Who Is Exempt From Workers’ Compensation Insurance in North Carolina?

Workers’ compensation exemptions in North Carolina are narrower than many injured workers are told. Most businesses with three or more employees must carry coverage, so an employer saying it is exempt starts the legal question rather than settling it.

This question often comes up after a worker gets hurt and learns there is no policy on file.

If you were hurt at work in Forsyth or Guilford County, a Winston-Salem workers’ compensation lawyer or Greensboro workers’ compensation lawyer on our team can review whether the law required your employer to be covered.

Key Takeaways for Workers’ Compensation Exemptions in North Carolina

• North Carolina requires most employers with three or more regular employees to carry workers’ compensation insurance or qualify as self-insured.
• Employers of any size must carry coverage if one or more employees work in activities involving radiation.
• The Workers’ Compensation Act excludes casual employees, domestic servants, federal government employees, railroad employees, and farm laborers when fewer than 10 full-time nonseasonal farm laborers work for the same employer.
• Sole proprietors, partners, and LLC members are not counted as employees unless they elect coverage, while corporate officers count toward the three-employee threshold.
• When a required employer fails to carry coverage, the injured worker may choose between a workers’ compensation claim and a lawsuit against the employer.

Which Employers Must Carry Workers’ Compensation Insurance in North Carolina?

North Carolina requires employers that regularly employ three or more people in the same business to carry workers’ compensation insurance or qualify as self-insured. The rule applies to corporations, partnerships, and sole proprietorships alike, and the North Carolina Industrial Commission enforces it.

The Commission’s guidance for employers and the definitions in Chapter 97 of the General Statutes set out the details below.

North Carolina workers’ comp coverage rule

• 3 or more regular employees in the same business in North Carolina: coverage required
• 1 or more employees working with radiation: coverage required, regardless of size
• State and local government employers: covered, regardless of size
• Corporate officers: count toward the three
• Sole proprietors, partners, LLC members: not counted unless they elect coverage
• Farms: coverage required only with 10 or more full-time, nonseasonal farm laborers

Sources: G.S. 97-2, G.S. 97-13, and the North Carolina Industrial Commission.

How Does the Three-Employee Rule Work?

The rule counts employees regularly in service in the same business within North Carolina, as G.S. 97-13 provides. Corporate officers count toward the total, even officers who exclude themselves from the policy, according to the Industrial Commission.

Owners of sole proprietorships, partnerships, and LLCs do not count unless they elect coverage. Whether a part-time or seasonal worker counts as regularly employed depends on the facts, and the Industrial Commission decides disputes over the count.

Which Employers Must Carry Coverage Regardless of Size?

Some employers must carry workers’ comp even with fewer than three employees. Under the Act’s definition of employment, any employer with one or more employees in activities involving radiation is covered, and State and local government employment is covered regardless of headcount.

Under G.S. 97-19, a contractor that sublets work without proof of the subcontractor’s coverage can be held responsible for that subcontractor’s injured workers. Under G.S. 97-13, any small employer that voluntarily buys a policy is treated as accepting the Act while the policy is in force.

Is Workman’s Comp the Same as Workers’ Comp in North Carolina?

Yes. Workman’s comp, workmans comp, and workers’ comp all describe the same North Carolina system, which the law calls workers’ compensation. The Workers’ Compensation Act in Chapter 97 sets the rules no matter which name an employer or a search uses.

The older term reflects how the law was once written. North Carolina’s Act dates to 1929, and older court opinions refer to workmen’s compensation. The benefits, deadlines, and exemptions are identical under either name.

Does a Small Business Need Workman’s Comp in NC?

Under G.S. 97-13, a small business needs workman’s comp in North Carolina once it regularly employs three or more people, and sooner if any employee works with radiation. Below that number, coverage is optional.

A business that buys a policy anyway is bound by the Act for the life of that policy, and its employees are covered like any other.

North Carolina Workers’ Comp Exemptions by Worker Type

North Carolina’s Workers’ Compensation Act does not apply to several groups of workers, and G.S. 97-13 lists most of them. An exemption depends on the worker’s actual role, not the title on a paycheck or tax form.

The main exempt categories are:

• Casual employees: short-term, irregular work outside the usual course of the business
• Domestic servants: nannies, housekeepers, and similar workers employed in a private home
• Farm laborers: when the employer regularly has fewer than 10 full-time, nonseasonal farm laborers
• Federal government employees: covered by a separate federal program
• Railroad employees: covered by federal law, except employees of a State-owned railroad company and electric street railroads
• Certain sawmill and logging operators: small, part-time operations whose main business is something else
• Employers with fewer than three regular employees: unless radiation work or a voluntary policy applies
• Sole proprietors, partners, and LLC members: excluded by default, with the option to elect coverage

Independent Contractors

Independent contractors are generally not covered because they are not employees under the Act. North Carolina looks past job titles, though. If the business controls how, when, and where the work is done, the Industrial Commission may treat the worker as an employee.

