I am often asked “what do I do if my employer does not have workers’ comp in North Carolina?” As noted in the previous section, an employer that is covered by the North Carolina Workers’ Compensation Act must either purchase insurance or qualify as self-insured. The NC workers’ comp system is mandatory and cannot be waived, even by agreement of the employees. There are harsh penalties if an employer does not have workers’ comp in North Carolina.
The North Carolina Industrial Commission is authorized to fine employers who fail to secure workers’ compensation coverage one dollar per employee per day, but not less than $50 per day and not more than $100 per day. So if an employer does not have workers’ comp in North Carolina for a year faces a fine between $18,250 and $36,500 per year, even if there are no workplace injuries.
An employer required to provide workers’ compensation who “willfully fails” to secure coverage can be charged with a Class H felony. An employer who simply “neglects” to provide the coverage can be charged with a Class 1 misdemeanor.
In addition to fines and criminal charges, non-insured employers continue to be liable for medical and wage replacement benefits related to an employee’s workplace injuries. In this instance the injured North Carolina employee has the option to bring their claim before the Industrial Commission or file a negligence claim in the civil courts. So, in addition to fines and criminal charges, a non-insured employer loses the protection of the “exclusive remedy” provision of the North Carolina Workers’ Compensation Act and opens themselves up to the broader array of damages, including pain and suffering, available in the civil courts.
Importantly, individuals with the “ability and authority” to bring a non-insured employer into compliance with its obligation to provide workers’ compensation in NC can be held personally liable for a penalty up to the amount of compensation due an injured employee. That means any person whose job it might be to buy workers’ compensation insurance for a company can be held personally liable for the medical and wage benefits payable to an injured worker if they fail to do so. These individuals can also be charged criminally.
The North Carolina Attorney General is authorized to prosecute non-insured employers in North Carolina and to collect fines imposed by the Industrial Commission. Non-insured employers may be investigated by the Industrial Commission’s Fraud Section. The Industrial Commission can waive collection of all or part of a penalty. The Industrial Commission will occasionally waive penalties when an employer does not have enough money to pay both an injured employee workers’ compensation benefits and the penalty.
There is nowhere to hide from the liability imposed on employers who fail to provide workers’ compensation coverage. The Industrial Commission will look carefully at the facts of a case and, when appropriate, “pierce the corporate veil” to reach the assets of the business owners to pay claims and fines. And because these claims are frequently rooted in fraud, they may not be dischargeable in bankruptcy.
If an employer does not have workers’ comp in North Carolina it may face serious civil and criminal liability. Employers lose the “exclusive remedy” protection of the NC Workers’ Compensation Act but remain responsible to an injured employee for his or her injuries. Individuals with the authority to purchase insurance can be held personally liable for penalties and benefits. And none of this is easily avoided.
The lesson here for the injured worker whose employer does not have workers’ comp is to not give up. Contact a Board Certified NC workers’ comp lawyer to evaluate your case and how to move forward.