NC Cracking Down on Enforcement of Workers’ Compensation Rules

Winston-Salem, NC 6/13/2012

 “There are a lot of people that don’t have workers’ compensation coverage,” says Jack Bayliss, an attorney with Carruthers & Roth in Greensboro. “If you have a corporation, and you’re the president, and someone’s a secretary, and you have one employee, that still counts as three people.”

Grainger Pierce, attorney with Nexsen Pruet who practices in Greensboro and Charlotte, says the crackdown began after an investigative report by the Raleigh News & Observer revealed a discrepancy of about 30,000 businesses between the records of two different regulatory agencies. The N.C. Rate Bureau, the Raleigh-based organization that sets standard insurance rates, plans and job classification systems, noted about 140,000 businesses in the state with workers’ compensation insurance — even though the state Department of Commerce noted about 170,000 businesses that would qualify on its books. Pierce says the N.C. Industrial Commission has started to seek affirmation on the front end that businesses have proof of coverage, rather than waiting to act until after something goes wrong.
“If you’ve got somebody without coverage or assets, and an employee gets hurt, you’ve essentially got a wrong without a resource,” Pierce says.  The state statute dictates that if a company doesn’t have workers’ compensation coverage, the commission can levy a penalty of up to $100 per day per employee for each day the company did not provide insurance, Bayliss says, adding that the penalty can be backdated to the formation of the company.
Employers could even face criminal charges if they willfully fail to have the insurance, Bayliss says. In May, the Industrial Commission published a contempt hearing docket, which called out many employers who had previously received workers’ compensation claims but had not paid. At those hearings, the commission threatened employers with jail time unless they took steps to settle their claims, according to a report from the McClatchy-Tribune news service.
The commission has also announced its intent to schedule regular contempt hearing dockets in coming months. Failing to comply can bring harsh penalties, regardless of whether the company was intentionally negligent or simply confused. Some small businesses think their liability insurance covers the necessary workers’ compensation protection, but that’s not the case, says Cal Adams, an attorney with Womble Carlyle in Winston-Salem.
“Everybody basically — small businesses, big business — in North Carolina has to have it,” Adams says. Adams recommends that companies check with their insurance agent annually to make sure each of the businesses’ insurance policies is up to date. “They’ve got a number of different insurance policies, and they need to be checking just once a year to make sure if they’re all in place,” Adams says. “If something goes wrong, you can bet your bottom dollar it’s the place where they let their insurance lapse. And then their out of pocket is going to be huge, as compared to that 30 minute phone call to check.”
Beyond that phone call to check in with your insurance agent, workers’ comp experts have some solid tips for small businesses to stay in compliance with regulations and minimize their risks.  If you have questions about about your insurance coverage for your business, please contact us for a comprehensive exposure analysis.
Content by Catherine Carlock - Special Reports/Publications Writer- The Business Journal

View All News Articles

What Our Customers Say!

"Jennifer, please accept my gratitude for everything you do for me as it relates to my insurance needs. You do an outstanding job and you represent Wilson Insurance Services very professionally.  You are clearly a trusted advisor to me."

Bill Stallings, Commercial Real Estate Lending

Read what others have to say.

What's New

Why every Board of Directors should carry D&O Insurance


Directors & Officers Liability insurance provides coverage for your own “wrongful act” while performing duties as a Director of Officer of the insured entity, or the "wrongful acts" of other board members. 

Why Do You Need Director’s & Officers Liability Insurance?

While an organization is legally permitted to cover the costs incurred as a result of personal liability stemming from the activities performed on behalf of the organization, this ability, called indemnification, may not apply to every situation.  The director or officer may become personally liable in their duties performed for the organization.

Read More »


What You Should Know About Rental Car Insurance
There are some very serious contractual gaps in coverage for rental vehicles. Even if you purchase their Collision Damage or Physical/ Loss Damage Waivers, many rental car contracts exclude the following:
  • Theft of the Vehicle
  • Tolling, or Turning the Vehicle Over
  • Lease Gap coverage
  • Loss of Use
  • Glass, Tire and Undercarriage Damage
  • Animal Collision
  • Flood and Hail Damage
  • Damage above the Windshield
  • Individuals who rent personal vehicles for extended periods and do not have a Personal Auto policy in force
  • Drivers who rent, and do not own another vehicle insured elsewhere, need to be expecially careful here
Read More »


5 Types of Cyber Criminals and How to Protect Against Them
Understanding the types of cyber criminals and their techniques can help protect your organization from a data breach. Here are some common threats and steps a business can take: 

Read More »