What to Do When Your Employer Doesn’t Have Workers’ Compensation Insurance
North Carolina has legislation in place to ensure that all employees are covered by workers’ compensation – as do most states in the U.S. Officials use certain processes to ensure coverage, and any companies’ that are not compliant with the laws risk significant penalties.
Despite all the existing legislation and checks and balances, however, now and then employees discover that they are not covered – often with devastating consequences.
Reasons for Noncompliance
There are various reasons for a lack of workers’ comp coverage, but most noncompliance situations are related to the following basic causes:
- Employees work for micro companies. Even though North Carolina law requires companies with three or more employees to register, and even though officers of the company are considered employees under this law, small companies sometimes have a staff of only one employee besides the owner or owners. In this case, the mandatory registration rule does not apply, but employees should still request that they be registered for coverage.
- Employers are simply unaware of the requirements. They don’t know that they are required to register their employees or how to do so.
- Employers willfully commit fraud by misclassifying employees as independent contractors or not registering them at all, simply to cut costs on their premiums.
- Staff members are coerced or convinced to “opt out” of workers’ compensation. Employees should know that this is illegal. Workers cannot decline coverage if the law requires it.
Employers’ complicity in these cases varies greatly – from simple ignorance of the law to knowingly flouting it – but the result for employees is usually the same: a protracted battle to get the benefits they should have had all along.
Whatever the case, employers may face penalties and sanctions for their noncompliance with workers’ compensation legislation. Consequences are usually based on the reason for the offense and may include any of the following:
- Civil fines and penalties. Under C.G.S. 97-94, employers may be fined $1 per day per employee, but not less than $50 per day and not more than $100 per day.
- Criminal prosecution. According to the same statute, willful noncompliance with workers’ compensation regulations is a Class H felony, which carries a possible prison sentence for the guilty parties.
- Civil actions to recover damages for pain, suffering and loss suffered by the affected employees. These actions may be taken against corporations or individuals and are usually decided on a case-by-case basis.
The requirements for workers’ compensation in North Carolina are clear, and the penalties can be harsh. Now let’s look at what you should do if you find you’re not covered. Here is an overview of the options available to you.
Your Options as a North Carolina Employee
If you have discovered the hard way that you are not covered by workers’ compensation, you have two basic options: file a civil lawsuit or file a claim with the North Carolina Industrial Commission. There are pros and cons to each course of action, but hiring a workers’ compensation attorney is highly recommended in either case.
Filing a Civil Suit
Employees can pursue damages in a civil lawsuit, based on the common-law theory of employer liability, as set out in N.C.G.S. 97-94(b).
This may seem like an attractive option, since there are no limits on the amount of damages a plaintiff can be awarded, meaning an employee could be compensated in full for his or her pain and suffering, losses and medical costs.
North Carolina is, however, a pure contributory negligence state. If the employee is found even the slightest bit responsible for his or her injuries or losses, he or she recovers nothing. Since it is incredibly unlikely that an employee would have done nothing to limit risk (and since an employer would go to great lengths to prove that the employee could have), these types of lawsuits tend to be protracted, expensive and rarely successful.
Filing a Workers’ Comp Claim with the North Carolina Industrial Commission
The more common strategy for employees looking to recover costs, damages and losses due to injuries on the job – and the one that’s more recommended by far – is to file a claim with the North Carolina Industrial Commission against the uninsured company or employer.
These claims, filed under the North Carolina Workers’ Compensation Act, result in an investigation by the Industrial Commission and the payment of benefits if they are deemed due. They also automatically involve the Attorney General’s office and the North Carolina Industrial Commission Fraud Investigation Unit; in addition to being held liable for costs and damages, employers who have willfully and knowingly broken laws are prosecuted accordingly.
While there are limits on the benefits and compensation employees can seek, filing a workers’ comp claim is by far the more successful strategy and often the best course of action for the employee.
Seek Legal Advice First
If you discover you are not covered by legally required workers’ compensation benefits, you should seek guidance in your individual case as soon as possible. Contact the experienced attorneys at Wilson, Reives & Silverman for a free consultation.
Winning the compensation you deserve is rarely simple, so the sooner you speak to a professional, the stronger your case may be.