North Carolina Workers' Compensation Insurance

Corporate officers are automatically counted as employees toward the three-employee threshold and are covered by default, but they may specifically exclude themselves from the company's policy; officers of certain nonprofit corporations who receive no compensation are not covered but still count toward the threshold. Sole proprietors, partners, and LLC members are not automatically counted as employees and are not automatically covered, but they may voluntarily elect to be included under the business's workers' compensation policy if they want coverage for themselves.

An employer that refuses or neglects to secure required coverage faces an administrative penalty of $1.00 per employee per day of noncompliance, with a floor of $20.00 and a cap of $100.00 per day (an alternative calculation based on estimated premium plus 10% may apply to a first-time violator), and this penalty generally cannot reach back more than three years. A willful failure to secure coverage is a Class H felony, while a negligent failure is a Class 1 misdemeanor. During any period of noncompliance, the employer remains directly liable to an injured employee for either statutory compensation or a common-law damages claim, at the worker's election (N.C.G.S. § 97-94).

North Carolina is a competitive market state rated by its own independent bureau, the North Carolina Rate Bureau (NCRB), rather than NCCI, and our agency can compare coverage across the many private carriers writing business here. There is no North Carolina state-run workers' comp fund; employers who can't find a voluntary carrier are placed through NCRB's residual market (assigned risk) mechanism. Because corporate officers count toward the three-employee threshold by default, a small corporation with just a couple of officers and one hire can trigger the requirement sooner than owners expect, so it's worth checking with an agent as headcount grows.