Does Workers’ Compensation Insurance in NJ Cover Independent Contractors?

Workers’ compensation in New Jersey is a must-have for employers. It’s actually the law. While carrying a policy that covers your employees may be clear, things get confusing when you use independent contractors in your business.

What Is An Independent Contractor?

A worker is an independent contractor when they meet the following criteria:

• The worker is outside of the employer’s control. In other words, the worker decides how to carry out the job.
• The work performed by the independent contractor is done outside of the tasks or business usually carried out.
• The independent worker has their own business or other employment.

As you can see, independent contractors are not directly employed by a company. This is the reason employees often feel comfortable ignoring independent contractors when it comes to workers’ compensation insurance in New Jersey.

But this isn’t best practice, and as an employer, you may just be setting yourself up for a hefty fine if you leave someone off the workers’ comp policy that should be covered.

While the above three points are a general way to determine if a person is an independent contractor, a fact-specific review should always be done to get things right.

Are You Entitled to Workers’ Compensation as an Independent Contractor?

If you’re injured on the job and the employer denies workers’ compensation benefits citing that you’re an independent contractor, they could be wrong. In New Jersey, employment status is far more important than independent contractor status.

In our state, the courts rather liberally interpret the law to cover as many workers as it possibly can under the NJ Workers’ Compensation Act. Issues like issuing a 1099 instead of a W-2 are not deciding factors. Rather, the courts look at the tangible relationship between employers and independent contractors.

As an independent contractor, you likely signed a document agreeing to your role when you started the job. Some employers try to use the agreement to say you’re not really an employee at the company. So, if you are hurt at work, you may be wondering whether or not you’ll have a fight on your hands. The good news is that employers don’t get to define employment in New Jersey – it’s up to state law.

Independent Contractors Are Entitled to Workers’ Compensation Coverage

After signing an agreement, the employer’s insurance provider will do everything they can to deny your compensation claim. But there’s every likelihood that a judge will disagree with them.

Under New Jersey’s workers’ compensation law, employers and employees are not on equal ground when it comes to bargaining power. If they could, many employers would probably have their entire workforce sign independent contractor agreements to avoid their legal obligations in terms of insurance cover.

But the judge takes a list of things into account when determining whether you’re an employee or an independent contractor, such as:

• Whether or not you depend on the company for an income
• Whether or not your job is an essential part of the business
• If the company controls how you perform your job
• Whether you work part-time or full-time

If the judge determines that you’re entitled to full workers’ compensation benefits, you may receive payment for lost time at work and your medical bills. If you never recover fully from the work-related accident, you may also be eligible for monetary compensation.

The world of workers’ compensation is a complex one, especially for independent contractors. That’s why it’s a good idea to have an experienced attorney in your corner to help you claim the compensation you deserve.

Book a consultation at Malamut & Associates LLC today to find out what your rights are in New Jersey.