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Bill

A 3724

Provides personal liability for owner, executive officer, or executive director of employer for failure to pay for workers' compensation coverage.

2026-2027 Regular Session Introduced by Alixon Collazos-Gill

The bill expands penalties and recovery to include principal owners for uninsured workers’ comp, with the Uninsured Employer’s Fund subrogation to recover costs.

Reported and Referred to Assembly Judiciary Committee
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WeVote Research Nonpartisan
Bill Summary · A 3724

Summary of Bill A3724 (Session 222, New Jersey)

Purpose and intent

  • This bill expands liability related to workers’ compensation coverage by extending penalties and fund recovery rights to principal owners of an employer, in addition to the employer itself.
  • It aims to strengthen enforcement of insurance payments for workers’ compensation by using the uninsured employer’s fund (UEF) and subrogation rights to recover amounts paid from uninsured employers.

Key provisions and changes

  • Uninsured Employer’s Fund (UEF) administration and surcharges

    • The UEF, already used to pay awards against uninsured defaulting employers, continues to be administered by the Commissioner of Labor.
    • An annual surcharge on January 1 (and each year thereafter) applies to:
    • Workers’ compensation policyholders
    • Employers’ liability policyholders
    • Self-insured employers
    • Several exceptions apply (e.g., certain reinsurance/retrocessional transactions, state or political subdivisions acting as self-insured, and specific endorsements).
    • If the fund balance exceeds $500,000 at year-end, surcharges are suspended for the next year and resume once the balance drops below $500,000.
    • The initial annual surcharge for 1989 is set at $500,000, and subsequent surcharges are calculated to cover 150% of the estimated benefits payable from the UEF in the following year, in consultation with the Commissioner of Insurance.
    • The surcharge is added to the overall policyholder/self-insured bill, shown separately on billing statements, and not subject to reductions for other workers’ compensation adjustments.

  • Penalties and subrogation for uninsured employers

    • The Director of the Division of Workers’ Compensation must impose a $1,000 penalty against an employer for failing to secure workers’ compensation coverage, plus an additional assessment of 15% of the awarded benefits for each claim (capped at $5,000 per claim). This goes into the UEF.
    • If the employer does not pay within 10 days after notice, a default in payment of compensation may be entered by judgment.
    • Sums collected from uninsured, defaulting employers are first applied to compensation and benefits due; any remaining balance is applied to the assessments per the statute, and amounts recovered from employers on judgments for these failures are deposited back into the UEF.

  • Joint and several liability

    • Both the employer and the principal owner (defined as someone with a beneficial ownership or control ability) are jointly and severally liable for penalties under this section.

  • Subrogation under the UEF

    • The UEF has subrogation rights to the compensation and benefits paid, allowing recovery against the employer and principal owners for claims arising under workers’ compensation.

Affected parties

  • Employers, including principal owners (as defined: individuals with ownership/control or beneficial interests).
  • Policyholders of workers’ compensation and employer’s liability insurance, and self-insured employers, who fund the UEF via surcharges.
  • Workers and beneficiaries receiving benefits from the UEF (indirectly affected via fund financing and recoveries).

Timeline and procedural aspects

  • Immediate effect upon enactment (the bill states it shall take effect immediately).
  • Annual surcharge process begins January 1 each year, with adjustments and suspensions based on the fund balance.
  • For 1989, specific baseline amounts are prescribed; ongoing surcharges follow the calculation methodology outlined (150% of estimated benefits payable).

Notes

  • The bill adds principal owners to the scope of liable parties for penalties related to uninsured workers’ compensation coverage.
  • It reinforces the UEF’s financial stability while expanding enforcement mechanisms to recover costs from uninsured employers and their owners.

Compiled from official sources — confirm details with the bill’s official record.

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