Workers' compensation insurance provides a much-needed lifeline for workers who are injured in on-the-job accidents or develop occupational diseases. Unfortunately, a recent News and Observer study revealed that tens of thousands of North Carolina employers do not carry adequate workers' compensation coverage.
State law requires all employers with more than three employees to carry workers' compensation insurance. According to the North Carolina Department of Commerce, there are 170,000 employers in the state which have more than three employees. However, the North Carolina Rate Bureau reports that there are only 140,000 businesses that have purchased workers' compensation coverage. Another 177 large companies are self-insured.
This means that there may be upwards of 29,800 North Carolina employers who do not provide their employees with legally-mandated workers' compensation coverage.
Sadly, most injured North Carolina workers don't find out about this lack of coverage until it's too late.
The state government doesn't have a good way of tracking which employers aren't carrying insurance. Employers are supposed to file a report whenever they purchase, renew or cancel a workers' compensation insurance policy. But, the state Industrial Commission doesn't have the resources to monitor cancelations. As a result, they often don't realize that an employer has been operating without insurance until an injured worker tries to file a claim.
The problem has been exacerbated by the fact that the penalties for operating without insurance are relatively light. By law, uninsured employers can be fined up to $100 per day and can be ordered to pay injured workers the benefits they would have otherwise been entitled to. However, since January 2011, the average fine per fraud case has only been about $135.
This is terrible news for North Carolina workers. Workers' compensation is a right, and no injured employee should have to go without benefits simply because their employer has tried to cut costs by violating the law. Hopefully, the state legislature will soon take steps to remedy this problem and give workers the protection they deserve.