Understanding workers’ compensation coverage in North Carolina can be complex, but knowing whether you’re protected is crucial if you’re injured on the job. The North Carolina Workers’ Compensation Act covers most employees, but there are important details and exceptions you need to know.
What Defines an Employee Under NC Workers’ Compensation?
The Broad Legal Definition
Workers’ compensation benefits in North Carolina are paid only to employees. However, the term “employee” is broadly defined under state law to include “every person engaged in an employment under any appointment or contract of hire or apprenticeship, express or implied, oral or written, including aliens, and also minors, whether lawfully or unlawfully employed” (N.C. Gen. Stat. § 97-2).
This comprehensive definition covers:
- Full-time employees
- Part-time employees
- Temporary workers
- Seasonal employees
- Family members working for the business
- Workers regardless of immigration status
- Minors (whether lawfully or unlawfully employed)
Who is Typically Covered by Workers’ Compensation?
The Three-Employee Rule
Most businesses in North Carolina, regardless of their structure (corporations, sole proprietorships, LLCs, or partnerships), are required to carry workers’ compensation insurance if they employ three or more individuals.
Coverage by Business Structure
Corporations and LLCs
Corporations, including non-profit corporations, must obtain workers’ compensation coverage when they have three or more people in the corporation. Here’s what you need to know:
- Corporate officers are included as employees in the count
- Corporate officers can “opt out” of coverage but are still counted toward the three-employee threshold
- LLC owners can “opt into” coverage but are not automatically counted as employees
Special Industry Requirements
High-Risk Industries
Businesses involved in activities using or involving radiation are required to have workers’ compensation coverage regardless of the number of employees they have.
Contractors and Trucking Operations
There are special rules for contractors and truck drivers that require workers’ compensation coverage no matter how many people are employed.
Important note for contractors: If a principal contractor hires an uninsured subcontractor, the principal contractor may be liable for the work-related injuries of the subcontractor’s employees.
Government Employees
State and Local Government Coverage
All North Carolina state government employees are covered, including:
- Paid full-time, part-time, and temporary employees
- University employees
- Community college employees paid with state funds
- All state elected officials
- Members of the General Assembly
- Local government employees
Emergency Workers and Volunteers
Volunteer Firefighters and Rescue Workers
Many emergency workers and first responders are covered by workers’ compensation even if they are volunteers, including:
- Volunteer firemen
- Volunteer rescue squads
- Pickup firefighters
- Auxiliary policemen
- Senior members of the Civil Air Patrol
Misclassified Employees
If an employer incorrectly labels workers as “independent contractors” to avoid providing coverage, the North Carolina Industrial Commission may still determine them to be employees and therefore covered by workers’ comp. This is a common issue that can leave workers without the protection they deserve – learn more about the independent contractor trap.
Who is Generally NOT Covered?
Agricultural Workers
Small farms with fewer than 10 non-seasonal, full-time laborers are exempt from the Workers’ Compensation Act.
Domestic Employees
Household domestic staff directly employed by the household are exempt from coverage requirements.
Casual Employees
Persons whose employment is both casual and not in the course of the employer’s regular trade, business, profession, or occupation are not covered.
Federal Employees
These workers are covered under a separate federal system (the Federal Employees’ Compensation Act or FECA).
Business Owners and Officers
Sole Proprietors, Partners, and LLC Members
These individuals are not automatically considered employees for workers’ compensation purposes, but they can elect to be included in coverage if they are actively engaged in the business and the insurer is notified.
Corporate Officers
While they are counted toward the “three or more employees” threshold, corporate officers may elect to be excluded from coverage.
Independent Contractors
Generally, true independent contractors are not covered by an employer’s workers’ compensation policy and are responsible for their own coverage. However, misclassification can lead to coverage.
Industry-Specific Exemptions
- Certain sawmill and logging operations have specific exemptions
- Various special rules exist for state and local officials, members of the National Guard, agricultural extension agents, and newspaper and magazine delivery drivers
How Employers Must Provide Coverage
Insurance Requirements
Employers who are covered by workers’ compensation must either:
- Obtain workers’ compensation insurance, or
- Qualify with the North Carolina Department of Insurance as a self-insured employer
Coverage is Mandatory – No Waivers Allowed
When required, workers’ compensation is mandatory. Employers and employees may not agree to waive coverage, and any agreements to avoid workers’ compensation in North Carolina are void and unenforceable.
Penalties for Non-Compliance
Financial and Criminal Penalties
An employer who fails to provide required workers’ compensation coverage can face:
- Financial penalties between $50 and $100 per day per employee
- Possible criminal charges
- Personal liability for injuries to employees that should have been covered by workers’ comp
Important Considerations for Employees
Report Injuries Promptly
If you suffer a work-related injury or illness, you must:
- Notify your supervisor immediately
- File the workers’ comp claim on the proper forms as soon as possible (generally within 30 days)
Work-Related Injury Requirements
Not all injuries are covered by workers’ compensation in North Carolina. To qualify for benefits, the injury or illness must arise out of and occur in the course of employment, resulting from job-related duties.
No-Fault System Benefits
Workers’ compensation is a no-fault system, meaning you don’t have to prove employer negligence to receive benefits. This provides crucial protection for injured workers.
What Benefits Are Available?
North Carolina workers’ compensation can provide:
- Medical treatment and related expenses
- Disability benefits for lost wages
- Injury ratings and permanent disability awards
- Death benefits for surviving family members
When to Seek Legal Help
If you have questions about your specific situation, consider consulting with the North Carolina Industrial Commission or a qualified workers’ compensation attorney. Legal representation is especially important if:
- Your claim has been denied
- Your benefits have been stopped
- You’re facing disputes about medical treatment
- You’re considering a settlement offer
Get the Protection You Deserve
Understanding workers’ compensation coverage is essential for protecting your rights as an employee in North Carolina. Don’t leave your future to chance – if you’ve been injured at work, contact an experienced workers’ compensation attorney to ensure you receive all the benefits you’re entitled to under the law.
This information is for educational purposes only and does not constitute legal advice. Every workers’ compensation case is unique, and you should consult with a qualified attorney about your specific situation.
