North Carolina Cracks Down on Employers Lacking in Workers’ Comp Coverage

January 12, 2016

The commission responsible for enforcing workers’ compensation laws in North Carolina has cracked down in the last year on employers who don’t carry proper insurance, collecting $1 million in civil fines from uninsured companies.

The News & Observer of Raleigh reports that the state Industrial Commission also charged 100 employers with misdemeanors for willingly going without coverage.

State law requires any employer with three or more employees to provide workers’ compensation insurance at no cost to the workers.

Despite the improvements, commission leaders know problems continue.

“The goal is to head it off and get to compliance before there’s an injury,” said Andrew Heath, who has overseen the commission’s work since Gov. Pat McCrory appointed him chairman in early 2013. Heath will soon leave the commission to be McCrory’s budget director; a replacement at the commission has not yet been named.

The News & Observer reported in April 2012 that as many as 30,000 employers in North Carolina required to purchase workers’ compensation had not. The following year, the state auditor reported the commission had done nothing to intervene as more than 11,000 businesses in 2012 canceled policies or let them lapse.

In the last fiscal year, the commission investigated nearly 2,000 cases involving potential lack of coverage, and those efforts brought 800 companies into compliance. In that same year, the commission ruled that 71 workers were injured while working for employers without proper insurance.

It’s unclear how many employers currently lack coverage because of changes made in 2013 in how the information is shared between insurance carriers and the commission.

So far, the commission has not pursued companies that misclassify employees as independent contractors. Gov. Pat McCrory, however, has ordered the commission to take a new role in stopping misclassification.

In mid-December, McCrory issued an executive order placing the Industrial Commission in charge of coordinating how various state agencies respond to information about businesses that might be cheating. He charged each agency to enforce its rules and issue appropriate sanctions when they find a business misclassifying workers.

McCrory acted after lawmakers didn’t pass legislation that would have established a team of investigators at the state Department of Revenue to pursue companies that misclassify workers.

The bill stalled as newspaper publishers lobbied against the legislation because of late alterations to the bill aimed at newspaper carriers. Legislators had said they would try again to pass the bill this year.

Topics Legislation Workers' Compensation Commercial Lines Business Insurance North Carolina

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