Does North Carolina require workers’ compensation insurance?
Yes, once a North Carolina business regularly employs three or more people, under N.C.G.S. 97-2. Corporate officers count toward the three, so a corporation with two officers and one employee must insure. Sole proprietors, partners, and LLC members are not counted but can elect coverage. Work involving radiation triggers the requirement at one employee, and a contractor who hires an uninsured subcontractor can owe that sub's injured workers regardless of its size.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before North Carolina requires workers' comp?
North Carolina's Workers' Compensation Act covers every private business in which three or more employees are regularly employed, and any business with one or more employees whose work involves the use or presence of radiation. Farm work is covered only when 10 or more full-time nonseasonal farm workers are regularly employed, and casual employees, domestic servants, federal employees, and most railroad employees are outside the Act (N.C.G.S. 97-13).
The three-employee floor does not protect a hiring contractor. Under N.C.G.S. 97-19, a contractor who sublets work without first getting the subcontractor's certificate of coverage is liable for that sub's injured workers, however few employees the sub has. Trucking follows a similar rule under 97-19.1: if an owner-operator has no coverage, the motor carrier must provide it, unless the owner-operator is individually licensed by the U.S. Department of Transportation and drives personally, per the Industrial Commission.
Source: N.C.G.S. 97-2, checked .
Which owners, officers, and family members are exempt in North Carolina?
Corporate officers are employees in North Carolina and count toward the three-employee threshold, but a corporation can exclude an officer from coverage under its workers' compensation policy. Sole proprietors, partners, and LLC members are not automatically counted as employees; any of them actively engaged in the business can elect coverage by notifying the insurer (N.C.G.S. 97-2).
Chapter 97 has no family-member exemption: none of the exceptions in 97-13 covers relatives, so a relative who works for pay counts like any other employee.
Source: N.C. Industrial Commission, Employers, checked .
What happens to a North Carolina employer with no workers' comp?
An employer that refuses or neglects to insure owes a civil penalty of $1 per employee for each day without coverage, at least $20 and at most $100 a day, assessed by the Industrial Commission for up to three years back (N.C.G.S. 97-94). A first-time violator that buys a policy can ask for an alternate penalty based on what coverage would have cost, plus 10 percent. Willfully failing to insure is a Class H felony and neglecting to is a Class 1 misdemeanor, for the employer and for any person with the authority to bring it into compliance. The injured worker can also claim compensation or sue the employer at law.
Source: N.C.G.S. 97-94, checked .
Who enforces workers' comp in North Carolina?
The North Carolina Industrial Commission administers the Act. Its Compliance Division investigates employers operating without insurance, decides whether they are subject to the Act, assesses the penalties above, and helps the N.C. Department of Justice collect them. Its Criminal Investigations and Employee Classification Division takes reports of uninsured employers.
Source: N.C. Industrial Commission, Compliance Division, checked .
Where do North Carolina employers buy coverage?
North Carolina has no state fund. An employer covered by the Act must either insure with an authorized insurer, which includes a mutual association formed by a group of employers, or get a self-insurance license from the Commissioner of Insurance (N.C.G.S. 97-93). A business no voluntary carrier will write goes to the North Carolina Workers Compensation Insurance Plan, the assigned risk market the Rate Bureau administers.
Source: N.C.G.S. 97-93, checked .
Who sets the class codes and rates in North Carolina?
North Carolina has its own rating bureau instead of NCCI. The North Carolina Rate Bureau, created under N.C.G.S. 58-36, prepares the annual loss cost filing for the voluntary market and the rate filing for the assigned risk market, collects the experience data used to calculate experience modifications, and inspects and assigns the classification of employers' operations in the state.
Source: North Carolina Rate Bureau, Workers Compensation, checked .
Is there an exemption or waiver form in North Carolina?
No. North Carolina has no waiver or exemption certificate for owners, and the Industrial Commission's forms list has none. Both owner choices run through the insurance policy instead: a corporation excludes an executive officer by naming the exclusion in its policy, and the exclusion lasts as long as that policy is in effect; a sole proprietor, partner, or LLC member opts in by notifying the insurer. The document others ask for is the carrier's certificate of insurance.
Building permits for work of $40,000 or more require proof of workers' compensation as required by Chapter 97 (N.C.G.S. 87-14), and general contractors ask for a certificate before subletting. An owner with no employees has no state document to show, so when a hiring contractor insists on proof, the answer is usually a policy that produces a certificate.
Source: N.C.G.S. 97-2, checked .
Sorting out North Carolina workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the North Carolina requirement in front of you says. We will say whether a policy, a waiver, or an exclusion fits.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
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The hub, and the North Carolina pages that go deeper
North Carolina workers’ comp FAQ
Do I need workers' comp in North Carolina with two employees?+
Usually not, but check who counts. Corporate officers are employees under N.C.G.S. 97-2, so a corporation with two officers and one employee must insure, per the Industrial Commission. One employee is enough if the work involves radiation. And a general contractor who hires you can be liable for your workers under 97-19, so it will likely ask for a certificate anyway.
Are LLC members counted toward North Carolina's three-employee rule?+
No. The Industrial Commission says sole proprietors, partners, and LLC members are not automatically counted as employees. Each can elect coverage on the business's policy by notifying the insurer. Corporate officers are different: they are counted, and the corporation can exclude them in its policy.
Does North Carolina have a workers' comp exemption certificate?+
No. There is no state waiver or exemption form for owners. Officer exclusions and owner elections are made through the insurance policy, and the proof hiring contractors and permit offices ask for is a certificate of insurance from the carrier.
Is occupational accident insurance a substitute for workers' comp in North Carolina?+
No. The Industrial Commission says occupational accident insurance is not a lawful substitute for workers' compensation under the Act. That matters for motor carriers using owner-operators.