North Carolina Workers Compensation Laws can be confusing. This short video is to help clarify when a Compulsory Insurance Law applies to your business. A Compulsory Insurance Law is a law which requires a business to possess a Workers Compensation policy.
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When it comes to the application of compulsory workers compensation law in North Carolina, the two primary factors at hand are: Entity Type and Workforce Count.
If your for-profit or non-profit business is structed as a C-Corporation or S-Corporation you are required by law to have a workers compensation policy when you have a total of three persons employed. This number is including officers, even if an exclusion of coverage for officers is selected.
If your business is structured as a Sole Proprietor, LLC, or Partnership, you are not under compulsory requirements until you have three employees in addition to the owner, LLC members, or partners. Owners, LLC members, or partners are automatically excluded from coverage, unless coverage is elected.
It makes no difference if an employee is full time or part time when considering your workforce count.
If your business is non-compliant with this law, the North Carolina Industrial Commission can levy a fine of $25 per day upon your business.
If you do not meet the compulsory requirements for a workers’ compensation policy based on employee count, you can still be taken to Civil Court if an employee is injured on the job, and you can incur legal fees to defend a case. Therefore, it is advisable to procure a workers’ compensation policy regardless of employee count requirements.
Of course, there are other nuances and factors that you’ll want to consider when it comes to Workers Compensation, but this summarizes the broad scope of North Carolina’s Compulsory Insurance Laws when it comes to Workers Compensation.
The LN Davis Insurance Agency has been serving Western North Carolina and beyond since 1933, and we’re happy to answer any questions you may have. Give us a call today to see how we can help you.