Workers' compensation insurance requirements for North Carolina employers

What are the benefits of workers’ compensation for employers and employees?

In the simplest terms, workers’ compensation insurance (also known as workmen’s compensation) helps provide benefits to employees who experience a work-related injury or occupational illness. For instance, having a policy can help cover an employee’s medical costs and replace some of their lost income should an incident occur and they miss time at work. There can be benefits for employers, too. In many cases, workers’ comp shields an employer from litigation due to a work-related injury or illness.

Next, let’s find out more about which employers need to have workers’ compensation coverage.

Workers’ compensation requirements that North Carolina employers should know

All businesses that employ three (3) or more employees, including those operating as corporations, sole proprietorships, limited liability companies and partnerships, are required to obtain workers’ compensation insurance.

That said, there are some exceptions to this rule, per the North Carolina Industrial Commission (NCIC). The NCIC oversees the North Carolina Workers’ Compensation Act and assists both employees and employers with questions or concerns about workers’ compensation. If you need to get in touch with their office, their contact information is included at the end of this article in the employer’s resource section.

Now here is more information on some workers’ comp exceptions

Though most employers in North Carolina must carry a workers’ compensation policy, there are some exceptions, including:

• Employees of certain railroads.
• Casual employees, for instance, someone whose employment is both casual and not in the course of the trade, business, profession or occupation of the employer.
• Domestic servants that are directly employed by the household.
• Farm laborers when fewer than 10 full-time, non-seasonal farm laborers are regularly employed by the same employer.
• Federal government employees in North Carolina.
• “Sellers of agricultural products for the producers thereof on commission or for other compensation, paid by the producers, provided the product is prepared for sale by the producer.”
• Corporate officers can elect to be excluded from workers compensation coverage, but importantly, these individuals are counted when determining whether a business has three or more employees and thus is required to carry a policy.

Businesses in which one or more employees are employed in activities that involve the use or presence of radiation are required to have workers’ compensation coverage.

You can view the full list of exceptions that are part of the North Carolina’s workers’ comp act here.

How does a company purchase workers’ compensation in North Carolina?

Companies have different ways to buy a policy.

• To obtain coverage, business owners are able to purchase a policy from private insurance carriers on the open market.
• Another option for North Carolina companies is to self-insure. Businesses that are  interested in taking this approach, must qualify to do so, which typically involves an assessment of financial solvency. For those interested, the Department of Insurance is available to answer questions at (919) 807-6750.
• In addition, employers may look into an assigned risk pool that exists for employers without sufficient company history that are unable to obtain insurance in the open market due to risk. The N.C. Rate Bureau is in charge of running this program. They can be reached at (919) 582-1056.

What can happen if a North Carolina employer does not carry workers’ comp?

Failure to carry the proper workers’ compensation insurance can result in fines, ranging from a minimum of $50 per day to a maximum of $100 per day, depending on the number of workers employed at the company.

While charges of neglect are generally considered misdemeanors, willful violations could result in felony charges or even imprisonment. The business could also be held liable for the compensation owed to an injured worker, with the potential to face criminal charges.

The business would also be responsible for medical treatment costs and wage loss benefits in the event of an injury, with no payment of defense costs by insurance if the employee was to sue the business.

The workers’ compensation statute of limitations in North Carolina is two years from the date of the injury. If the injured person does not file the Form 18 claim within that time, the claim will not be able to be processed.

What should an employee do when an injury occurs?

Even though it is the last thing anyone wants to happen, if there is an incident at work, the employee should notify you right away. If that’s not possible, this information should be communicated to you verbally and in writing within 30 days of when the incident occurs.

Employees are required to complete Form 18 or Notice of Accident to Employer and Claim of employee, representative or dependent.

For employers, be sure to report the injury to your carrier or insurance administrator and file a Form 19 (First Report of Injury) within five days with the North Carolina Industrial Commission:

• If the employee misses more than one day from work.
• Cumulative medical costs exceed $4,000.

Additionally, a copy of Form 19, accompanied by a blank Form 18, must also be given to the employee.