The Short Answer
In North Carolina, common workers’ comp exemptions include independent contractors, domestic workers, farm laborers at small farms, injuries caused by intoxication or reckless behavior, and employees at businesses with fewer than 3 employees. But even if you’re excluded from workers’ compensation coverage, you still have options for pursuing compensation after a work injury.
Key Takeaways
- Most workers are covered, but some key limits and exclusions apply based on the type of worker, type of injury, or type of misconduct.
- Independent contractors, domestic workers, farm laborers, and sole proprietors may not automatically qualify for workers’ compensation benefits.
- Self-inflicted injuries, off-duty injuries, and injuries caused by intoxication are generally excluded.
- Workers engaged in reckless behavior or who violate safety rules may have their claims denied or reduced.
- North Carolina requires coverage only for businesses with 3 or more employees—smaller businesses may be exempt.
- Undocumented workers are generally protected under North Carolina law, but certain nuances affect compensation awards.
- Federal employees and railroad workers are covered under separate federal laws, not state workers’ compensation.
- Corporate officers and nonprofit volunteers may have special rules about whether they are counted or excluded.
- If your employer fails to carry required insurance, you may have additional legal options available.
1. Types of Workers Commonly Excluded
Not every job or worker classification qualifies for workers’ compensation in North Carolina. Below are the most common categories of workers who may be excluded from coverage under state law:
Independent Contractors
Independent contractors are generally not covered by workers’ compensation because they are not considered employees. However, North Carolina law looks beyond job titles—if an employer still controls how, when, and where the work is done, the contractor may actually be treated as an employee under the law. Simply issuing a 1099 does not guarantee exemption.
Subcontractors who don’t have their own workers’ comp coverage may still be covered, depending on the specifics of the work being done and the circumstances of the accident.
Casual Laborers
Workers engaged in casual labor—meaning work that is temporary, irregular, or outside the normal course of business—are generally not covered under workers’ compensation laws. In most cases, casual employee workers’ compensation eligibility does not apply because these individuals are not considered regular employees. Their services are typically short-term and unrelated to the routine operations of the business.
For example, a business that hires a landscaper for seasonal groundskeeping or a contractor to upgrade its facilities would typically not be required to provide workers’ compensation coverage for those individuals.
Domestic Workers
People employed in private homes—such as nannies, housekeepers, and in-home caregivers—are typically excluded from workers’ comp requirements. That said, if they are employed through an agency or if the homeowner voluntarily purchases coverage, they may still be protected.
Farm and Agricultural Laborers
Almost every state excludes agricultural workers from the requirement of compensation coverage. This affects those who work on farms and ranches, and those who work in aquaculture.
Much like domestic workers, agricultural workers who work for agencies or in organizations that have more than a certain number of workers may have coverage. In North Carolina, any agricultural employer with fewer than 10 full-time, non-seasonal employees doesn’t have to carry workers’ compensation.
Sole Proprietors, Partners, and LLC Members
If you own your own business and haven’t opted into coverage, you may not be protected. In North Carolina, sole proprietors, partners, and members of LLCs are not counted as employees unless they choose to be. That means they’re excluded by default, though opting in is allowed.
Corporate Officers and Nonprofit Volunteers
Officers of corporations (such as S-corps or C-corps) are considered employees and count toward North Carolina’s 3-employee threshold. However, they may elect to exclude themselves from workers’ comp coverage. Volunteers, nonprofit board members, and similar roles are generally not treated as employees under the law and are usually excluded.
Federal and Railroad Workers
If you’re employed by the federal government or work in the railroad industry, your workers’ comp benefits fall under federal laws like the Federal Employers’ Liability Act (FELA) or the Federal Employees’ Compensation Act (FECA), not North Carolina state law.
2. Types of Injuries Commonly Excluded
Even if you’re eligible for workers’ comp coverage in North Carolina, not every injury automatically qualifies for benefits. Workers’ compensation typically covers injuries that are linked to performing your duties at work. However, injuries that result from intoxication, self-inflicted injuries, or unrelated personal activities generally are excluded.
Injuries Involving Drugs or Alcohol
If your employer can prove that drug or alcohol use was the primary cause of your injury, your workers’ compensation claim can be denied. Employers often require drug testing after a workplace accident to assess whether intoxication played a role.
Self-Inflicted Injuries
If a worker intentionally causes harm to themselves, that injury will not be covered under workers’ compensation.
Injuries Outside the Scope of Employment
For an injury to be compensable, it must occur while the employee is performing job-related duties. Injuries that happen during:
- Personal errands,
- Off-duty time, or
- Activities unrelated to work (e.g., fighting a coworker over a personal disagreement),
…are typically excluded. However, borderline cases—such as injuries during work-related travel or casual horseplay—may be reviewed based on context.
3. Misconduct-Related Exclusions
In North Carolina, certain types of employee misconduct can lead to a reduction or complete denial of workers’ compensation benefits. These exclusions are often tied to recklessness or violations of safety protocols in the workplace.
