Am I Covered Under Workers’ Comp?

Business owners must determine whether or not they are required to carry workers’ compensation insurance for their employees. Even if an employer does not consider those who do work for them “employees” in the traditional sense, this does not matter under the eyes of the law. Failure to carry workers’ compensation can result in steep financial penalties. On the other hand, if you are an employee injured on the job, you will want to know if your employer is required to provide you with workers’ compensation insurance.

What Type of Business is it?

First, you must determine what type of business is involved.

  • SOLE PROPRIETORSHIP—This is the simplest type of for-profit business structure, where the business is owned by one person.
  • PARTNERSHIP—Owned by two or more parties. A “party” can be an individual, a group of individuals, another company or a corporation.
  • ESTATE or TRUST—Run by someone who acts as executor or trustee of the company on behalf of someone else.
  • LLC or LLP—Limited Liability Company or Limited Liability Partnership. These business structures provide some of the limited liability corporations have but take less red tape to organize and are generally cheaper to administer.

RULE: Sole proprietorships, partnerships, LLCs and LLPs are required by law to carry workers’ compensation coverage if they have at least three (3) regularly employed employees besides the sole proprietor, partners, executor of the estate, bearer of the trust, or formulators of the LLC/LLP. It does not matter for these purposes whether the employees are full time, part time, seasonal or family members. Sole proprietors and partners may choose to exempt themselves from coverage if they carry a workers’ comp insurance policy.

  • CORPORATION—This is its own legal entity created through the laws of the state of incorporation. Corporations can be sued distinct from their stockholders and further limit the owners’ personal liability for the company’s debts.

RULE: All forms of corporations, including those with nonprofit status, are required to carry workers’ compensation if they have at least three (3) people in the corporation including the corporate officers. Corporate officers may choose to exempt themselves from coverage or opt in if they carry a workers’ comp policy.


RULE: Businesses where at least one employee’s activities involve the use or presence of radiation are required by law to carry workers’ compensation.


RULE: These businesses are required to carry workers’ compensation if they have 10 or more full-time non-seasonal agricultural workers.

What Type of Employees Does the Business Have?

Besides the regular full time, part time, and seasonal employees discussed above for the different types of businesses, there are other types of workers that may or may not be considered employees for the purposes of workers’ comp.

The definition of “employee” under the North Carolina Workers’ Compensation Act includes minors, undocumented workers, apprentices and unlawfully employed workers.

General contractors with three (3) or more employees are required to carry workers’ comp. General contractors are not responsible for subcontractors, but they do have liability for the subcontractor’s employee or employees.

Subcontractors who have no other employees are not required by law to carry workers’ comp coverage for themselves, although the general contractor who hires them can require coverage as a condition of their being employed.

Independent contractors, on the other hand, are not generally considered “employees” for the purposes of workers’ comp. Just because an employer files an employee as a “1099” independent contractor for tax purposes does not mean the individual will automatically be treated as such for workers’ comp. Listing someone as an independent contractor in order to avoid having to pay for their workers’ comp and payroll taxes does not change the fact that the person may still count as an employee. Such an employer will still be liable for paying workers’ comp for the individual. Whether a person qualifies as an employee or independent contractor for workers’ comp depends on the specific facts of each case and largely hinges on the level of control the employer has over the employee’s work and their relationship. If the employer has the right to control when, where and how the “independent contractor” does their job, the individual will likely be considered an employee for workers’ comp.

What is the Penalty for Not Providing Required Workers’ Compensation?

Failure to not carry workers’ compensation insurance when required by law is punishable by penalties between $50 and $100 for each day of non-compliance. The employer is also liable to the employee for other compensation under law while in non-compliance.

If you were injured on the job and your employer is saying you are not covered by workers’ compensation insurance, or the insurance company denies your claim, it is extremely important to speak with an experienced workers’ compensation attorney as quickly as possible. Injury on the job can have long-lasting devastating impacts on a person’s life, and workers’ comp claims must be filed within a certain amount of time within the accident. The workers’ compensation attorneys at Arnold & Smith, PLLC are ready to step in and fight for the compensation you deserve. We are a civil and criminal litigation firm in Charlotte, North Carolina proudly serving the Queen City and surrounding areas. Contact Arnold & Smith, PLLC today for an initial consultation with one of our workers’ comp attorneys.

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