Committee Advances Bill Allowing Certain Small Businesses to Forgo Workers’ Compensation

Assemblywoman BettyLou DeCroce

PARSIPPANY — Small businesses and start-ups saddled with a mandate to purchase workers’ compensation coverage despite a lack of employees could see some relief under legislation advanced by the Assembly Labor Committee today.

The bill (A508), sponsored by Assemblywoman BettyLou DeCroce and Assemblyman Jay Webber, revises the definition of employer in the workers’ compensation law. Partnerships that consist of two partners or S corporations with only one employee who is also the sole shareholder could save on unnecessary coverage.

“Our small businesses have struggled to stay afloat in the face of coronavirus shutdowns and it’s time we remove this undue mandate that is hindering their ability to survive,” said DeCroce (R-Morris). “Revising the workers’ compensation law so that businesses without employees can save on unnecessary coverage is one way our state can support their success.”

About three out of every 10 small businesses in the state have closed during the course of the coronavirus crisis.

“In order to foster an economic recovery, New Jersey needs to step up its support of small businesses,” continued DeCroce. “It’s critical to find ways to help owners in every stage – the start-ups trying to get off the ground, small businesses who need help getting through this crisis, and those who want to grow. This bill will allow small businesses to save on excessive insurance and spend that money on efforts to better help them achieve their goals.”

Failing to carry the proper insurance can currently result in fines up to $5,000 for the first 10 days and up to $5,000 every 10-day period thereafter. It is classified as a disorderly person offense and, if determined to be willful, a crime of the fourth degree.

The Senate passed the bill (S967) unanimously on February 10.