in which companies can be penalized:

Failure to Purchase Coverage

• Failure to secure Workers’ Compensation Insurance or allowing coverage to lapse for up to 10 days may result in an administrative fine of $5,000. Each 10-day period that a business is in noncompliance may result in additional $5,000 fines. Businesses that are unable to produce sufficient proof of adequate coverage may be fined an additional $1,000.
• Employers that knowingly fail to secure coverage, misrepresent one or more employees as independent contractors, or provide false, incomplete, or misleading information on the number of employees, may be subject to a stop-work order, forcing them to cease all business operations.
• Failure to comply with coverage requirements may result in criminal charges, punishable by a fine of up to $1,000, imprisonment for up to six months, or both.

Unpaid or Delayed Benefits

• Negligently delaying or failing to pay the required benefits to an injured employee may result in a penalty of up to 25 percent of the total amount of benefits due to an injured employee.
• Employers may also be required to reimburse any legal expenses an employee incurred in order to secure owed benefits.
• Failure to pay required compensation benefits for 60 days or more after a judgement or order for compensation is issued may result in a fine of $1,000, a penalty of 15 percent of the compensation owed, and a requirement to pay simple interest on any compensation owed.

Unfiled Reporting

• If an employer fails to file any report required by the DWC, they may be fined $10 for the first violation, $25 for a second, and $50 for each and every subsequent violation.
• Failure to submit the required annual report of benefits paid to employees by July 31 of each year may result in a $100 fine for each 30-day period the report remains unfiled, up to $500.

Fraud

• Workers’ Compensation fraud is a crime in the fourth degree in New Jersey, punishable by a fine of up to $10,000, imprisonment for up to nine months, or both.

How much does Workers’ Compensation Insurance cost in New Jersey?

According to the National Academy of Social Insurance Workers’ Compensation Report (October 2019), the average employer cost for Workers’ Compensation in New Jersey was $1.45 per $100 of covered wages. This figure is estimated across all insurers and all industries, so the cost to your particular business may vary.

How does the Workers’ Compensation claims process work in New Jersey?

The claims process in New Jersey begins with the employee. If an employee suffers a work-related injury or illness, he or she must report the condition to the employer in writing within 14 days of the injury or accident. Any delay in reporting may result in delays in the claims process, reduction of benefits, or denial of the claim.

The employer must then notify its insurance carrier so that a First Report of Injury form can be filed. This form informs the DWC about the accident or injury, and a copy of the report is sent to the injured employee for verification. Within 26 weeks of the injured employee fully recovering or returning to work, a second report, called the Subsequent Report of Injury, must be filed by the insurance carrier, informing the DWC of any benefits paid. 

New Jersey Workers’ Compensation Insurance Resources

For more information on New Jersey Workers’ Compensation laws and requirements, please visit the following resources:

• New Jersey Division of Workers’ Compensation (DWC)
• DWC Employer’s Guide to Workers’ Compensation