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Workers' compensation requirements for employers

The North Carolina Workers' Compensation Act mandates that all employers in the state with at least three employees have workers' compensation insurance. Otherwise, the employers must be self-insured for the purpose of paying employees workers' compensation benefits in the event of workplace accidents. This regulation is applied to all businesses that operate as sole proprietorships, partnerships, limited liability entities and corporations.

A business with only one employee who works around radiation, however, has to have coverage. Furthermore, companies that subcontract work to other businesses that do not have workers' compensation coverage might be held responsible for the subcontractor's staff if there is a workplace accident that results in injuries. The number of people whom the companies and subcontractors employ is irrelevant. However, there are a few exceptions to the workers' compensation or self-insurance requirement. Businesses that employ certain railroad workers and casual employees may not be bound by this mandate. Other exceptions might include federal employees, some farm laborers and domestic servants under the direct employment of a household.

Some employers do not automatically count sole proprietors, partners and LLC members as staff, and corporate officers might choose to be omitted from workers' compensation coverage. Despite this, they still count toward the number of employees that a company has. Additionally, employers cannot simply call their workers "independent contractors" to avoid liability under the Workers' Compensation Act because the Industrial Commission, which investigates benefit claims, could find that the workers are employees.

When a workplace accident occurs, an injured employee must notify the employer so that the employer can fill out an injury form to start the workers' compensation process. Employers who fail to do this or to have coverage for their employees become the subject of an Industrial Commission investigation and face fines, misdemeanor or felony charges, and possible imprisonment if they are found to have violated the Workers' Compensation Act.

Source: North Carolina Industrial Commission, "Employers' requirement to carry Workers' Compensation Insurance", November 11, 2014

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