If your business has employees in the state of North Carolina, you’ll need to make sure you adhere to North Carolina’s Workers’ Compensation Insurance laws. Workers’ Compensation provides medical and financial benefits for employees who suffer work-related injuries or illnesses or for their survivors in the case of an employee death.

Who needs Workers’ Compensation Insurance in North Carolina?

North Carolina requires all employers with at least three employees total or at least one employee that works in the presence of radiation to obtain Workers’ Compensation Insurance. In North Carolina, an “employee” is generally defined as any individual who performs services for another and is not an independent contractor. 

The North Carolina Workers’ Compensation Act (WCA) defines all of the requirements for Workers’ Comp in North Carolina, and the North Carolina Industrial Commission (NCIC) monitors, enforces, and administers the program. Ensuring your company is in compliance is critical, as there are serious penalties and fines for those who fail to abide by state regulations.

What employees are covered under Workers’ Compensation in North Carolina?

Almost all workers are covered under Workers’ Compensation in North Carolina. If you provide work or services for an employer, and you are not an independent contractor, you will likely be eligible for Workers’ Compensation Insurance. 

The following are categories of employees that are eligible for Workers’ Comp coverage:

• Full-time and part-time employees
• Apprenticeships and internships
• Undocumented workers
• Farm laborers when 10 or more full-time, non-seasonal farm laborers are regularly employed by the same employer
• Sole proprietors, partners of a business, or any member of a limited liability company if he or she is actively engaged in the operation of the business
• Minors

The following are categories of employees that are generally excluded from Workers’ Comp coverage:

• Independent contractors
• Volunteers, except those of certain emergency and law enforcement services
• Casual or occasional workers
• Domestic workers

What Workers’ Compensation benefits do employees receive?

Under Workers’ Compensation in North Carolina, employers are required to provide the following benefits to employees who are injured in the course of employment:

Medical Benefits

• Employers are required to cover expenses for medical, surgical, hospital, nursing, and rehabilitative services. This may also include expenses for sick travel, chiropractic services, medicines, medical supplies, and prosthetic members.
• In order to receive medical benefits, the employee must use a health care provider that is authorized by the employer, except in an emergency situation. Employees may also request to receive a second opinion on a medical diagnosis, which would be covered by the employer.

Temporary Total Disability Benefits

• If an employee is unable to return to work due to an injury, he or she is eligible to receive Temporary Total Disability (TTD) benefits while recovering, which provides 66 and two-thirds percent of a worker’s average weekly wage pre-injury. 
• The NCIC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2020, the maximum TTD benefit was $1,066 per week, and the minimum benefit amount was $30 per week.
• TTD benefits are available for 500 weeks from the date of first disability, unless the employee qualifies for extended compensation.

Temporary Partial Disability Benefits

• An injured employee may be able to return to work while recovering in a partial or limited capacity. If the employee works fewer hours or receives lower wages during this time, he or she may be eligible for Temporary Partial Disability (TPD) benefits. TPD benefits provide 66 and two-thirds percent of the difference between a worker’s pre- and post-injury average weekly wage.
• The NCIC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2020, the maximum TPD benefit was $1,066 per week, and the minimum benefit amount was $30 per week.
• TPD benefits are available for a maximum of 500 weeks.

Permanent Partial Disability Benefits

• If an employee recovers from an injury but suffers a permanent partial impairment, he or she may be eligible for Permanent Partial Disability (PPD) benefits.
• The total amount that is paid out for PPD benefits depends on a number of factors, including the severity of the disability and the type of injury. The NCIC maintains a schedule of injuries, which lists the percentage of average weekly wages to be paid and the number of weeks benefits will be paid.
• A schedule loss generally involves the loss of use of an upper extremity (arm, hand, finger), lower extremity (leg, foot, toe), back, or eyesight or hearing. 
• For losses that are not specifically listed in the schedule, the NCIC would decide proper and equitable compensation not to exceed $20,000.
• The NCIC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2020, the maximum PPD benefit was $1,066 per week, and the minimum benefit amount was $30 per week.

Permanent Total Disability Benefits

• If an injured employee develops a permanent total disability precluding the possibility of earning any wages, he or she may be eligible for Permanent Total Disability (PTD) benefits. 
• Permanent total disability is presumed when the worker suffers a loss of two major members or a combination of members of the body such as eyes, arms, hands, legs, or feet; spinal injury involving severe paralysis of both arms, legs, or the trunk; second- or third-degree burns to 33 percent or more of the total body surface; or severe brain or closed head injury. 
• PTD benefits provide 66 and two-thirds percent of a worker’s average weekly wage pre-injury, payable as long as the employee remains permanently and totally disabled and is unable to earn wages.
• The NCIC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2020, the maximum PTD benefit was $1,066 per week, and the minimum benefit amount was $30 per week.
• There are no limits to the number of weeks that PTD benefits are payable.

