The Short Answer
In North Carolina, not every employer is required to carry workers' compensation insurance — it depends on the size of your workforce and the type of work involved. Most businesses must have coverage once they regularly employ three or more people. Independent contractors are excluded from coverage because they are not legally considered employees under NC law. If you're unsure whether your employer is required to cover you, looking at your tax form is a quick first step — a W-2 points to employee status, while a 1099 suggests independent contractor status.
In short, it depends. According to North Carolina General Statute §§ 97-2(1), 97-2(3), 97-93 an employer must carry workers’ compensation insurance if:
Three or more employees regularly employed in the same business or establishment, or
One or more employees employed in activities which involve the use or presence of radiation, or
If providing agriculture or domestic services, 10 or more full?time nonseasonal agricultural workers regularly employed by the employer
This is to ensure that if an employee were to be injured on the job then the insurance company could handle the cost, therefore limiting the risk of the employer being insolvent and not being able to pay for treatment. This also ensures that the employee will receive compensation for their treatment sooner.
However, there are some exceptions to this rule. One of these exceptions is when there is an independent contractor working for an employer.
Since an independent contractor is not an employee, the employer does not have to provide workers’ compensation insurance for them. Since, technically, they are not an employee, the North Carolina Industrial Commission does not have jurisdiction over this relationship. The definition for employee is defined by North Carolina statute §97-2, but there are some easy ways to determine if you are an employee or an independent contractor. The first of these would be to look at the kind of tax form you receive. If you are receiving a W2 then you are most likely an employee, if you are receiving a 1099 then you are probably an independent contractor. Also do you get paid overtime or certain hourly wages? Do you wear a uniform that the owner of the business has required you to wear? These are all helpful ways to determine if your “employer” must have workers’ compensation insurance in case you are injured on the job.
Key Takeaways
- North Carolina employers must carry workers' compensation insurance if they regularly employ three or more people in the same business or establishment.
- Employers in industries involving radiation must carry coverage for even one employee, and agriculture employers need coverage once they have 10 or more full-time nonseasonal workers.
- Independent contractors are not considered employees under NC law, so employers are generally not required to provide them workers' compensation coverage.
- The North Carolina Industrial Commission, which oversees workers' comp claims, does not have jurisdiction over independent contractor relationships.
- Your tax form is a practical clue — W-2 recipients are typically employees with coverage rights, while 1099 recipients are typically independent contractors without them.
- Other indicators of employee status include being required to wear a uniform, receiving overtime pay, or being paid a set hourly wage set by the employer.
