North Carolina workers’ compensation laws make coverage mandatory for employers with three or more employees. This includes minors and undocumented workers. On average, business owners pay around 97 cents per $100 of payroll for their workers’ comp insurance, which makes North Carolina tied for 12th for the least expensive for workers’ comp.
Even if workers’ compensation in North Carolina is less expensive than many other states, small business owners should still compare coverage to ensure they get a good deal. Working with a broker like CoverWallet makes that process easy. Employers fill out a simple online application to get offers from top-rated carriers for the state.
What Are the Workers’ Compensation Requirements in North Carolina?
The North Carolina Industrial Commission (NCIC) governs workers’ compensation in the state, and it says employers need workers’ compensation insurance when they have at least three employees. This includes corporations, sole proprietorships, limited liability company members, and partnerships. If a business’s operations expose workers to radiation, then the owner must get workers’ comp even if he has fewer than three employees.
Who Is Considered an Employee in North Carolina?
North Carolina describes an employee as anyone engaged in employment, including individuals appointed to a position, under contract, or hired as an apprentice, as well as:
- Part-time employees
- Undocumented individuals
- Temporary staff
- Seasonal workers
Business owners can be held responsible for the work-related injuries of a subcontractor’s employees and should obtain a certificate of insurance from their subcontractors to avoid liability for injuries suffered by a subcontractor’s employees.
Are There Exemptions for Workers’ Compensation in North Carolina?
Not every worker counts towards the three-employee requirement. For example, North Carolina law makes exceptions for:
- Sole proprietors, limited liability company (LLC) members, and partners
- Employees of certain railroads
- Casual employee like people whose employment is both casual and not in the course of the trade, business, profession, or occupation of the employer
- Domestic servants directly employed by the household
- Farm laborers when fewer than 10 full-time, non-seasonal farm laborers are employed regularly by the same employer
- Certain sawmill and logging operators
- Federal government employees in North Carolina
- Sellers of agricultural products, provided the product is prepared for sale by the producer
Sole proprietors, LLC members, and partners can choose to include themselves on their workers’ compensation insurance. Corporate officers, on the other hand, are counted as one of the three employees that make workers’ compensation insurance necessary—even if they choose to exclude themselves from coverage.
Where Can I Get North Carolina Workers’ Compensation Insurance?
Employers can purchase workers’ compensation insurance from more than 500 private workers’ comp insurance companies authorized to sell policies in North Carolina. North Carolina does not have a state fund, but high-risk, difficult-to-insure businesses can find coverage in the state’s assigned risk market. Businesses approved by the North Carolina Department of Insurance may self-insure.
Top North Carolina Workers’ Compensation Insurance Providers
Comparing offers for workers’ compensation in North Carolina
Flexible payment options for workers’ comp
Specialized workers’ comp program for agribusinesses
Midsized businesses with mobile workforces across multiple states
Companies who want a local agency with a personalized touch
CoverWallet stands out for business owners who want broad workers’ compensation protection, with the bonus of getting to quote other business insurance policies from top carriers. As an online broker, CoverWallet works with multiple insurers to deliver quotes in just minutes after completing its easy online application. This makes it easier to compare offers so you can select the coverage you need and nothing you don’t.
Small business owners seeking flexible payment options for workers’ compensation insurance should look no further than The Hartford. This carrier offers both a traditional payment plan and a pay-as-you-go option―Xact PAY―that reduces your upfront workers’ comp costs. Instead of paying your entire premium when you buy your policy, XactPAY integrates with your payroll service to base your costs on your actual payroll. Along with workers’ compensation insurance, The Hartford offers a full range of business insurance policies. Its team of professionals understand the unique risks you face.
First Pioneer Insurance
First Pioneer Insurance is a great fit for farm and agribusiness operations because it partners with several different agricultural associations to offer an exclusive workers’ compensation insurance program, including coverage for H-2A Temporary Agricultural Workers. Other benefits include yearly dividend opportunities, free loss control services, and 24/7 claims access. Established in 1980, this agency is based in North Carolina and is well-suited to understand the needs of local small businesses.
Travelers, one of the largest workers’ compensation providers in the US, writes the most premium for employers in North Carolina—with more than 8% of the market share in 2018. This combination, plus its nationwide presence, makes it a good option for businesses with a mobile workforce or out-of-state offices. Moreover, Travelers remains responsive and reliable despite its large size because of its local claim professionals who can provide quick service.
East Coast Insurance Services
East Coast Insurance Services is a good choice for North Carolina employers seeking a local carrier familiar with the state’s workers’ compensation laws and the risks in its top industries. This agency is completely independent of any one insurance carrier, so its agents are dedicated to helping you find exactly the workers’ compensation coverage your business needs. You can request a quote online, but a real person will contact you for more information to complete your quotes and provide you with a comparison to save you time and confusion. That’s a personal touch you won’t get with most major carriers.
