LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 3772
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: MARCH 13, 2025
SUMMARY
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Synopsis: |
Concerns valuation of board and lodging with respect to workers’ compensation. |
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Type of Impact: |
Annual State expenditure increase from the Second Injury Fund. |
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Agencies Affected: |
Department of Labor and Workforce Development. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Year 1 |
Year 2 |
Year 3 |
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State Expenditure Increase |
Up to $11,700 |
Up to $23,400 |
Up to $35,100 |
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· The Office of Legislative Services (OLS) concludes that the bill will result in an increase of State expenditures of up to $11,700 in the first year, with ongoing claims creating an additive effect in each subsequent year.
· The OLS was unable to identify any job roles at the State or local level where board and lodging were furnished as part of the employment. As such, the OLS anticipates the only circumstances where the State would have responsibility for paying workers’ compensation that include board and lodging are those related to the Second Injury Fund.
· The OLS notes that the Second Injury Fund makes benefit payments to injured workers who are totally and permanently disabled as a result of their last work-related injury combined with the worker’s pre-existing disabilities.
BILL DESCRIPTION
This bill revises the workers’ compensation law regarding its treatment of board and lodging provided by an employer when calculating the rate of benefits. Currently, board and lodging furnished by an employer are regarded as part of wages and valued at $25 per week, unless a different amount is fixed at the time of hiring. The bill provides, instead, that unless a different amount is fixed at the time of hiring, the value of employer furnished board and lodging be its market value, except that if the claimant continues to receive board or lodging during the period of total temporary disability, the value of the board or lodging will not be included in the calculation of the workers’ compensation rate for purposes of temporary total disability.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that the bill will result in an increase of State expenditures of up to $11,700 in the first year, with ongoing claims creating an additive effect in each subsequent year.
In order to determine the impact this bill will have on expenditures, the OLS first estimated the percentage of jobs in the State to which the board and lodging provisions apply. There are generally three major job categories which provide board and lodging as part of employment: farm labor, live-in domestic workers, and live-in child care providers. Based on the June 2024 United States Bureau of Labor Statistics report there are 4,000 agricultural labor jobs in New Jersey. In the same report, federal agency classifies 65,600 domestic workers and 19,600 childcare workers employed in the state. According to a study entitled “Domestic Workers in New Jersey” published in September of 2020 by Rutgers University’s Center for Women and Work, 14 percent of domestic workers in New Jersey are classified as live-in help. While not available at the state level, the Bureau of Labor Statistics nationwide data isolates the job code for live-in nannies as a subset of childcare workers. The federal agency reports this subset as 3.7 percent of all childcare workers.
Applying these factors to the State total in these job categories, the OLS estimates there are 9,200 live-in domestic workers and 800 live-in childcare providers. Combined with the 4,000 agriculture laborers noted above, there are approximately 14,000 jobs impacted by this bill, or approximately 0.33 percent of the workforce.
State law requires that all New Jersey employers not covered by federal programs have workers’ compensation coverage or be approved for self-insurance. The only circumstances where the State would have responsibility for paying workers’ compensation that include board and lodging are those related to the Second Injury Fund because the OLS was unable to identify any job roles at the State or local level where board and lodging were furnished as part of employment. The State makes benefit payments through the fund to injured workers who are totally and permanently disabled as a result of their last work-related injury combined with the worker’s pre-existing disabilities. The Second Injury Fund is funded by a yearly surcharge on workers' compensation insurance policyholders and self-insured employers.
According to evaluation data provided by the Department of Law and Public Safety in the FY 2025 Governor’s Budget, there will be an estimated 400 Second Injury Fund claims completed per year for fiscal years 2024 and 2025. Applying the 0.33 percent against this number of Second Injury Fund claims, the OLS determines that one claim per year will be impacted by the bill. The baseline of any claims will be unaffected by the legislation, but an incremental increase in the claim amount needs to be estimated for the value of board and lodging. In general, workers’ compensation claims pay approximately 70 percent of the worker’s wages, up to a calendar year 2025 maximum weekly amount of $1,159. The OLS has calculated the weighted average weekly wage of the workers eligible for board and lodging as $691 per week. Applying the 70 percent factor to these wages, the average workers’ compensation claim for this subset is $483 per week.
While there are no specific studies to determine the market value of board and lodging, the United States Department of Labor has established daily subsistence standards for farm workers under the H-2A visa program of $15.88 per day. Using this standard yields an additional benefit for board of $111 per week. In addition, the Wage and Hour Division of the United States Department of Labor generally allows a tax credit of seven and one-half times the statutory minimum wage per week for employers that provide lodging. Applying this factor to the 2024 farm minimum wage of $12.81 yields a benefit of $96 per week and the nonfarm minimum wage of $15.13 per hour yields a benefit of $113 per week. Applying these increments to a full 52 weeks of workers compensation, each claim will have an annual incremental cost of up to $10,800 for a farm worker claim, and up to $11,700 for a nonfarm worker claim.
The OLS was unable to identify any job roles at the State or local level where board and lodging were furnished as part of the employment. As such, there is no anticipated additional impact to State or local workers’ compensation claims as a result of this bill other than those related to Second Injury Fund claims.
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Section: |
Commerce, Labor and Industry |
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Analyst: |
Associate Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).