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North Carolina Cracks Down on Employers Without Workers’ Compensation Insurance

March 9, 2016 Workers' Compensation

With few exceptions, North Carolina requires that all businesses that regularly employ three or more employees obtain workers’ compensation insurance or qualify as self-insured. It does not matter if the employees are full-time, part-time, regular, seasonal, or family members. In addition, any business with even one employee whose work involves radiation must have worker’s compensation insurance. For an employer who provides agriculture or domestic services, the requirement for worker’s compensation insurance is triggered when they have 10 or more full-time, non-seasonal workers.

Employers who do not carry the proper workers’ compensation insurance and do not qualify as self-insured may face financial penalties of up to $100 a day for each day without coverage. Businesses who fail to comply with the law may also face misdemeanor or felony charges and possible imprisonment. Over the past 18 months, the state’s Industrial Commission, which is responsible for enforcing workers’ compensation laws, has been cracking down on employers who do not carry the proper insurance. Over the course of this period, the agency has almost $1 million in civil penalties and 100 employers have been charged with misdemeanors for willingly going without coverage.

As of 2012, it was estimated that at least 30,000 employers in North Carolina lacked the required insurance coverage. Out of the 2,000 cases that the commission investigated last year, 800 companies were brought into compliance and found that 71 workers had been injured while working for employers who need not have the required worker’s compensation insurance.

One of the biggest issues with non-compliance comes from employers who treat individuals as independent contractors when they actually should be treated as employees. Under the law, an employer may not avoid the requirements of the Workers’ Compensation Act merely by classifying its employees as independent contractors. According to research by the National Employment Law Project, 20 to 30% of employers misclassify at least some of their workers as independent contractors.

In North Carolina, the Governor recently issued an executive order charging the Industrial Commission with the task of coordinating how various agencies will address businesses that may be trying to gain a competitive edge by deliberately misclassifying workers. Until the executive order in mid-December, the state had not been pursuing employers who misclassify workers to avoid workers’ compensation insurance. Outside of evaluating the specific facts of a workers’ compensation claim, it has been tricky for the agency to evaluate whether an injured worker was in fact misclassified. One tool that was recently introduced to address this issue, is the Non-Compliant Employer Targeting System (NETS), which uses data from various state agencies to compile a list of potential violators based on priority. The system went online in 2014 and has resulted in charges against employers who had failed to have the proper insurance coverage.

Consult an Experienced Worker’s Compensation Attorney

If you or a family member has sustained an injury at work, you may be entitled to worker’s compensation benefits.  Please contact the experienced Worker’s Compensation attorneys at Wallace Childers PLLC for assistance with your claim.