The Short Answer
Whether you can collect workers' compensation benefits after your employer files bankruptcy depends mainly on how your employer was insured at the time of your injury. If your employer carried workers' compensation insurance through a third-party insurer — which covers most workers in North Carolina — the insurance company is required to pay your benefits regardless of the employer's bankruptcy. If your employer was self-insured, a bond typically guarantees your benefits are protected. The only situation where collecting becomes genuinely difficult is if your employer had no workers' compensation insurance at all when you were injured.
Most employers’ employees are covered by workers’ compensation insurance. This workers’ compensation insurance is provided by a third party insurance company, not the employer themselves. Insurance companies are required by the state to keep a reserve of money on hand to cover the cost to pay out benefits to the injured worker. Therefore, if your employer files bankruptcy and they had workers’ compensation insurance at the time you were injured, the insurance company will be required to pay you your benefits.
However, there are a few exceptions to this rule, especially if your employer is a large company that is “self insured”. In the event your employer is self insured, they must usually have a bond through an insurance company that will “guarantee” injured workers receive their benefits in the event the employer files bankruptcy or cannot provide benefits to the injured worker.
Sadly, if your employer does not have workers’ compensation insurance and they file bankruptcy, it may be difficult to collect money from them if you were injured on the job because they are “broke” and you “can’t get water from a dry well.”
Key Takeaways
- Most North Carolina employees are covered by workers' compensation insurance held by a third-party insurer, not the employer directly, so an employer's bankruptcy does not cut off those benefits.
- Insurance companies are required by the state to maintain reserves specifically to pay out workers' compensation claims, meaning your benefits are protected even if your employer goes broke.
- Self-insured employers must carry a bond through an insurance company that guarantees injured workers still receive benefits if the employer files bankruptcy or becomes unable to pay.
- If your employer was operating without any workers' compensation insurance when you were injured, collecting compensation becomes very difficult because a bankrupt, uninsured employer has no assets to pay your claim.
- Always verify your employer's insurance status as early as possible in a workers' compensation claim — especially if the employer is showing signs of financial distress.
