Stop work orders and failure to insure for workers’ compensation insurance in New Jersey

On Behalf of | Mar 28, 2013 | Workers' Compensation

In New Jersey, it is important that all employers have workers’ compensation coverage, whether through an insurance provider or are approved for self-insurance. Workers’ compensation insurance is required of all employers, even those from out-of-state who are working on jobsites in New Jersey. Employers will sometime attempt to misclassify workers as independent contractors to avoid responsibility for the necessary workers’ compensation insurance.

News from Connecticut tells how their Department of Labor’s Division of Wage and Workplace Standards had to issue “stop work” orders to companies who violated the state’s workers’ compensation rules by misclassifying workers on numerous construction sites.

Companies attempt to obtain a competitive advantage by not carrying the proper insurance, avoiding unemployment taxes and improper payroll reporting, which may allow them to underbid other companies, who obey the law and adequately protect their employees with the appropriate workers’ compensation insurance.

Connecticut can assess a $300 per day penalty for companies violating these laws. In New Jersey, the penalty can be more severe. If it is a willful, it may be charged as a crime. It also carries a penalty up to $5,000 for the first ten days and up to $5,000 for each additional ten-day period.

If the business is a corporation, the penalties can be assessed personally against the officers and failure to insure penalties cannot be discharged in a bankruptcy. And this is if no one is injured on the job.

If there are injured workers, the owner/officers of the employer can be personally liable for all medical expenses, temporary disability and permanent disability or dependency benefits of the injured worker. New Jersey may also levy civil penalties against owner/officers of the employer.

If you are aware of any employer who misclassified workers or failed to insure, report them to the New Jersey Office of Special Compensation Funds.

Source:, “CT DOL Issues Stop Work Orders To 27 Companies; Investigates Misclassification,” March 27, 2013