This blog will discuss the special NC workers’ compensation rules for truck drivers. The rules for trucking companies are similar to, but not identical to, the NC workers’ compensation rules for contractors and subcontractors. A truck driver can be an independent contractor or an employee depending on the facts of the case. But for purposes of who is responsible for paying an injured truckers workers’ compensation benefits it may not make much difference.
North Carolina General Statute §97-19.1 provides:
(a) An individual in the interstate or intrastate carrier industry who operates a truck, tractor, or truck tractor trailer licensed by a governmental motor vehicle regulatory agency may be an employee or an independent contractor under this Article dependent upon the application of the common law test for determining employment status.
Any principal contractor, intermediate contractor, or subcontractor, irrespective of whether such contractor regularly employs three or more employees, who contracts with an individual in the interstate or intrastate carrier industry who operates a truck, tractor, or truck tractor trailer licensed by the United States Department of Transportation and who has not secured the payment of compensation in the manner provided for employers set forth in G.S. 97-93 for himself personally and for his employees and subcontractors, if any, shall be liable as an employer under this Article for the payment of compensation and other benefits on account of the injury or death of the independent contractor and his employees or subcontractors due to an accident arising out of and in the course of the performance of the work covered by such contract.
(b) Notwithstanding subsection (a) of this section, a principal contractor, intermediate contractor, or subcontractor shall not be liable as an employer under this Article for the payment of compensation on account of the injury or death of the independent contractor if the principal contractor, intermediate contractor, or subcontractor (i) contracts with an independent contractor who is an individual licensed by the United States Department of Transportation and (ii) the independent contractor personally is operating the vehicle solely pursuant to that license.
(c) The principal contractor, intermediate contractor, or subcontractor may insure any and all of his independent contractors and their employees or subcontractors in a blanket policy, and when insured, the independent contractors, subcontractors, and employees will be entitled to compensation benefits under the blanket policy.
A principal contractor, intermediate contractor, or subcontractor may include in the governing contract with an independent contractor in the interstate or intrastate carrier industry who operates a truck, tractor, or truck tractor trailer licensed by a governmental motor vehicle regulatory agency an agreement for the independent contractor to reimburse the cost of covering that independent contractor under the principal contractor’s, intermediate contractor’s, or subcontractor’s coverage of his business.
So, let’s unpack the NC workers’ compensation rules for truck drivers a little bit.
If a contractor (or subcontractor) in the trucking industry contracts with a trucker, typically an owner-operator, who has not secured workers’ compensation coverage for himself, his employees or his subcontractors, then the contractor is liable for workers’ compensation injuries to the trucker, his employees or his subcontractors. In essence, a trucking contractor is on the hook for workers’ compensation injuries to his subcontractors, even if they are determined to be independent contractors. The provision does not apply to an owner-operator who at the time of the injury is operating his own truck pursuant to his own license from the United States Department of Transportation.
Note that the liability extends beyond the subcontractor to the subcontractor’s employees and subcontractors. The statute applies to interstate and intrastate trucking operations involving the use of trucks or tractor trailers licensed by the United States Department of Transportation.
A trucking contractor can protect himself from this liability by: 1) ensuring that the independent contractor has workers’ compensation coverage in place covering himself, his employees and his subcontractors; or 2) by insuring the subcontractor and his employees and subcontractors on a blanket workers’ compensation policy. Note that, unlike the law dealing with contractors and subcontractors outside the trucking context, it is not good enough to just obtain a certificate of insurance from the subcontractor. The coverage must in fact be in place for there to be protection provided to the contractor. A trucking contractor, unlike other employers and contractors, may by agreement withhold from his subcontractor’s payment an amount sufficient to reimburse the contractor for purchasing a blanket workers’ compensation policy.
Trucker drivers, more than any other occupation, must carefully consider their employment arrangements when they are hired. Experienced trucking operations are adept at creating arrangements intended to avoid or shift the risk of workers’ compensation injuries. When they are hired truck drivers will often be presented with documents creating complex lease, lease to own, ownership, or independent contractor relationships. This can make it difficult for drivers to determine who is responsible for providing workers’ compensation coverage. Drivers are also frequently required to purchase “accident insurance.” This insurance mimics workers’ compensation by paying medical and disability benefits for a limited time after an on the job accident. These polices however are for a limited duration and lack the protections offered by the North Carolina Workers’ Compensation Act.
Feel free to call if you have questions about NC workers’ compensation rules for truck drivers.