Most North Carolina businesses with employees are required to pay for workers' compensation insurance (WC or workers' comp insurance). The insurance provides compensation to employees who suffer work-related injuries. Here are some basic facts that you need to know about workers' comp insurance in North Carolina as a business owner and employer.
If your North Carolina business has three or more employees, you're generally required to carry workers' compensation insurance. Exceptions apply in the following cases:
Other exceptions also may apply. There also are special rules for trucking companies. In addition, business owners, such as members of LLCs, partners in partnerships, and sole proprietors, are not automatically counted as employees and are not required to be covered by workers' compensation insurance. Corporate officers may choose to be excluded from WC coverage but still are counted as employees for the purpose of determining whether a business has at least three employees.
The North Carolina Industrial Commission (IC) is the primary state agency that handles workers' comp claims. Most of the law for WC insurance is contained in North Carolina's Workers' Compensation Act (Chapter 97 of the North Carolina General Laws). In addition to the Act, there are also administrative rules that cover workers' compensation in North Carolina.
In North Carolina, workers' compensation insurance is available through private insurance companies. If your business is unable to obtain coverage through a private insurer, you may be able to get coverage through the state's assigned risk pool, which is administered through the North Carolina Rate Bureau. There is also an option to self-insure, but this may not be advisable for smaller businesses, in part because it requires that a lot of money be set aside to cover potential claims.
When an employee is injured on the job, he or she should give you a completed Form 18, Notice of Accident to Employer and Claim of Employee, Representative, or Dependent. You are required to provide a blank Form 18 to the employee for him or her to complete. As the employer, you must complete Form 19, Employer's Report of Employee's Injury or Occupational Disease to the Industrial Commission (Form 19 often is more simply known as a First Report of Injury or FROI). In most cases, your workers' comp insurer will then file the completed form electronically with the IC. A copy also must be provided to the injured worker.
You should file Form 19 within five days of learning of the injury. Beyond these initial steps, there are subsequent steps to the WC claims process, not covered here.
You or your WC insurer may choose to deny some or all workers' comp benefits to an employee. If there is a dispute regarding injuries or compensation, the matter will automatically be referred to mediation through the IC. If mediation doesn't resolve the dispute, you may have a hearing before a deputy commissioner of the IC. Beyond that, you may then appeal to the full Commission, and, ultimately, the North Carolina Court of Appeals and Supreme Court.
If you think an employee is engaging in workers' compensation fraud, you also may choose to contact the IC's Fraud Investigative Unit.
If you don't carry workers' compensation insurance, you may be subject to various financial penalties, as well as criminal charges (misdemeanor or felony), and potentially also prison time. Some of these penalties are laid out in Section 97-94 of the Workers' Compensation Act.
There are many other workers' compensation requirements for North Carolina employers that are not covered here, such as putting up posters about workers' compensation coverage where employees can see them. For more information, see the Nolo website section on workers' compensation and the North Carolina Industrial Commission website.