Workers’ Compensation Insurance in New Jersey: What You Need to Know
Accidents happen. But if you are a business owner, and one of your employees has one when they’re on the job, your company and livelihood could be on the line. Workers’ compensation insurance is the safety net for your employees and your business.
Workers’ compensation is a system of no-fault insurance that provides medical and cash benefits to employees, or their surviving family members, in the event of a work-related injury, disease, and/or death. If one of your employees is medically authorized to take time off from work because of work-related injury, they will be reimbursed for lost wages and all the medical expenses related to the treatment and rehabilitation.
Worker’s compensation insurance isn’t just something that is nice to have. In New Jersey, it’s required by law, mandated by the Workers’ Compensation Act (WCA) and enforced by the Department of Labor and Workforce Development (LWD). Although there are some exceptions, any business that employs even one person must offer them workers’ compensation coverage. Employers are legally required to purchase a workers’ compensation policy from a licensed insurer or be granted the authorization to self-insure, using their own assets for protection for workers’ compensation claims. They also must annually provide proof of their coverage or their authorization to self-insure to the NJ Department of Workers’ Compensation (DWC) as well as complete an insurance audit.
There are some nuances when it comes to who must be covered under your workers’ compensation insurance. For example, partnerships may exclude partners, sole proprietorships may exclude the principal owner, and limited liability companies may exclude members. Corporations must include corporate officers.
How does the process work?
After securing coverage, employers must display a notice where employees can easily see it, alerting them to the company’s workers’ compensation coverage. These notices are available from your coverage provider or the DWC. Employers are required to designate a staff member who is responsible for responding to workers’ compensation issues, and their contact information must also be provided to DWC.
If an employee reports a work-related injury or disease, the employer must promptly notify their insurance provider or a third-party administrator if the condition requires time off beyond the day or shift when the incident occurred or medical treatment beyond simple first aid, and/or if it is a disease associated with the worker’s occupation. The insuring party must also inform the DWC.
Employers must provide medical treatment to employees who report work-related conditions, but it does not mean they are admitting liability for the employee’s claim. Related medical records must also be submitted to the DWC.
An employer, or their insurance provider, may request an independent medical exam (IME), an exam by a medical professional other than the physician who first examined an injured or sick employee. This can serve as a second opinion to confirm a diagnosis and treatment plan. If an employee does not follow recommended medical treatments, therapy, or established return-to-work plan, they may jeopardize their workers’ compensation benefits.
After the state-specified waiting period to receive benefits passes, benefits are paid weekly at a state-specific percentage rate of the employee’s average weekly wage, up to a maximum dollar amount. A medical provider will then determine when an employee has reached maximum medical improvement (MMI) or has recovered enough to return to their regular work. Once that happens, the employer has 26 weeks to submit a Final/Subsequent Report of Accident to the employee and the DWC. They can do it directly, or through their insurance provider or third-party administrators.
Tips for Controlling Workers’ Compensation Costs
Even with the proper insurance protections, workers’ compensation claims can be costly. The most important way to combat them is to partner with your employees to create a safe working environment and emphasize the importance of minimizing dangers. Some other things you can do include:
- Establish and implement a return-to-work policy where injured or ill employees can perform modified duties until they are fully healthy.
- Empower and train your employees on safe practices for their job functions.
- Insist on prompt reporting of employee claims.
- Thoroughly investigate the cause of injuries and illnesses.
New Jersey has established state-run funds that all employers contribute to for administering certain claims under the WCA, including:
- The Uninsured Employer’s Fund (UEF) providing limited workers’ compensation benefits to employees whose employers do not have workers’ compensation coverage as required by law
- The Second Injury Fund providing benefits for employees who experience two disability injuries
At Hanson & Ryan, we understand that workers’ compensation insurance can be stressful and taxing for business owners and employees. That’s why we work with you through the entire process to ensure your business and team are properly protected. If we can help you, please contact us today.