Workers Compensation Insurance and North Carolina (NC)

Health insurance may be the hot topic right now, but employers should not forget about workers’ compensation insurance. The beginning of the year is a good time to get on track if your business has not been compliant in the past. From the NC Department of Commerce website, “The North Carolina Workers’ Compensation Act requires businesses which employ three or more employees, including those operating as corporations, sole proprietorships, limited liability companies and partnerships, obtain workers’ compensation insurance or qualify as self-insured employers for purposes of paying workers’ compensation benefits to their employees.”
A Chairman at the NC Department of Commerce has put in place an initiative to make sure NC employers carry workers’ compensation insurance. Over the last 18 months many businesses may have been confronted with an investigator inquiring about their insurance. These investigators are not only enforcing compliance, but they are imposing fines and misdemeanor charges for employers willingly not having coverage. Per the Raleigh News and Observer the NC Department of Commerce has collected “nearly $1 million in civil fines.”
They are able to detect these companies by state agencies starting to work together. We have seen increased examples of this in the tax world as well. The Secretary of State and counties are utilizing each other’s data to see if registered businesses with the Secretary of State have filed their county property tax listings. If not, the county is sending out notices to these businesses. The NC Department of Commerce is working to increase the data mining capabilities as soon as possible. The increased ability to collect data from various state agencies will result in more company visits in the upcoming years. Letting a worker’s compensation policy lapse is a good way to increase chances of those visits.
Lack of insurance not only can result in fines and charges for the employer, but it can be devastation for the employee as well. If employees are not properly insured they can face significant health costs when they go to get their medical bills paid while trying to recover from an injury. Typically their only recourse is to file a claim with the Industrial Commission or worse, go after their employer. This issue is perpetuated if the employee is misclassified as an independent contractor. The employee believes they are covered, but the independent contractor designation excludes the employer from providing coverage. We have been working to educate our clients on the need to properly classify their workers as employees or independent contractors. We should see misclassification of workers become a point of investigation in conjunction with the workers’ compensation investigations.
If you believe you may have a misclassification issue or need assistance finding a representative to provide workers’ compensation insurance, let us know.