Workers’ compensation insurance is one of the most important protections contractors can provide for their employees—and for their businesses. But when a contractor operates across state lines, things can quickly become complicated.
Imagine this scenario:
• A construction company is headquartered in Manhattan.
• Payroll is processed through the New York office.
• One of the company’s employees lives in New Jersey.
• The company takes on a four-month project across the river.
• While working on the New Jersey job, the employee gets injured.
The question becomes: where should the injured employee file for workers’ compensation benefits—New York or New Jersey? And, equally important, which state’s coverage will protect the employer?
This situation comes up often for contractors in the tri-state area, so let’s break it down.
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Determining Which State’s Workers’ Compensation Benefits Apply
Workers’ compensation benefits are governed by state law. Each state has its own rules about wage replacement, medical coverage, duration of benefits, and employer obligations.
When an employee works and lives in one state but is employed by a company headquartered in another, multiple jurisdictions may be involved.
Here are the primary factors that determine where a workers’ compensation claim can be filed:
1. State of Employment Contract
• If the employment relationship was established in New York (offer made, payroll set up, contract signed), New York has jurisdiction.
2. Employee’s Place of Residence
• Since the employee lives in New Jersey, New Jersey could claim jurisdiction, especially if the work injury occurs within state borders.
3. State Where Injury Occurred
• Workers’ compensation laws generally allow claims to be filed in the state where the injury happened. Since this accident occurred in New Jersey, the employee can file there.
4. Employer’s Insurance Policy
• If the employer’s workers’ compensation policy is written only for New York, it may not automatically cover injuries in New Jersey. This creates a potential gap that needs to be addressed.
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Filing Options for the Employee
In this scenario, the injured worker typically has two filing choices:
• File a claim in New York:
Because the employer is based in Manhattan and payroll is processed there, New York has jurisdiction. The employee can seek New York workers’ comp benefits, which include medical treatment, temporary disability benefits, and, in certain cases, long-term disability payments.
• File a claim in New Jersey:
Since the injury happened in New Jersey and the employee lives there, New Jersey law also applies. New Jersey workers’ comp benefits might differ in terms of wage replacement percentages, medical provider choices, or duration of benefits.
The employee can generally file in either state. In some cases, the worker may even try to pursue claims in both states, although they cannot collect double benefits.
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What Happens if the Employer Only Has a New York State Policy?
Here’s where things get tricky. If the employer’s workers’ compensation coverage is written only for New York, it might not automatically cover New Jersey exposures.
Most standard workers’ compensation policies have two parts:
• Part One – Workers’ Compensation Insurance
This provides coverage for the specific state(s) listed in the policy declarations. If the policy lists only “New York,” then it only guarantees coverage for injuries subject to New York jurisdiction.
• Part Two – Employers’ Liability Insurance
This provides protection if an employee sues the employer for a work-related injury outside the scope of workers’ comp benefits. However, this is not a substitute for proper New Jersey workers’ compensation coverage.
That means if an employee files in New Jersey, and the employer’s policy does not extend coverage there, the employer could be exposed. The New Jersey Workers’ Compensation Board may require the employer to pay benefits directly—while also facing fines or penalties for non-compliance.
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Extending New York Coverage to New Jersey
Can an employer insured through a New York State plan extend coverage to New Jersey?
Yes—but it requires action. Here’s how:
1. Add New Jersey as a Covered State:
• When purchasing a workers’ compensation policy, the employer must list all states where they have employees working. If the company anticipates projects in New Jersey, the policy should include New Jersey under “3.A – Workers’ Compensation Insurance.”
2. Use the “Other States” Coverage Provision:
• Many policies allow employers to add “Other States” coverage under Section 3.C. This provision provides temporary coverage if employees begin working in a new state during the policy period.
• However, “Other States” coverage is not a permanent solution. Insurers often require the employer to notify them promptly when operations begin in a new state.
3. Secure a Separate New Jersey Policy (if needed):
• In some cases, a separate New Jersey policy may be required, particularly if the company will have ongoing operations there.
The key takeaway: Contractors who cross state lines must proactively extend their workers’ compensation coverage to every state where they operate.
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Why Contractors Need to Be Proactive
Failing to secure proper coverage in all states where employees work can have severe consequences:
• Fines & Penalties: New Jersey aggressively enforces workers’ comp compliance. Employers who do not carry proper coverage can face fines of up to $5,000 per day.
• Direct Payment of Benefits: If the insurance policy does not apply, the employer may be forced to pay medical expenses, lost wages, and disability benefits out of pocket.
• Civil Liability: Without workers’ comp protection, the employee could sue the employer directly for damages.
In short: assuming a New York policy covers New Jersey exposures is a costly mistake.
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How BGES Group Can Help Contractors
At BGES Group, we specialize in workers’ compensation insurance for contractors in the tri-state area. We understand the unique challenges that come with cross-border operations between New York, New Jersey, and Connecticut.
Here’s what we do for contractors:
• Review your current workers’ compensation policy for coverage gaps.
• Ensure that all states where you employ workers are properly included.
• Advise on the best way to extend coverage when you take out-of-state jobs.
• Help you avoid penalties and lawsuits by staying compliant with state laws.
• Secure policies designed specifically for contractors—so you’re not overpaying for coverage you don’t need.
We don’t just place coverage; we make sure it works for your business model and risk profile.
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Final Thoughts
For contractors, crossing state lines is often a normal part of doing business. But when it comes to workers’ compensation insurance, state borders matter a great deal.
In the scenario of a Manhattan-based contractor with an employee injured on a New Jersey job site, the injured worker may file in either New York or New Jersey. If the employer’s policy is written only for New York, the company could be dangerously exposed.
The solution is to work with a specialist who can make sure your coverage extends wherever your projects take you.
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Contact BGES Group Today
BGES Group is your trusted workers’ compensation insurance specialist. We serve contractors in New York, New Jersey, and Connecticut.
📞 Call: Gary Wallach – 914-806-5853
📧 Email: bgesgroup@gmail.com
🌐 Visit: http://www.bgesgroup.com
Don’t wait until a claim exposes gaps in your coverage. Contact BGES Group today and let us protect your business, your employees, and your future.