Do businesses need workers compensation insurance before hiring?

Workers Compensation Insurance Requirement Before Hiring in New Jersey

In New Jersey, businesses must secure workers compensation insurance before hiring employees. This insurance is essential to cover medical expenses and lost wages if an employee is injured on the job.

Operational Steps for Compliance

• Obtain Workers Compensation Insurance: Before onboarding any employee, ensure you have an active workers compensation insurance policy. This applies to most employers with one or more employees.
• Register Your Business: Register with the New Jersey Department of Labor and Workforce Development as part of your compliance process.
• Classify Employees Correctly: Proper employee classification affects insurance premiums and compliance. Misclassification can lead to penalties and increased costs.
• Maintain Accurate Records: Keep detailed records of your insurance policy, employee payroll, and injury reports as part of your compliance and reporting obligations.
• Review Payroll Systems: Integrate workers compensation insurance costs into your payroll and accounting systems for accurate bookkeeping and tax reporting.

Additional Considerations

As of 2026, failure to have workers compensation insurance before hiring can result in fines and business penalties. It can also expose your business to direct liability for workplace injuries.

Consult with your insurance provider or a licensed broker to select the appropriate coverage based on your business size and industry risk.