Employers Be Cautious when Taking Out Workers' Compensation Insurance Coverage


A recent unreported New Jersey Appellate Division decision highlights the importance of employers knowing their businesses and ensuring that they are properly covered by workers' compensation insurance.

All employers in New Jersey, other than a self-employed person or partner of a limited liability partnership, are required to obtain workers' compensation insurance coverage intended to cover all of its employees for any work-related injury or illness. The recent case of Williams vs. Raymours Furniture Co. Inc., Docket No. A-3450-15T4, should be a cautionary tale to employers doing business in New Jersey that not all workers' compensation policies are created equal.

The case of Williams addressed the issue of whether New Jersey had jurisdiction over a claim filed in the state by a New Jersey resident, who was injured in New York while working at the company's business in its New York location. Under normal circumstances, residency alone will not afford an individual with jurisdiction in the New Jersey Workers' Compensation Court. There must be more of a connection to the state before the court will accept jurisdiction.

In Williams, the only connection that was established was that Mr. Williams, a resident of Paterson, NJ, filed an online application for employment with Raymours Furniture Company to work at the company's facility in Suffern, New York. It was established that a company representative telephoned Williams at his home to offer him the job. Williams accepted the job over the phone, and then began working at the location in Suffern. Other than that, Williams worked exclusively in New York, and the injury occurred in New York. Based upon these facts, the Workers' Compensation Judge (WCJ) concluded that there was "no reason for New Jersey to assert jurisdiction" over the claim, and dismissed the action with prejudice for lack of jurisdiction.

Williams then appealed the WCJ's determination, arguing that the fact he entered into the contract of employment in New Jersey was sufficient enough contact with the state to have jurisdiction over the claim. The Appellate Division agreed with Williams and reversed the hearing judge's ruling, finding that it is well established that where a worker is hired, or the employment contact was formed, is sufficient enough contact with the state to assert jurisdiction within the state.

The importance of this decision for New Jersey employers is that other states may have similar laws governing jurisdiction, and the policy of insurance that the employer takes out for workers' compensation insurance coverage may need to cover that contingency. Workers' compensation policies can be state specific, and are only intended to cover claims that occur within the state. To the many smaller businesses that only do business within the state, and hire individuals who reside in the state, the area of coverage may not be of any concern. However, if a business does any work across state borders, or does any hiring outside the state of New Jersey, especially towns that border other states, such as Pennsylvania, New York and Delaware, such information should be brought to the attention of the insurance agent who obtains coverage on the employer's behalf, to ensure that the proper endorsement is made to cover potential claims in multiple states.

A simple endorsement to the policy will generally be sufficient to cover most states, however, there are four states that cannot be covered by such an endorsement, since those states are considered to be "monopolistic" states. Monopolistic states are states that only have coverage that is afforded by the state, so any required coverage must be obtained directly through the state. They are Ohio, North Dakota, Washington and Wyoming.

The important lesson to be learned by the Williams decision is to be cognizant of any activities taken by the company outside the State of New Jersey that may open the door to workers' compensation claims being filed in other jurisdictions. A simple conversation with the workers' compensation insurance company, or insurance agent, should take care of most concerns.

For more information please contact Mark Setaro at 856.779.6010 or msetaro@wglaw.com

Disclaimer: The contents of this post are for informational purposes only, are not legal advice and do not create an attorney-client relationship.


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