This past January, Governor Phil Murphy signed legislation to amend New Jersey’s Workers’ Compensation Act by replacing this statutory shortfall with a modern standard: board and lodging are now valued at market value unless otherwise fixed at the time of hiring.
By Adam Kotlar & Justin Cohen
New Jersey workers’ compensation law has long recognized that an employee’s wages are not limited to cash compensation. Under N.J.S.A. 34:15-37, the term “wages” includes the “money rate” of recompense under the contract of hire. Historically, “wages” has also included the value of board and lodging furnished by the employer as part of an employee’s compensation.
But for decades, the statute applied an outdated valuation mechanism: if board and lodging were provided, the weekly value was assessed at $25 per week unless the parties set a different amount at the time of hiring. For generations, that figure has been detached from economic reality.
This past January, Governor Phil Murphy signed legislation to amend New Jersey’s Workers’ Compensation Act by replacing this statutory shortfall with a modern standard: board and lodging are now valued at market value unless otherwise fixed at the time of hiring.
Bringing “Board and Lodging” to the Present Day
The amendment to Section 34, codified in Senate Bill 3772, which was sponsored by Senator Joseph Lagana, is concise. However, it will have a seismic impact on wage calculation, benefit valuation, and litigation strategy for cases involving workers whose compensation packages include employer-provided board and lodging. This change will materially affect the many claims pending in the courts in the Division of Workers’ Compensation for Petitioners from workers with board and lodging benefits as part of their overall employment compensation packages.
The amended statute provides that board and lodging furnished by the employer as part of wages “shall be included at market value unless the money value of such advantages shall have been otherwise fixed by the parties of the time of hiring.” With this language, Senator Lagana and Governor Murphy modernized the antiquated $25-per-week lodging benefit by replacing it with a market-based valuation.
It is difficult to overstate the importance of the average weekly wage (AWW) in New Jersey workers’ compensation practice. The AWW is not merely an abstract number—it drives the compensation rate that becomes the foundation for the payment of temporary total disability benefits under N.J.S.A 34:15-12(a), as well as permanent partial disability (PPD) and permanent total disability (PTD) awards. While statutory minimum and maximum benefits constrain each of these separate categories of benefits, the payable amount generally cannot exceed 70% of the claimant’s AWW.
By recalibrating the valuation of “board and lodging” from a nominal $25 per week to “market value,” the amendment effectively increases the AWW wage base in appropriate cases. In turn, for claims that include room and board, that increase will raise the weekly compensation rate for all cases used to value the claim.
Workers Who Live Where They Work Stand to Benefit Immensely From This Change
This change to valuing board and lodging is particularly significant for workers in industries where employer-provided housing is common. In industries like caregiving, live-in service roles, hospitality, agricultural employment, and maintenance, the “contract of hire” between the employer and employee often includes housing as a substantial economic component of the job. Until this change, injured workers did not receive compensation based on the true value of their pre-injury compensation package; that is, the value of the board and lodging they received. Workers frequently accepted lower weekly pay rates from employers because their living expenses were substantially subsidized by the board and lodging provided. With this amendment to the Workers’ Compensation Act, injured workers can receive the appropriate level of their benefits.
Notably, when making this change, the New Jersey Legislature built in practical and predictable limitations to prevent any possibility of excess or double recovery. While market-value housing may be included as wages, the statute now provides that if the employee continues to receive that board or lodging during the period of temporary total disability, its value “shall not be included” for purposes of calculating the TTD rate. That carve-out reflects a straightforward policy prohibition against double recovery: if the employee is receiving housing during disability, it would be inequitable to both (1) treat the housing as wages inflating the TTD rate, and (2) allow the employee to continue receiving the benefit in kind.
A Forthcoming Battle Over “Market Value?”
Workers’ compensation trial attorneys can already see on the horizon the next natural area of conflict arising from this change: defining “market value.” The legislature did not include a definition of “market value” in the statute, so we can expect disputes over the calculation of market value when a contract for hire does not specify the value of the board and lodging.
In most cases, I expect the issue will not be whether housing is included in wages, but rather how housing is valued. That phrasing creates an immediate evidentiary premium on written employment agreements, onboarding paperwork, and contemporaneous records showing the value assigned to housing at the outset of employment. Stay tuned for guidelines from courts on what “market value” means, as cases that turn on that phrase work their way through the state’s workers’ compensation courts.
Expect to See an Impact On PPD and PTD Cases
In practice, while the amendment expressly addresses board and lodging within “wages,” its practical effect will be felt most acutely in PPD and PTD valuations. In a significant subset of cases, the most contested issue in PPD and PTD is not merely the impairment rating but the value of the exposure attached to the rating—particularly when the weekly rate is disputed. A market-value housing component can elevate the AWW and produce a significantly higher compensation rate, which in turn increases the expected value of an eventual PPD or PTD resolution.
The amendment to N.J.S.A. 34:15-37 replaces a relic of prior decades with a realistic valuation method grounded in present-day economics: board and lodging are now valued at market value. This change will most directly affect cases in which employer-provided housing is a meaningful economic benefit, and it will introduce a new set of valuation disputes that practitioners should expect.
Wage calculation issues are rarely academic in workers’ compensation; they shape the rate, the exposure, and the settlement strategy. This statute ensures that in the board-and-lodging context, those calculations will now reflect the world as it is today—not as it was when $25 per week was presumed to be enough to pay for a roof over one’s head.
Adam Kotlar is a founding partner at Kotlar Cohen. He is certified by the Supreme Court of New Jersey as a civil trial attorney and as a workers’ compensation attorney. Justin Cohen is also a founding partner at Kotlar Cohen. He is certified by the Supreme Court of New Jersey as a workers’ compensation attorney. Both co-chair the firm’s No Surprises Act legal practice, representing physicians and medical groups in the statute’s Independent Resolution Process. They can be reached at [email protected] and
[email protected], respectively.
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