Willful Misconduct or Reckless Behavior
If an employee knowingly violates safety rules, engages in horseplay, or behaves in a way that shows a disregard for workplace safety, they may be excluded from receiving benefits. For example:
- Ignoring posted safety warnings
- Engaging in roughhousing near machinery
- Tampering with safety equipment
All of these can be grounds for a denied claim, depending on the circumstances.
Failure to Use Provided Safety Equipment
When an employer provides proper safety gear (such as helmets, gloves, or harnesses) and trains employees on how to use it, failure to follow those protocols may disqualify a claim, especially if the injury could have been prevented by using the equipment.
However, context matters. If an employer fails to enforce safety policies consistently or does not provide clear training, you might still be eligible for workers’ compensation.
Special Rules Unique to North Carolina
North Carolina’s Workers’ Compensation Act includes several state-specific rules that affect who must be covered and under what conditions. These exemptions can impact small businesses, undocumented workers, and even nonprofit organizations.
- Undocumented Workers Are Covered: Despite immigration status, North Carolina law generally allows undocumented workers to file for workers’ compensation benefits, although some limits may apply when calculating future wage losses.
- Commission-Based Agricultural Sales: Workers who sell agricultural products on commission—if those products were prepared by the producer—may be excluded from coverage.
- Horseplay May Still Be Covered: Injuries from workplace horseplay or personal deviations are not automatically excluded. If the behavior is common, tolerated, or indirectly encouraged by the work culture, coverage may still apply under North Carolina precedent.
What to Do if You Are Excluded from Workers’ Compensation
If you find out that you are excluded from workers’ compensation coverage in North Carolina, you still have options to protect your rights and pursue compensation:
- Private Insurance Policies: Some independent contractors, sole proprietors, and small business owners carry private accident or disability insurance that can help cover work-related injuries.
- Third-Party Liability Claims: If your injury was caused by someone outside your employer—such as a negligent contractor, a careless driver, or a defective product manufacturer—you may have grounds for a third-party lawsuit.
- Employer Noncompliance: If your employer was required by law to carry workers’ compensation insurance but failed to do so, you may still be able to seek compensation through the North Carolina Industrial Commission or pursue a civil claim against the employer directly.
- Consult a Workers’ Compensation Lawyer: Navigating exceptions and alternative legal options can be complex. An experienced attorney can help you understand your rights, assess your case, and identify all possible sources of compensation.
You deserve to know your rights and get the support you need after a workplace injury—even if workers’ comp doesn’t apply. If you have questions about your eligibility or your next steps, speaking with a North Carolina workers’ compensation lawyer for a free consultation can help you explore your options and protect your future.
When to Hire a Workers’ Compensation Lawyer
If you’re unsure whether you qualify for workers’ compensation benefits—or if you believe your claim was wrongfully denied—getting legal advice can make all the difference.
Employers in North Carolina who are legally required to provide workers’ compensation coverage but fail to do so can face serious consequences, including civil penalties, misdemeanor or felony charges, and potential personal liability for injured workers’ medical bills and lost wages. You deserve to understand your rights, and you should not have to navigate this complicated situation alone.
At Lewis & Keller, our team has decades of experience helping injured workers across Winston-Salem and throughout North Carolina. Whether you are pursuing a standard claim, a third-party lawsuit, or exploring options after a denied or excluded claim, we’re here to help.
Contact us today for a free consultation and find out what options may be available in your case. You have nothing to lose—and possibly much to gain.
FAQs About Workers’ Compensation Exemptions
Who Needs a Workers’ Comp Exemption?
Workers who want to opt out of mandatory coverage—such as corporate officers in North Carolina—must formally elect an exemption. Sole proprietors, partners, and LLC members are automatically excluded unless they actively opt into coverage. Independent contractors are also generally excluded unless misclassified.
Does North Carolina Require Workers’ Compensation Insurance?
Yes. North Carolina requires employers with 3 or more regular employees to carry workers’ compensation insurance. Some businesses with fewer than 3 employees may not be required to provide coverage.
Do I Need Workers’ Comp Insurance if I Have 1099 Employees?
In North Carolina, you are generally not required to provide workers’ compensation insurance for true independent contractors (those issued a 1099). However, simply classifying someone as a 1099 contractor does not automatically exempt you. If the business still controls how, when, and where the work is performed, the worker may legally be considered an employee—and coverage may be required.
Is Workers’ Compensation Insurance Required in All States?
Workers’ compensation insurance is required in North Carolina and every state except Texas, where it is optional for private employers. However, each state has its own rules about which employers must carry coverage and how many employees trigger the requirement.
What If My Employer Doesn’t Have Workers’ Compensation Insurance?
If your employer doesn’t carry workers’ compensation insurance as required by state law, you may still have options for pursuing compensation for your work-related injury or illness. In North Carolina, employers are required to carry this insurance. When they don’t, they can face serious penalties—and you may be able to take legal action directly against them.
