When workplace injuries occur, both employers and employees need to know they are covered. Workers’ compensation is the insurance that provides medical benefits and temporary disability to injured workers. This insurance is designed to protect both employees and employers alike.
Workers' compensation works just like any other insurance. Employers pay a premium to an insurance company in exchange for the coverage. If an employee is injured on the job and draws benefits from the plan, the insurance company pays for it.
Even though New Jersey has a private market for workers' compensation insurance, meaning employers can purchase coverage from any insurance company they choose, the insurance coverage itself is regulated by the state.
For example, in New Jersey there are set rates for weekly temporary disability payouts. The current 2018 base rate for New Jersey is $241 per week, while the maximum rate is $903 per week. That means that all weekly temporary disability payouts for injured workers must fall within that range, no matter who underwrites the workers' compensation insurance policy.
The cost of workers' compensation insurance is based, in part, on the type of the business that the employer is engaged in. Employers who are involved in higher risk businesses, where injuries are more common, pay higher premiums for coverage than employers whose workers who face little risk in the workplace.
Costs Based on Classification
While many states use the classification codes and rates set by the National Council on Compensation Insurance (NCCI), New Jersey uses its own set of rules and classifications. For employers in New Jersey, the New Jersey Compensation Rating & Inspection Bureau, or NJCRIB, offers the state-regulated codes and associated rates for various job classifications.
These "class codes" categorize the types of work people do. There are over 9,000 codes in New Jersey that denote the type of work and the risks associated with that work. The riskier the profession, the more it costs to insure those workers. For example, an office worker will cost a lot less to insure than a construction worker.
Even though the insurance payouts are state regulated, the cost of individual insurance plans will vary based on the nature of the employer's work. Thus, it makes sense to shop around and get quotes from a few different insurance providers before choosing one for your business.
In the Northeast United States, insurance premiums are typically higher than the rest of the country. This means we pay our workers at a higher rate, and therefore, must also insure them at a higher rate.
It is important to make sure that employers are correctly classified and covered under a workers' compensation insurance plan in order to protect their employees and comply with state law.
New Jersey Workers' Compensation Laws
In New Jersey, all employers must have workers' compensation insurance if they are not covered by Federal programs. Key details about workers' compensation in New Jersey:
- A sole proprietor with no employees in New Jersey may not be required to have coverage but can opt to insure themselves.
- Any business with at least one employee must provide coverage.
- An employer must purchase coverage from a private insurer or be approved for self insurance.
If you have been injured at work and have questions about workers’ compensation benefits, you should contact an experienced NJ Workers Compensation Lawyer.
Sources:
https://www.njcrib.com/Handbooks/2017/RateClassification_Handbook_Numeric.pdf
