If your New Jersey LLC has even one employee who is not a member, yes, the LLC must carry workers compensation for that person before their first shift. The members who own the LLC are treated differently: New Jersey leaves LLC members out of the business's coverage by default, though the LLC can elect to include them.
Who this is for: Owners of a New Jersey limited liability company (LLC) who want to know whether the business must carry workers comp and whether the members themselves are covered. Workers comp is the insurance that pays medical bills and part of lost wages when an employee is hurt on the job.
The short version
- Members: LLC members who actively work in the business are left out of the LLC's workers comp by default.
- Employees: any non-member employee, full-time, part-time, or seasonal, must be covered from the first hire.
- Electing in: the LLC can choose to cover its members, but only when the policy is bought or renewed, and that choice cannot be withdrawn mid-term.
- No employees at all: a member-only LLC with no other workers is generally not required to carry a policy.
- Proof of coverage: clients and general contractors often still want it, so many owner-only LLCs buy a policy anyway to produce a certificate.
Are LLC members covered, or just employees?
New Jersey treats the people who own an LLC differently from the people the LLC hires. Under the state's Workers' Compensation Law, a member who actively performs services is deemed an employee only if the LLC elects that coverage; otherwise members sit outside the policy. Everyone the LLC pays as a worker sits inside it.
| Person | Covered by default? | How to change it |
|---|---|---|
| LLC member who works in the business | No, left out by default | The LLC elects to include them at purchase or renewal |
| Non-member employee (full-time) | Yes, must be covered | Cannot be waived |
| Non-member employee (part-time or seasonal) | Yes, must be covered | No hours minimum |
| 1099 worker who is really an employee | Yes, must be covered | Turns on the control test |
| Family member on the payroll | Yes, must be covered | No general family exemption |
When does my LLC have to buy a policy?
The dividing line is simple: do you pay anyone who is not a member? If yes, you need a policy for those workers before they start. If your LLC is only its members with no other staff, New Jersey does not require you to carry coverage, although the LLC can still elect to cover the members, since a member's own on-the-job injury is otherwise not paid by anything.
Two traps catch New Jersey LLCs. First, calling a worker a 1099 contractor does not settle the question: if you control how and when they work, New Jersey usually treats them as an employee who must be covered. See 1099 workers. Second, in construction a general contractor can be held liable for an uninsured subcontractor's injured worker, so coverage gets checked closely.
How the member election works
If members want to be covered, the LLC includes them when the workers comp policy is purchased or renewed, and the members' pay is then counted into the premium. New Jersey does not let you add or drop that election in the middle of a policy term, so decide at renewal. This matters most in trades where members do physical work next to the crew.
A quick New Jersey example
Illustrative, not a quote. Two partners run a small remodeling business in Jersey City as a two-member LLC and hire one full-time carpenter. The two members are left out of the policy by default, but the carpenter must be covered from day one, and construction gets no lower threshold in New Jersey. Because the members swing hammers themselves, they elect to include both members at renewal, so a fall from a ladder is covered for them too. When the carpenter later strains his back lifting drywall, the policy pays his treatment and lost wages. Skipping coverage could have brought a stop-work order and, on a job for a larger general contractor, loss of the contract.
Real questions New Jersey owners ask
I have a single-member LLC in New Jersey with no employees. Do I need workers comp?
Generally no. A member-only LLC with no other workers is not required to carry a policy. You can still choose to cover yourself by electing it when the policy is bought or renewed, since your own injury is otherwise not covered.
I added one employee to my LLC. What changes?
You now need a workers comp policy for that employee before their first shift. The members stay left out by default, but the new hire must be covered, and there is no part-time exception in New Jersey.
Can the LLC members choose to cover themselves?
Yes. The LLC elects to include its members when the policy is purchased or renewed, and their pay is then counted into the premium. The choice cannot be withdrawn in the middle of the policy term.
My LLC only pays 1099 subcontractors. Am I off the hook?
Not automatically. If you control how the work is done and it is part of your regular business, New Jersey usually treats those workers as employees who must be covered. In construction the review is stricter.
Does my LLC protecting my personal assets mean I do not need workers comp?
No. The liability shield of an LLC keeps your personal assets separate from business debts, but it does not remove the legal duty to carry workers comp for employees. They are separate things.
A general contractor wants proof of coverage before I start. What do I send?
If you carry a policy, we send a certificate showing your coverage the same business day for most carriers. If your LLC has no employees and no policy, you would either buy a policy to produce that certificate or the contractor agrees to take you on without one.
Are family members who work in my LLC covered?
Yes. New Jersey has no general family exemption for a for-profit business, so a family member on the payroll must be covered like any other employee.
Why New Jersey owners choose Morrow
- We shop the right market for you. New Jersey is an open, competitive market with no state fund, so coverage comes from any of the private insurers the state authorizes, and Morrow shops several of them to fit your trade and budget instead of leaving you with one option.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related New Jersey guides
Every New Jersey business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in New Jersey (start here)
- Workers comp: the owner's overview
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Do sole proprietors need workers comp?
- What workers comp does not cover
- Contractor workers comp in New Jersey
This guide is general information, not legal advice. New Jersey rules and penalty amounts can change, so verify current requirements with the New Jersey Division of Workers' Compensation or a licensed advisor before you rely on them. Last updated: July 2026.