Today’s post comes from Kristina Thompson, attorney at the Jernigan Law Firm.

Do I need to buy workers’ compensation insurance in North Carolina?

Here’s the general rule:  in North Carolina, if you are an employer and regularly employ three or more employees, you must have workers’ compensation insurance. Seems pretty straight forward, right? For such a simple statement there are actually a lot of factors to consider and many employers, especially small business owners, are unwittingly finding themselves before the North Carolina Industrial Commission for a penalty hearing for not buying workers’ compensation insurance when they had three employees.

Common questions from employers:

  1. what does it mean to “regularly employ three or more employees?”
  2. do part-time employees count?
  3. do 1099 workers count as employees?
  4. do corporate officers count as employees?
  5. how do we count LLC members for “counting” purposes?

What’s at stake?

The ramifications for failing to buy insurance are significant. The minimum fine for not having workers’ comp insurance is $50 per day. The maximum fine is $100 per day. So, if you are a business owner and mistakenly forego buying insurance, and a year goes by, your minimum penalty will be $17, 600. We have seen penalties as high as $77,000. For many business owners, this penalty can cripple their finances and potentially put them out of business. Make sure you have coverage.

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