Workers’ Comp 101: What Asheville Employers with 3+ Employees Need to Know

Workers’ comp requirements can feel incredibly complicated, especially if you’re a small business with relatively few employees. Keeping up with those standards, however, is an essential part of remaining in compliance with North Carolina Law – not to mention protecting both yourself and your employees in the event of an accident. Make sure you know what the law requires for workers’ comp in Asheville as your employee base grows.

The 3-Employee Threshold — When NC Law Requires Coverage

According to N.C. Gen. Stat. Chapter 97, any business that “regularly employs” three or more people must carry workers’ compensation insurance. The law does not make a distinction based on status: full-time employees, part-time employees, and seasonal employees all count toward that number. Furthermore, the headcount rule comes into effect as soon as you have three employees – not when you’re ready to renew your insurance or at the end of the year.

In addition, the statute has a very narrow radiation-work exception: in that specific case, a single employee triggers the requirement. If your employees work with radiation, make sure you are familiar with those requirements and prepared to provide that coverage as soon as they sign on.

How Corporate Officers Factor Into the Count

It’s easy to forget corporate officers in your employee count, including the president, vice president, secretary, or treasurer. However, those individuals automatically count toward the 3-employee threshold – even if they are unpaid or only work part-time. Officers may elect to personally exclude themselves, usually via carrier endorsement, but that election does not remove them from the headcount. If you have two officers and a single employee, you already need a workers’ compensation policy. That includes cases in which one officer might be a silent or unpaid part of the team – so for many businesses, the workers’ comp requirement for small businesses in Asheville triggers earlier than they would have assumed. Sole proprietors, partners, and LLC members, on the other hand, aren’t automatically counted, but can choose to opt in for coverage.

What Happens If a Claim Is Filed Without Coverage

If an employee is injured at work and files a claim, and you do not have coverage, you can face two types of exposures simultaneously – and the combined hit can cause financial devastation for your business.

Under N.C. Gen. Stat. § 97-94, you face a $20–$100/day civil penalty for failure to carry workers’ comp coverage as well as a Class H felony for willful failure and a Class 1 misdemeanor for neglect. Furthermore, the individual or individuals responsibile for obtaining coverage may face personal liability for failing to make sure they followed those legal requirements.

The second challenge occurs when an employee files a claim for compensation for their losses: an uninsured employer can be sued directly in civil court for uncapped damages, including pain and suffering, instead of the claim going through the capped workers’ comp system. In many cases, that can mean substantial financial losses – especially if the employee suffered severe injuries.

Make Sure You Remain in Compliance

As your business grows, you get to experience a lot of new benefits, but you can also face a number of new potential liabilities and challenges – including new compliance obligations that are easy to miss. At Platinum Group, we help ensure that your business remains in compliance with state and federal laws, from hiring and reporting obligations to workers’ comp requirements. Reach out to us to learn more about our services and how we can help you build hiring/compliance workflows that catch those critical moments automatically, preventing your business from facing the consequences of missing them.

[DISCLAIMER: The information in this article is provided for general informational and educational purposes only and does not constitute legal, tax, or professional advice of any kind. Employment laws and regulations — at the federal, North Carolina, and local level — change frequently, and their application depends on the specific facts of your business. Nothing in this post should be relied upon as a substitute for advice from a licensed attorney or qualified HR professional familiar with your situation. Reading or using this content does not create an attorney-client relationship, an advisory relationship, or any other professional relationship between you and Platinum Group. We make reasonable efforts to keep this information current and accurate but make no representations or warranties, express or implied, about its completeness, accuracy, reliability, or applicability to your circumstances. Platinum Group and its employees, officers, and affiliates disclaim any and all liability for actions taken, or not taken, based on the contents of this article. Before implementing, revising, or relying on any employee handbook or workplace policy, consult a licensed employment attorney.]