North Carolina is a great place to open a small business. In fact, small businesses comprise 99.6% of the state’s businesses and employ 1.6 million workers.
However, before you place an ad to attract employees, you need to know the small business workers’ comp rules that apply to your business.
- The North Carolina Workers’ Compensation Act is administered by the state’s Industrial Commission.
- In 2020, private employers in North Carolina reported 64,900 nonfatal workplace injuries and illnesses.
- Two industries—trade, transportation and utilities and education and health services—reported 53% of occupational injuries and illnesses in North Carolina in 2020.
- You are required to carry workers’ comp insurance in North Carolina if you employ three or more employees. This regulation applies to corporations, sole proprietorships, limited liability companies and partnerships.
- North Carolina’s workers’ compensation requirements also apply to certain trucking owners or operators, even if the operator works as an independent contractor. If the owner-operator doesn’t have his or her own workers’ comp insurance, the employer must provide coverage.
- As with most regulations, there are exceptions to the rule. Employees who don’t require workers’ comp insurance include:
- Those employed by certain railroads
- Casual employees who are not employed in the same field as the employer
- Domestic servants directly employed by the household
- Farm workers employed by a company that has fewer than 10 full-time, regularly employed, non-seasonal farm laborers
- Employees of the federal government
- People who sell agricultural products on commission or for other compensation paid by the producer
- A business that employs independent contractors in North Carolina and issues a Form 1099 for tax purposes may still be required to provide small business insurance to these individuals if the N.C. Industrial Commission determines that these workers function as employees.
- If you contract with a subcontractor who doesn’t have workers’ comp insurance, you may be on the hook to pay for work-related injuries of the subcontractor’s employees, regardless of the number of employees you or the subcontractor employs.
- There are penalties for not carrying workers’ comp insurance. If not properly insured, you may be:
- Penalized financially
- Charged with a misdemeanor
- Charged with a felony, or
- Required to serve jail time
- If an employee is injured on the job, you must immediately report the incident to your worker’s comp insurance carrier. If an injury or illness causes your employee to miss more than one day of work or medical expenses are more than $4,000, you or your insurance carrier must submit an Employer’s Report of Employee’s Injury to the Industrial Commission form (Form 19) within five days of learning of the incident. Once Form 19 is filed, you must provide the employee a copy of the form and ask him or her to complete a Notice of Accident to Employer and Claim of Employee form (Form 18).
For more information about meeting small business insurance requirements in North Carolina, check out the state’s Workers’ Compensation Supervisor Handbook.
Remember, every situation is different. North Carolina workers’ compensation laws are subject to change, so be sure to do your research and speak with a trusted advisor.
Please note that this content is intended for educational purposes only. As laws change regularly, refer to your state legislation and/or an advisor for specific legal counsel. If you’re a small business owner, learn more about the basics of workers’ comp or check your current rate in 3 minutes.