Workers’ Compensation Insurance

Most individuals and business owners have at least heard of the term workers’ compensation or, for short, worker’s comp. However many people do not understand how the system works, who qualifies for it, and how it may apply to your business. There are both New Jersey and federal workers’ compensation programs. Understanding how the workers’ compensation schemes function as it relates to your business interests can be an essential step to avoid potentially huge financial liabilities.

This video is intended to familiarize you with the basics of workers’ compensation. However, this is merely an educational starting point. This video is not legal advice nor does it create an attorney-client relationship. If you do have questions regarding a workers’ compensation, you should speak with an experienced business attorney serving Elizabeth, Newark, Union and northern New Jersey.

What is Workers’ Compensation?

Workers’ compensation schemes offer medical treatment, wage replacement and disability compensation to eligible workers who suffer an injury on the job or a job-related illness. Death benefits are also often available for those who pass due to their work-related injuries or illnesses. While workers’ may be compensated through the program, they cannot bring a lawsuit against their employer in most circumstances.

Who Administers Workers’ Compensation?

For federal employees, the program is administered by the Department of Labor’s Office of Workers’ Compensation Programs (OWCP). Subsumed under the OWCP’s purview are the Division of federal Employees’ Compensation (DFEC), Division of Energy Employees Occupational Illness Compensation (DEEOIC), Division of Longshore and Harbor Workers’ Compensation (DLHWC), and the Division of Coal Mine Workers’ Compensation (DCMWC).

In New Jersey, workers’ compensation claims are overseen by the New Jersey Department of labor and Workforce Development. Both formal and informal claims can be filed with the department.

Who must have Workers’ Compensation Insurance in New Jersey?

New Jersey law requires that all employers in the state have some form of workers’ compensation coverage. This general results in three acceptable scenarios. The first is where the business is covered by a federal workers’ compensation regime. The second is where the company purchases an insurance policy from an underwriter who is authorized to write insurance in New Jersey. Third, the company has been approved, as per N.J.S.A 34:15-77 for self-insurance for workers’ compensation claims. While all companies located in New Jersey must adhere to these requirements, out-of-state businesses may be required by New Jersey law to carry coverage if work is done in New Jersey or the employment contract is entered into in the state.

If you are unsure about your corporation, partnership, LLC, or sole proprietorship’s obligation to carry workers’ compensation insurance, speaking with an experienced Union, New Jersey business attorney can provide sound advice. The consequences for a failure to carry required insurance can be financially damaging. If it is determined that the failure to provide insurance is willful, a forth degree crime may be charged. Financial penalties include a $5,000 a day penalty for each of the first 10 days on non-compliance. Additional penalties can apply thereafter and the liability can extend to corporate officers.


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