Issuing a 1099 does not settle the question. A subcontractor’s worker who lacks coverage may still be covered through the general contractor, as explained in the uninsured-employer section below.

Casual Laborers

Casual laborers are exempt under G.S. 97-13 when their work is temporary, irregular, and outside the normal course of the business. Their services are short-term and unrelated to the company’s routine operations.

For example, a business that hires a landscaper for one seasonal cleanup typically does not have to cover that person.

Domestic Workers

Domestic workers employed directly in a private home, such as nannies, housekeepers, and in-home caregivers, are exempt from North Carolina’s coverage requirement.

Workers placed through an agency may be covered through the agency. A homeowner who voluntarily buys a policy also brings household employees under the Act.

Farm and Agricultural Laborers

Farm laborers are exempt unless the employer regularly employs 10 or more full-time, nonseasonal farm laborers. The count includes only full-time, nonseasonal workers.

A farm below that number may still choose to buy coverage, and a farm worker placed by an agency may be covered through the agency.

Sawmill and Logging Operators

Some small sawmill and logging operators are exempt under the Act’s definition of employment. The exemption applies to an operator with fewer than 10 employees who saws and logs fewer than 60 days in any six consecutive months and whose principal business is unrelated to sawmilling or logging.

Sole Proprietors, Partners, and LLC Members

Business owners are excluded by default unless they opt in. According to the Industrial Commission, sole proprietors, partners, and LLC members are not counted as employees, but they may elect to include themselves on the business’s workers’ comp policy.

Corporate Officers and Nonprofit Volunteers

Corporate officers count as employees toward the three-employee threshold, but they may exclude themselves from coverage under the company’s policy, per the Industrial Commission’s employer guidance.

Uncompensated officers of certain nonprofit corporations are not covered, yet they still count toward the total. Volunteers and nonprofit board members are generally not treated as employees.

Federal and Railroad Workers

Federal employees working in North Carolina fall under the Federal Employees’ Compensation Act (FECA), not state workers’ comp.

Railroad workers generally pursue injury claims under the Federal Employers’ Liability Act (FELA). Under G.S. 97-13, employees of a State-owned railroad company and electric street railroads remain under North Carolina’s Act.

Work Injuries Excluded From North Carolina Workers’ Comp

Under G.S. 97-12, a covered worker receives no compensation when the injury was proximately caused by intoxication, a non-prescribed controlled substance, or a willful intention to injure or kill oneself or another. Injuries outside the course of employment also fall outside the system.

Workers’ comp generally covers injuries linked to performing job duties. The exclusions below are narrower than many employers suggest.

Injuries Involving Drugs or Alcohol

Under G.S. 97-12, an intoxication defense succeeds only if the employer proves the intoxication proximately caused the injury. The defense does not apply if the employer or a supervisor supplied the alcohol, or if a controlled substance was taken under a prescription.

Employers often request post-accident drug testing, and a qualifying test result can create a rebuttable presumption of impairment.

Self-Inflicted Injuries

An injury the worker intended to inflict on themselves is not covered. The same bar applies when a worker is hurt while willfully trying to injure someone else.

Injuries Outside the Scope of Employment

An injury must arise out of and in the course of the job to be covered. Injuries that happen during these activities are typically excluded:

• Personal errands
• Off-duty time
• Personal disputes unrelated to work, such as a fight with a coworker over a private matter

Borderline cases, such as injuries during work travel, are decided on their specific facts.

Does Breaking a Safety Rule End a Workers’ Comp Claim?

Usually not. Under G.S. 97-12, a worker’s willful failure to use a safety appliance, or willful breach of an employer rule approved by the Industrial Commission and known to the worker, reduces compensation by 10 percent rather than eliminating it. The employer carries the burden of proving the violation.

The same statute works in the other direction. Compensation increases by 10 percent when an employer’s willful failure to follow a statutory requirement or Commission order causes the injury.

What About Horseplay and Reckless Behavior?

Horseplay does not automatically defeat a claim. When horseplay was common, tolerated, or part of the work environment, coverage may still apply under North Carolina case law, including McGraw v. Fieldcrest Mills.

Conduct that amounts to a willful intention to injure someone is different and does bar compensation.

Failure to Use Provided Safety Equipment

Skipping provided safety gear, such as a harness or guard, can lower benefits by 10 percent, but only when the failure was willful. Inconsistent enforcement or unclear training can weaken an employer’s argument that a worker knowingly broke the rule.

Are Undocumented Workers Covered?

Yes. North Carolina’s definition of employee covers workers whether lawfully or unlawfully employed, and the Court of Appeals confirmed coverage for undocumented workers in Ruiz v. Belk Masonry Co. Immigration status can, however, affect how future wage-loss benefits are calculated.

What Can You Do If Your Employer Should Have Carried Workers’ Comp but Did Not?

