A recent audit reported in the Winston Salem Journal shows that despite improvement there are still huge gaps in identifying uninsured NC employers who cheat the workers’ comp system in NC. State law requires most employers to have workers’ compensation coverage to provide medical and wage replacement benefits to injured workers and their families. State auditors claim at least 156,000 NC workers’ are employed by North Carolina employers who do not carry the required workers’ compensation coverage.
According to the audit, the North Carolina Industrial Commission has collected more than $2.4 million in fines since April of 2014, up from just over $500,000 for the two previous years, despite having only 5 workers dedicated to the effort full-time.The NC Industrial Commission has asked for more staff to help identify uninsured NC employers.
When employers fail to provide workers’ comp for injured workers we all pay the costs, including employers who follow the rules and are put at a competitive disadvantage, and taxpayers who must foot the bill through programs like Medicare and Medicaid. Often employers who fail to maintain workers’ comp misclassify employees as “independent contractors,” meaning that the state foregoes millions in uncollected income and payroll taxes. Injured workers and their families can lose their savings, cars, and homes. Families and communities suffer when employers fail to meet their obligations to their injured workers.
Last session the General Assembly considered legislation to crack down on employers who misclassify their employees as independent contractors. This legislation would have required departments within state government to work together to identify these employers and would have provided significant penalties and fines for employers caught misclassifying employees. Addressing employee misclassification would go a long ways towards solving the problem of employers who fail to maintain workers’ comp coverage in NC. Hopefully the Legislature will take up this legislation again, and also fully fund the NC Industrial Commission’s efforts to identify the cheaters.