A Beginner’s Guide To Workers’ Compensation In New Jersey

If you run a business with hired workers, knowing the rules of workers’ compensation is vital. Learning about workers’ compensation in New Jersey doesn’t have to be challenging.

You’re probably already familiar with the basics of workers’ compensation, but here is a bit of a refresher. With this handy guide, you’ll be on your way to having all the tools needed to make sure that your business is compliant and safe from fines.

What Does Workers’ Compensation Do?

Workers’ compensation provides payment to employees in a variety of ways, including wage replacement, medical treatment, and permanent disability compensation. Workers’ compensation is a no-fault insurance program which covers death benefits should an employee die due to their job or employment.

While workers’ compensation is mandatory, it’s also an excellent benefit for the employer since the employee receives benefits no matter who is at fault. The company has to pay premiums which are needed as a protection against huge medical bills and can easily pay for itself after one major injury claim.

Types Of Workers’ Compensation Coverage

There are a couple of ways to obtain coverage for workers’ compensation:

1. Self-Insurance. This type of coverage is provided through an application and approval by the Commissioner of the Department of Banking and Insurance. This works as there is a financial eligibility that has to be met to keep the stability of the business. Meaning, the company must be able to provide this insurance and have the funding to do so, while being an established company with a positive history of permanence. Well-established and successful companies may find this an ideal solution for their workers’ compensation needs.
2. Workers’ Compensation Insurance Policy. This type of coverage is one that is written by an authorized entity such as a stock carrier or mutual. The subsequent premiums depend on a few factors such as claims history, the type of labor performed by the workers, and the employer’s payroll.

Who Has To Provide Workers’ Compensation?

Whether the company is a sole proprietorship, a partnership, or a corporation—all must provide workers’ compensation as per New Jersey regulations. Although some states have varying rules, this is fairly standard.

What Are The Benefits Of Workers’ Comp?

There are multiple benefits that protect the employees and this helps the company as well. These include:

Medical Benefits

This covers prescriptions, necessary medical treatment, and hospital services as long as the injury is related to the workplace.

Temporary Total Benefits

Temporary total benefits are designated for those who are disabled for seven or more days. However, these benefits are retroactive and kick in dating back to when the injury first occurred. There is a statutory maximum rate and the payout to the employee is 70% of the average weekly wage.

Permanent Partial Benefits

This type of benefit starts after the temporary benefits session ends. It covers bodily impairment that is permanent and due to a job-related injury. This is paid out based on the injured person’s functional loss and is paid out weekly.

Permanent Total Benefits

This type of benefit is for those who cannot return to work at all due to their work-related injury. This starts at 450 weeks and if the employee can show that they are still permanently injured, the benefits will continue. This is paid weekly and at the same 70% payout of the individual’s average weekly pay.

Death Benefits

This benefit is for the dependents of an employee who dies from an illness related to work or a work-related injury. This includes funeral expenses up to $3500 as with other benefits. The death benefits are at a weekly payout at 70% of the employee’s average weekly pay.

If you have a sole proprietorship, a partnership, or a corporation in New Jersey and need help with workers’ compensation, simply contact us. We can also help you determine what other types of insurance you may need to best protect your business.