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Does My Employer Have to Carry Workers Comp Insurance?

If you are a New Jersey employee, you may wonder whether your employer has to carry a workers’ compensation insurance policy.  The answer is almost certainly yes.

New Jersey requires that every employer in New Jersey, and even some out of state employers whose hiring reaches into New Jersey, must have workers’ compensation insurance or be self-insured. The only exceptions are employers who are already covered by certain federal coverage programs, and government agencies.

The underlying principle is the same for different types of employers.  If a business has someone other than the owner working for it, then the company must carry workers’ compensation insurance (or fall under an exception).  For a corporation, this means that having one or more employees, including officers, requires carrying a policy.  For a self-proprietor this means that a policy is required for one or more employees.  An LLC must be covered for employees other than the partners or members working for it.

A business that must provide coverage can do this in one of two ways:

  • By purchasing a workers’ compensation insurance policy from a New Jersey company authorized to provide it
  • By sufficiently demonstrating, by providing security to the state as a guarantee, that the company has sufficient resources to self-insure

Workers’ compensation insurance policies are common, so it is clear that self-insurance is a rare option. Although government agencies do not have to buy workers’ compensation insurance, they must have insurance sufficient to cover claims. If an employer fails to get workers’ compensation insurance, it can face stiff penalties, as well as non-dischargeable liability for any injuries its employees face.

If you have questions about workers’ comp in New Jersey, contact us for further information.

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