In almost every U.S. state, employers are required by law to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in North Carolina, you must carry workers’ comp insurance if you have at least three or more employees. Like most states, North Carolina specifies a few employee types that are exempt from compulsory coverage.

Workers’ compensation is one of many small business insurance types all North Carolina entrepreneurs should consider.

In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.


How does workers’ compensation insurance in North Carolina work?


The state of North Carolina requires you to carry workers’ compensation insurance as soon as you have three or more employees.

You can purchase coverage via the private market through either a licensed insurance broker or directly through an insurance company.

If your company is considered high-risk, you might struggle to find insurance through the private market. The North Carolina Rate Bureau can help provide coverage for insurers who can’t find a suitable private market solution.

Some larger employers can also qualify to become self-insurers. To become a self-insurer, a company must periodically submit proof that it has the financial capability to handle injury claims from any and all of its employees.


Who needs workers’ compensation insurance in North Carolina?


Nearly every employee in North Carolina must be covered by workers’ compensation insurance, with some exceptions. Individuals who are exempt from mandatory coverage include:

  • Agricultural workers on farms with less than 10 employees
  • Casual employees (those who perform work not typically associated with the business and can leave the job at will)
  • Corporate officers who opt out of coverage
  • Domestic workers
  • Federal government and railroad employees

Sole proprietors, members of LLCs and partners are not counted as employees in North Carolina.

If you’re a sole proprietor, you still might want to secure coverage for yourself. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.


What are the penalties for not having workers’ comp in North Carolina?


Failing to provide workers’ compensation insurance for you employees can lead to fines and other penalties. In North Carolina, non-compliant businesses are assessed a daily fine between $50 and $100 based on the number of employees. Non-compliance can also lead to criminal charges and even imprisonment. Additionally, any employees that become sick or get injured on the job can seek damages in court.


What does workers’ comp cover?

Medical costs

If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.

For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.

Lost Wages

Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.

If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.

Ongoing Care

Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who might receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.

Death Benefits

If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.