Does the law require my employer to carry workers’ compensation?

Workers’ compensation is an insurance policy your employer carries. In some states, not all employers must carry this insurance, but that is not the rule in every state as each state manages its own system. 

According to the New Jersey Department of Labor and Workforce Development, the law in this state says every employer must carry workers’ compensation coverage. There are two exceptions. 

Government agencies 

Some government employers may not have to carry the insurance if they receive federal benefits that will cover employees. Otherwise, they must have some type of insurance or self-insure. 

Self insurance 

If an employer wishes to insure itself instead of buying a policy, it must submit an application to the Department of Banking and Insurance. The employer must be able to meet set financial obligations and provide evidence it meets any other requirements. 

Sole proprietors 

If the business only includes the owner and there are no other workers, then a sole proprietorship does not have to carry workers’ compensation insurance. If the business does employ or contract anyone for services, then it must obtain the insurance. 


In a partnership, the company will need insurance if it has any workers. However, if the only workers are the owners, then there is no requirement for coverage. 

Uninsured employers 

The state manages regular checks of employers to ensure they meet workers’ compensation coverage requirements. If your employer does not have insurance and should under the law, you can report it to the Office of Special Compensation Funds. Failure to carry the proper insurance may result in fines, liens and a shut down of a business.