What Is Workers Compensation Insurance?

The standard rule on workers’ comp is that you must purchase such insurance if you own any business with at least one employee. In the state of North Carolina, the minimum number of workers needed for your business to face consequences is three.

The NC Industrial Commission clarifies that all businesses that employ three or more employees must obtain workers’ compensation coverage. Such businesses include industries that operate as sole proprietorships, limited liability companies (LLCs), partnerships, and corporations.

If you qualify as a self-insured employer, you are required to get insurance plans for the purposes of paying your workers’ compensation benefits.

Exceptions to this requirement include:

Employees of certain tracks or railroads.
Casual employees, or persons whose employment does not directly relate to your trade, business, occupation, or profession.
Household helpers or domestic servants who are directly employed by a family.
Vendors of agricultural products. This refers to persons selling on behalf of the producers, as an act of commission or another form of compensation from the producers, so long as these vendors sell products prepared by the producers themselves.
Farmers or agricultural laborers, particularly when one employer regularly employs fewer than 10 full-time and non-seasonal farmworkers.
Employees of North Carolina’s federal government.

If you call your employees “independent contractors,” you, as an employer, are not relieved of your liability under the Act.

The Industrial Commission may investigate the control you exercised over the details of your trade to determine whether your “independent contractors” were still employees.