Here’s your Workers’ Comp Q&A:
I only have one part-time employee. Do I still need Workers’ Comp?
NO — North Carolina law requires businesses which employ three or more employees, including those operating as corporations, sole proprietorships, limited liability companies and partnerships, obtain workers’ compensation insurance.
Does my General Liability policy or BOP provide Workers’ Comp coverage?”
NO — These always have to be written in separate policies. Even if your GL or BOP carrier writes Workers’ Compensation insurance, it will have a different policy number and likely be insured with a different writing company.
Are there penalties if I don’t purchase Workers’ Comp?
YES — If you fail to carry Workers’ Compensation insurance you may: face stiff penalties, be charged with a misdemeanor, be charged with a felony or be imprisoned. Yikes!
My employee was negligent at work and that’s why he got hurt. Is he still covered under my Workers’ Comp policy?
YES — Employees are entitled to receive medical treatment for on-the-job injuries or illnesses regardless of who’s at fault. In return they are prevented from suing employers over those injuries.
What if my employees’ payroll is lower than originally estimated? Do I get a refund?
YES — If the annual payroll was estimated to be, let’s say, $80,000/year but at the end of the policy term your actual reported payroll turns out to be $60,000, you will be refunded the difference in premium. At the same time, if your payroll is higher than reported, like $100,000, then you will be required to pay the additional premium due upon the final audit.
Do I have to report payroll?
YES — The initial premium is only based on an estimated payroll figure. At the end of every policy term, you are required to report your actual payroll so that the insurance carrier can determine your final earned premium (the exact amount owed to the company).
Are there different Workers’ Comp rates for different types of businesses?
YES — Businesses are first classified by the type of work their employees are involved in and then the specific industry classification code. For example, if you are a plumbing contractor with three employees who work in the field and have one employee who handles your bookkeeping, the rates would be higher for the former since it represents bigger exposures. Therefore contractor employees and clerical office employees must be rated separately based on the payroll for each class.
Am I, the business owner, covered under my Workers’ Comp?
YES & NO — Individuals who are sole proprietors, members of LLCs, and partners are not counted automatically as employees, but can be included for Work Comp. Corporate officers may elect to be excluded from coverage but are still counted in determining whether a business has three or more employees.
