Tom's Blog
As one of the many working towards the dream of owning your own business, it is important to understand North Carolina Workers Compensation Insurance Laws. If you are starting, or own a business in North Carolina, then you need to comply with the North Carolina Workers’ Compensation Act.
The first step is for you to clarify the requirement by law, to determine your need to carry workers compensation insurance. The major factor of compliance with this act is based on determining the correct number of employees within your organization.
What’s the least number of employees I can have before the requirement kicks in?
North Carolina’s workers compensation insurance law requires coverage once you have obtained three or more employees. However, the way your business is structured can affect how the number of employees is counted.
For sole proprietors, partnerships, limited liability companies, estate, or trust, the requirement begins once you have three employees, in addition to the sole proprietor, partners, formulators of the LLC, executor of the estate, and bearer of the trust. To determine the number of employees, they are not included in the count. Also, it is important to remember, when classifying who is a regular employee you should also include employees that are part-time, regular seasonal or family members, in addition to your full-time employees.
What about Contractors?
The North Carolina Workers Compensation Act states that independent contractors are considered employees. Referring to an employee as an independent contractor does not exclude them from the total employee count for compliance with the North Carolina Workers Compensation Act.
Corporations are expected to abide by this law as well. If the business is a corporation, including those that have non-profit status, you must include corporate officers in this headcount, but these officers may exclude themselves from coverage.
A question that can often come up is whether a business can obtain a waiver. For North Carolina, waivers have been unavailable since October 1995.
After you have identified your requirement for compliance with the Act, the second step is to obtain coverage. In North Carolina there are four markets of coverage.
Markets of Coverage
1) Find coverage in the conventional open market. Call Paramount Insurance at 866-869-3335 or Click Here. We’ll shop the marketplace finding you the lowest rates.
2) Qualify to become self-insured. For information on this process, contact the North Carolina Department of Insurance
3) Determine if your business can be placed in a self-insured fund. For a list of self-insured funds, contact the North Carolina Department of Insurance.
4) You may be placed in the assigned risk pool. Assigned risk pools are administered by the N.C. Rate Bureau. Request a quote here.
Understanding the requirements for your business, and the available options for coverage are a critical puzzle piece to ensure success. If you are unsure of the responsibilities given to you, as an employer, please contact your lawyer or insurance agent for professional advice.
Compliance with the North Carolina Workers Compensation Act is a serious matter. As an employer, you can face stiff financial penalties. The possible repercussions do not stop there. You can also potentially be charged with a misdemeanor, or even be charged with a felony and possible imprisonment. For more information on possible penalties for non-compliance review Section 97-94 of the Act.
