Immediate Answer
In North Carolina, if you employ **two or more employees**, you must carry workers' compensation insurance. The law requires coverage for any business that has at least two workers, regardless of how many are paid or not.
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Legal Background
The Workers' Compensation Act, codified in N.C. Gen. Stat. § 95‑3, mandates that employers with two or more employees provide coverage for work‑related injuries or illnesses. The statute applies to all employers, including sole proprietors, partnerships, LLCs, and corporations, unless they are exempt (e.g., certain agricultural or small farming operations).
How the Threshold is Calculated
When determining the employee count, employers must include:
- Full‑time, part‑time, and seasonal workers who are paid for their labor.
- Independent contractors are not counted as employees for this purpose.
Temporary or seasonal workers count if they are paid. If you have one employee and a part‑time worker, you still meet the two‑employee threshold.
What Happens If You're Over the Threshold
Once you have two or more employees, you must:
- Obtain a workers' compensation policy from an authorized insurer.
- File a claim with the North Carolina Industrial Commission (NCIC) for any covered injury.
- Pay the employer's portion of premiums, which are based on payroll and job classification.
Failure to comply can result in fines, loss of insurance benefits, and potential legal liability.
Special Cases and Exemptions
Some businesses may be exempt from coverage, such as:
- Employers in the agricultural sector who have fewer than five employees and meet specific criteria.
- Owners of farms who do not hire any other workers.
These exemptions are limited and require filing a written request with the NCIC.
Practical Steps for New Employers
If you're starting a business and plan to hire:
- Track employee status and payroll carefully to stay compliant.
- Consult with a licensed North Carolina insurance broker to determine the appropriate policy limits.
- Maintain accurate records of workers' compensation claims and payments for audit purposes.
Key Takeaway
North Carolina's workers' compensation law is clear: having two or more employees obligates you to carry insurance. Stay ahead by reviewing your employee count before hiring and securing coverage promptly.