According to the New Jersey Department of Labor and Workforce Development, all employers within the state must carry workers’ compensation if they hire or contract one or more individuals (excluding partners of an LLC or principal owner of a sole proprietorship) to perform work for the organization. The exception to this is if the employer qualifies for self-insurance.
The consequences of failing to provide workers’ compensation can be significant, even if an injury does not occur. For every 10-day period that an employer fails to carry adequate coverage, the state will assess a fine of up to $5,000. Moreover, the state may charge the owners or officers with a disorderly persons offense. If the offense is willful, the charge increases to a fourth-degree crime. The officers of a corporation may assume personal liability for failure to insure, and they cannot discharge the fines in bankruptcy.
The consequences do not end there, though. When a worker does sustain an injury, the law entitles him or her to medical expenses, lost wages and other benefits. How, though, can that person recover when his or her employer does not have insurance?
The Uninsured Employers Fund
According to the NJ DOL, the state established the Uninsured Employers Fund to ensure that injured workers had access to medical payments and temporary disability benefits even if their employers failed to provide coverage or make a benefits payment award. Unfortunately, the fund does make payments for permanent disability. However, if a worker sustains a permanent disability injury, the Superior Court will place a lien against the employer. Once a lien is in place, the worker and his or her attorney may attempt to locate the employer’s assets and collect them through court.
Consequences for the uninsured employer
If the state must pull money from the Uninsured Employers Fund, it will place a lien against the offending employer for the amount of the necessary payments. Though the fund does not pay permanent disability benefits, it will take unpaid permanent disability benefits into account and docket them against the employer on the injured workers’ behalf. Moreover, the court will fine the employer the $5,000 for each 10-day period the employer failed to carry coverage. It will also assess an additional $6,000 fine against the employer.