The Risk of Not Having Workers’ Compensation Insurance

The Risk of Not Having Workers’ Compensation Insurance

By G. Thompson Miller, Brinkley Walser, PLLC

Generally speaking, in North Carolina an employer must provide workers’ compensation insurance coverage for its employees if it regularly employs three or more people. Sometimes employers choose not to provide the required coverage for their employees. This may be due to a lack of experience or it may be a conscious decision made to avoid the related expense.

When an employee is injured on the job and there is no workers’ compensation insurance to cover medical expenses and lost wages, the employer can face some serious consequences. The employer can be fined from $50 to $100 per day for each day the employer has refused or neglected to purchase such insurance. If the employer willfully fails to procure the insurance then the employer is guilty of a Class H felony and could go to jail. If the employer’s failure to procure the insurance is simply neglect then the employer is still guilty of a Class 1 misdemeanor. In addition, any person with the ability and authority to bring an employer into compliance can be held criminally liable and may be assessed a civil penalty in an amount of 100% of the amount of compensation due to the injured employee, including injury-related medical expenses and lost wages. As an example, if one partner in a business refused to purchase the required coverage, the other partner may possibly be held criminally liable, as well, depending on the circumstances.

Under the North Carolina Workers’ Compensation Act, workers’ compensation is the “sole remedy” available to the employee or his dependents or next of kin (in the case of an on-the-job death). This means if the employer has complied with the Act’s provisions, the employee cannot sue the employer to recover damages related to the injury. If however, the employer fails to provide workers’ compensation insurance coverage, then the employer is liable to the injured employee under the Workers’ Compensation Act. While the Act provides for medical expenses and lost wages, if the employer is out of compliance and a lawsuit is filed, the injured employee would then have the option to request additional damages, including pain and suffering.

In short, if you are an employer and you fail to purchase workers’ compensation insurance coverage, it could ultimately cost you much more than the cost of the insurance premiums. This is penny wise and pound foolish to say the least.

About the Author
G. Thompson Miller is an attorney and Of Counsel at Brinkley Walser, PLLC, in Lexington, North Carolina. He can be reached at (336) 249-2101 or via e-mail. He focuses his practice areas on workers’ compensation, Social Security disability, personal injury law, wrongful death, employment law, business law, and wills/trusts/estates. Miller has received an AV® Preeminent rating by Martindale-Hubbell® Peer Review Ratings™.