North Carolina Rate Bureau
Employers who have difficulty obtaining coverage from private insurers can turn to North Carolina’s assigned risk market. Run by the North Carolina Rate Bureau (NCRB), the assigned risk market provides coverage for new businesses as well as those in high-risk industries or with poor claims histories. Employers must be in good standing with NCRB rules to qualify for coverage. Rates charged for policies are generally higher than those available in the voluntary market.
North Carolina Self-insurance Requirements
- Evidence they have $500,000 in fixed assets
- Documentation of their organizational structure
- Two years for financial statements prepared by a certified public accountant (CPA)
- A certificate or other evidence of safety inspection
- A summary of their risk classification, payroll, number of employees, and previously paid workers’ compensation benefits
- A letter of approval from the North Carolina Self-Insurance Security Association
Employers may also seek coverage through a group self-insured fund. A self-insured fund is a large fund employers pay into that provides coverage for all contributors. Each contribution to the fund is based on a business’s number of employees, payroll, and NCRB rate.
How Much Does North Carolina Workers’ Compensation Insurance Cost?
The average North Carolina employer pays 97 cents per $100 of payroll, according to the most recent report from the National Association of Social Insurance, down more than 8% from the previous report. Business owners on the assigned risk plan paid an average annual premium of $2,929, per the NCRB.
The three main components of workers’ compensation insurance costs are the business’s:
- Claims history
The NCRB categorizes areas of work by the tasks performed. It then assigns each group a class code and rate based on the amount of risk. When a business applies for workers’ compensation, the NCRB determines its class code and multiples the base rate by the business’s payroll divided by $100 and a number that represents its claims history called an experience modification rate (EMR)
Businesses qualify for an EMR when their annual premium hits $11,000 over a year or two years. If a business has been around for more than two years, it needs an average annual premium of $5,500.
In the News:
North Carolina recently announced two changes to the North Carolina Basic Manual for Workers Compensation and Employers Liability due to COVID-19:
- Payroll for furloughed employees can be excluded from workers’ compensation premium calculations
- Employers can reclassify remote workers as clerical telecommuter employees (class code 8871)
Contact your insurance agent for details on how this impacts your workers’ comp costs.
North Carolina Workers’ Compensation Insurance Cost Example
Typically, the more risk employees face on the job, the higher the employer’s workers’ compensation premium is. For example, say you run a landscaping business (class code 0042) in North Carolina with three full-time employees. Each employee makes $50,000 per year for a total payroll of $150,000. Your workers’ comp carrier charges you $3.88 per $100 of payroll, so your premium is $5,820 per year.
However, let’s say only two of your employees work as landscapers. The third is an office administrator. In North Carolina, that employee is classified as a clerical employee (class code 8810) and has a rate of just 10 cents per $100 of payroll. Now your workers’ compensation insurance premiums look more like this:
Clerical employee ($0.10 x $500)
Landscaping ($3.88 x $1,000)
Workers’ comp premium
In this situation, correctly classifying your employees saves you $1,890 per year. That isn’t always the case, but you should review your class codes to ensure you’re being charged the appropriate premium. If you don’t, you can end up either overpaying or being invoiced when your policy is audited.
North Carolina Workers’ Compensation Audit Requirements
Most insurance carriers require a premium audit at the end of a workers’ comp policy period because your payroll and employee count can change over time. By verifying your business’s payroll and evaluating your business operations, the auditor determines if your business is paying the correct premium.
You can prepare for a premium audit by pulling together relevant documents, including:
- Tax reports
- Payroll records
- Employee records
- Profit and loss statements
- Cash disbursement journal
- General ledger
- Check register
- Certificates of insurance for subcontractors and independent contractors
While an audit ensures your carrier hasn’t misclassified your business, it also determines if you’ve correctly identified which workers are eligible for coverage. For example, you may classify some workers as independent contractors. The auditor will investigate your relationship with those workers to decide if that’s an accurate classification.
What Does North Carolina Workers’ Compensation Cover?
Like most states, North Carolina workers’ compensation insurance pays for approved medical treatment, partial lost wages, and death benefits that may be required after a job-related injury or occupational illness. Injured workers receive benefits regardless of who was at fault in an accident or injury.
The specific areas of loss include:
- Medical benefits: An employer or its insurance carrier is responsible for covering all claim-related medical care; however, the employer or insurance company can require that an injured employee receives care from a specific physician or clinic.
- Temporary total disability: Employees are entitled to weekly benefits equal to two-thirds of their average weekly wages up to the maximum compensation rate of $1,066. There is a seven-day waiting period before payments begin.