Disfigurement Benefits

• Serious and permanent disfigurement to the face or head may entitle the worker to compensation up to a maximum of $20,000. 
• Serious bodily disfigurement not involving the face or head and not involving a scheduled body part may entitle the worker to compensation up to a maximum of $10,000.

Vocational Rehabilitation Benefits

• If an injured employee is unable to earn 75 percent of average weekly wages pre-injury, he or she may be eligible for vocational rehabilitation services. These benefits can include such services as job counseling, skills training, vocational assessments, and more.

Death Benefits

• Employers are required to pay funeral expenses up to $10,000.
• A worker’s surviving dependents may be eligible to receive 66 and two-thirds percent of the deceased employee’s average weekly wages, up to the maximum set by the NCIC. For accidents that occurred in 2020, the maximum benefit was $1,066 per week, and the minimum benefit amount was $30 per week.
• Dependents can receive benefits for up to 500 weeks, but the benefits will terminate in the case of a spouse remarrying or child dependents turning 18.

What are the penalties for breaking North Carolina Workers’ Compensation laws?

Failure to adhere to the Workers’ Compensation laws set out by the WCA can result in significant fines and even imprisonment. In order to avoid any costly penalties, it’s important to consult the WCA or your insurer to ensure you are in compliance. Below are the major ways in which companies can be penalized:

Failure to Secure Coverage

• Failure to secure Workers’ Compensation Insurance is punishable by a fine of $1.00 for each employee, with a minimum of $20 and a maximum of $100, for each day of noncompliance.
• An employer’s willful failure to secure Workers’ Compensation Insurance may be charged with a class H felony, punishable by a fine, imprisonment between four and 25 months, or both.
• An employer’s neglectful failure to secure Workers’ Compensation Insurance may be charged with a class 1 misdemeanor, punishable by a fine, imprisonment up to 120 days, or both.
• Individuals may be held personally liable and charged if they had the ability and authority to bring an employer in compliance but did not.

Failure to Pay Benefits

• If an employer does not pay any installment of compensation within 14 days after it becomes due, an additional charge of 10 percent of the amount owed will be levied. 

Fraud

• If an employer willfully makes a false statement or representation of a material fact for the purpose of obtaining or denying any benefit or payment, they may be charged with a class 1 misdemeanor, punishable by a fine, imprisonment up to 120 days, or both. If the amount at issue is $1,000 or more, the employer may be charged with a class H felony, punishable by a fine, imprisonment between four and 25 months, or both.
• If an employer threatens an employee for the purpose of coercing or attempting to coerce the employee into agreeing to Workers’ Comp benefits compensation or agreeing to forgo benefits compensation, they may be charged with a class H felony, punishable by a fine, imprisonment between four and 25 months, or both.

Failure to Maintain Accident Records and Reports

• Employers must keep accurate records of all employee injuries, fatal or otherwise, and report them to the NCIC.
• If an employer fails or refuses to keep these records and file them with the NCIC, they may be charged a penalty of between $5 and $25 for each refusal or neglect.

How much does Workers’ Compensation Insurance cost in North Carolina?

According to the National Academy of Social Insurance Workers’ Compensation Report (November 2020), the average employer cost for Workers’ Compensation in North Carolina was $0.90 per $100 of covered wages. This figure is estimated across all insurers and all industries, so the cost to your particular business may vary.

How does the Workers’ Compensation claims process work in North Carolina?

The claims process in North Carolina begins with the employee. If an employee suffers a work-related injury or illness, he or she must report the condition to the employer in writing within 30 days of the injury or accident. Any delay in reporting may result in delays in the claims process or denial of the claim.

The employer or insurer can then investigate the incident and must file a report with the NCIC within 30 days of being notified of the accident, indicating whether a claim will be approved or denied. If a claim is denied, the employer or insurer must notify the employee in writing, along with any applicable medical providers and the NCIC. If the claim is not denied, the insurer must begin paying benefits to the injured employee within 30 days of being notified of the accident. If the claim is disputed, a hearing can be requested with the NCIC.

North Carolina Workers’ Compensation Insurance Resources

For more information on North Carolina Workers’ Compensation laws and requirements, please visit the following resources:

• North Carolina Industrial Commission (NCIC)
• NCIC Most Common Frequently Asked Questions