Does a Self-Employed Person Need to Pay Workers’ Compensation Insurance in New Jersey?
You aren’t required to purchase workers’ compensation insurance coverage if you are a sole proprietor with no employees or a freelancer.
Nevertheless, some New Jersey insurance companies will sell you a workers’ compensation policy. It’s usually a good idea to procure one, as a self-employed worker can get hurt on the job as easily as an employee can.
As soon as you hire your first employee, you must obtain workers’ compensation insurance, even if your employee only works part-time.
Caveat: Make Sure You Are a Gig Worker
It is vital to understand your status. If you are classified as an independent contractor but serve one employer, you may be eligible for workers’ compensation through that organization.
In the 2002 New Jersey Supreme Court case, East Bay Drywall, LLC, v. Department of Labor and Workforce Development develops a three-prong test to determine whether you are an employee or an independent contractor.
- Whether you are under the direction and control of the employer.
- Whether your work is outside the usual course of business for which the service is performed.
- Whether you’re customarily engaged in an independently established trade, occupational, profession, or business.
If you have multiple clients, you’re probably an independent contractor. If you have just one, you may be an employee. If you are doing web design for a construction company, you may be an independent contractor. You may be an employee if you’re doing construction for a construction company.
How much does workers’ compensation insurance cost?
If you need or want workers’ compensation insurance, it may please you to discover it won’t be as expensive as you think. Estimated rates are $1.45 per every $100 covered in payroll, based on the location, number of employees, industry and risk factors, coverage limits, and claims history.
Purchasing this insurance may be a lifesaver if you cannot work due to injury, as your health insurance will not cover living costs.
Are you a freelancer having trouble with your workers’ compensation insurance?
Freelancers who purchase workers’ compensation insurance can have just as much trouble with denials and delays as employees. Indeed, they can have more, as it can be harder to prove your injury was work-related when you work from home and serve as your only supervisor.
If you’ve paid into workers’ compensation insurance and you’re having a hard time taking advantage of your benefits, contact our office for a free case review. We may be able to help you create a successful claim.
See also:
Make Sure You Really Are an Independent Contractor Before Foregoing a Workers’ Compensation Claim