- Temporary partial disability: Workers who obtain employment post-injury but earn less than they did preinjury are entitled to compensation equal to two-thirds of the difference between the post-injury and preinjury average weekly wages.
- Permanent partial disability: Whether or not they can earn wages after their injuries, employees with permanent impairments may receive benefits of up to two-thirds of their average weekly wage times a set number of weeks, depending on the body part.
- Total and permanent disability: Employees who experience a permanent, debilitating disability, such as the loss of two limbs or a severe brain injury, are entitled to weekly benefits and medical compensation during their lifetime.
- Disfigurement and damage to other organs: Injuries that leave facial or head scars that cause serious disfigurement or that cause the loss or permanent injury to an important organ of the body entitle workers to additional compensation of up to $20,000.
- Death benefits: North Carolina workers’ compensation pays benefits to survivors within six years after a fatal incident or within two years of the final determination of disability, whichever is later; death is compensated by payment of two-thirds of the employee’s average weekly wage or the maximum compensation rate for a period of 500 weeks from the date of death.
For employers, North Carolina workers’ compensation not only covers financial liabilities for workplace injuries and illnesses but it also includes employer’s liability insurance to provide legal representation if an employee files a lawsuit.
What Are the Penalties for Not Having Workers’ Compensation in North Carolina?
Employers who do not comply with workers’ compensation laws in North Carolina can face stiff fines and penalties. For instance, employers who go without mandatory coverage can be:
- Fined between $50 and $100 per day
- Charged with a Class 1 misdemeanor
- Charged with a Class H felony if they’re found to be willfully noncompliant
- Held liable for an injured employee’s medical expenses and wage replacement benefits
Additionally, any person who has the ability and authority to buy workers’ comp for a business can be held personally liable for an injured employee’s costs and face criminal charges if coverage isn’t purchased.
To curtail non-compliance and misclassification of employees, the NCIC established the Employee Classification Section (ECS) to investigate the intentional misclassification of employees as independent contractors to avoid tax liabilities and evade the requirement for workers’ compensation coverage. The ECS has become a permanent function of the NCIC.
How to File a Workers’ Compensation Claim in North Carolina
Most of the burden of filing a workers’ comp claim falls on your employee. However, employers have responsibilities in claims, too. These include:
- Providing immediate medical treatment: Prompt first aid can lessen the impact of an injury.
- Notifying your carrier or administer and the state: Employers have five days to file Form 19 Report of an Injury with the NCIC if an injury or alleged injury causes an absence of more than one day or medical expenses greater than $2,000
- Giving injured employees the appropriate paperwork: Employers need to give their injured employees a blank Form 18 Notice of Accident to complete along with a completed copy of Form 19
- Following up as needed: Check in with injured employees during their recovery to see if they’re receiving medical treatment and workers’ compensation benefits
Your employees’ responsibilities are:
- Reporting their injuries to you immediately
- Providing written notice of their injuries to you within 30 days of the incident
- Filing Form 18 with the NCIC no later than two years after the injury date or diagnosis of an occupational disease
- Calling the carrier or administrator or filing Form 33 Request for Hearing if benefits are not provided
North Carolina Workers’ Compensation Insurance Deadlines
The most important deadline for workers’ comp in North Carolina employers is to have a policy in place as soon as you hire three or more employees. Other important deadlines to know are listed below:
- Workers have 30 days to provide written notice of an injury to their employer
- Workers have no more two years to file a Notice of Accident (Form 18) with the NCIC
- You or your carrier must file a Report of Injury (Form 19) with the NCIC within five days of learning about an injury or allegation
- The NCIC must notify the worker of a claim denial within 14 days of being notified of an incident
- Employees have two years from the date of injury or diagnosis of occupational disease to file a Request for Hearing (Form 33) with the NCIC
All forms must be filed electronically, although an exception is for employees who do not have legal representation. Your insurance carrier might require you to submit additional information or follow its deadlines to comply with your specific workers’ compensation policy.
North Carolina Workers’ Compensation Insurance Resources
- Contact information
North Carolina Industrial Commission
1240 Mail Service Center
Raleigh, NC 27699-1240
(919)-807-2501 or (800)-688-8349
- Key forms
Workers’ compensation insurance is mandatory in North Carolina for most employers who have three or more employees. By covering employees’ medical treatments and lost income after a work-related injury or illness, workers’ compensation in North Carolina protects your business from potential lawsuits. Employers can keep workers’ comp costs low by providing a safe work environment and following industry safety guidelines.
The Hartford can help North Carolina employers find appropriate workers’ compensation insurance with flexible payment options. The online application process takes just minutes to complete, and you’ll have the workers’ comp coverage for you and your employees in the event of a work-related injury.