You still have options if your employer was required to carry workers’ comp and did not. Under G.S. 97-94, an uninsured employer remains liable to the injured worker, who may elect either a workers’ compensation claim before the North Carolina Industrial Commission or a lawsuit against the employer.

The Commission must also put the worker’s compensation ahead of any penalty the employer owes. In practice, an uninsured employer is often where an informational question becomes a legal claim.

How Do You Check Whether Your Employer Has Coverage?

The Industrial Commission’s Insurance Coverage Search lets anyone look up an employer’s workers’ comp policy by name or federal employer ID number.

The database is not proof of coverage and may miss cancellations or reinstatements reported in the last 30 days. When results are unclear, the Commission can be contacted directly for coverage information.

Can You Sue an Uninsured Employer in North Carolina?

Yes, when the employer was legally required to carry coverage. G.S. 97-94 lets the injured worker choose between benefits under the Act and a lawsuit at law against the uninsured employer.

A lawsuit may reach losses workers’ comp does not pay, such as pain and suffering, but it brings different proof requirements and deadlines. Our guide on who else may be liable covers other parties who may share responsibility.

Can a General Contractor Be Responsible for a Subcontractor’s Workers?

Yes. Under G.S. 97-19, a contractor who sublets work without first obtaining a certificate of the subcontractor’s coverage can be liable for the subcontractor’s injured employees when the subcontractor had no coverage in effect.

That liability applies even if the subcontractor has fewer than three employees. The rule matters most on construction jobs, where layers of subcontractors are common.

What Penalties Do Uninsured Employers Face?

Under G.S. 97-94, the Industrial Commission can assess a civil penalty of $1 per employee for each day without coverage, with a daily minimum of $20 and a daily maximum of $100.

Willful failure to carry required coverage is a Class H felony, and neglect is a Class 1 misdemeanor. A person with authority to bring the business into compliance faces the same criminal exposure, plus a civil penalty of up to 100 percent of the compensation owed to injured workers.

Steps That Help Protect a Claim Against an Uninsured Employer

A claim against an uninsured employer often turns on paperwork gathered early. Many injured workers find these steps helpful:

• Giving written notice of the injury to the employer, which North Carolina generally requires within 30 days.
• Filing a claim with the Industrial Commission on Form 18, generally within two years, even when the employer says it has no insurance.
• Keeping pay stubs, schedules, and messages that show who directed the work, in case employee status is challenged.
• Listing coworkers by name, which can help show the business had three or more employees.
• Saving the coverage search result along with the date it was run.

Having these records at a consultation allows a fuller evaluation of both the workers’ comp claim and any lawsuit. For the broader checklist, see what to do if you’re hurt on the job.

Options When a Workers’ Comp Exemption Truly Applies

An exemption closes the workers’ comp route, but other paths to compensation may remain. The right option depends on who caused the injury and what coverage the worker carries personally.

• Third-party claims: a negligent driver, another contractor, or a defective product manufacturer may be responsible outside the workers’ comp system.
• Private insurance: some independent contractors and business owners carry accident or disability policies that apply to work injuries.
• A misclassification challenge: when the exemption rests on a label rather than how the work was actually done, the Industrial Commission may find the worker was an employee after all.

North Carolina Workers’ Comp Exemptions: Questions Answered by Our Greensboro and Winston-Salem Attorneys

Can I get workers’ comp in North Carolina if I’m paid in cash?

Yes, if you are an employee of a covered employer. Payment method does not decide employee status. The Industrial Commission looks at whether the business controlled how, when, and where you worked, and records of hours or payments help show your wages.

Can my employer make me sign a waiver of workers’ comp in North Carolina?

No. Under G.S. 97-6, no contract, rule, or agreement can relieve an employer of its obligations under the Workers’ Compensation Act, except where the Act itself allows it, such as a corporate officer electing out of coverage. A signed waiver does not make a covered employer exempt.

What happens if my employer’s policy was canceled before I got hurt?

The key question is whether a policy was in force on the date of your injury. If it had lapsed and the employer was still required to carry coverage, the uninsured-employer rules apply, including your choice between a workers’ comp claim and a lawsuit. The Commission can confirm policy dates its online database has not yet caught up with.

Can I be fired for filing a claim against an employer without workers’ comp?

North Carolina’s Retaliatory Employment Discrimination Act makes it unlawful to retaliate against a worker for filing a workers’ compensation claim in good faith. That protection does not depend on whether the employer carried insurance. A retaliation complaint has its own filing deadline with the N.C. Department of Labor, so timing matters.

When an Employer Says It Isn’t Covered

An employer’s statement that it is exempt is an opinion about the law, and the Industrial Commission has the final word. Checking the headcount, the policy dates, and the contractor chain often changes which path makes sense.

Lewis & Keller Injury Lawyers represents injured workers from our Winston-Salem and Greensboro offices. Call 336-933-9566 or contact us online whenever you are ready to talk it through.