SENATE LABOR COMMITTEE

STATEMENT TO

SENATE COMMITTEE SUBSTITUTE FOR

SENATE, No. 794

STATE OF NEW JERSEY

DATED:  DECEMBER 5, 2024

      The Senate Labor Committee reports favorably a Senate Committee Substitute for Senate Bill No. 794.

      This committee substitute revises the definition of “employee” in the workers’ compensation law, R.S.34:15-1 et seq., to clarify that financial consideration is in the form of a salary or wage.  The bill permits the shareholder of an S corporation who actively performs services on behalf of the S corporation to obtain workers’ compensation for themselves if the S corporation elects to obtain workers' compensation coverage for the shareholder, subject to the following conditions:

      (1)  The policy may only be elected at purchase or at renewal and may not be withdrawn during the policy term.

      (2)  The workers' compensation policy will have primary responsibility for the payment of benefits if the business or partnership performs services covered under a homeowner's policy or other policies providing comprehensive personal liability insurance.

      Further, the bill provides that no insurer or insurance producer shall be liable, in an action for damages, for the S corporation’s failure to choose to obtain workers' compensation coverage for the S corporation shareholder unless the insurer or insurance producer willfully, wantonly or with gross negligence causes damage.