Watch Out Non-Insured Employers! They Are Coming After You!
By: Jeffrey A. Misenheimer
As a general rule, businesses that operate in North Carolina and maintain three or more employees must maintain workers’ compensation insurance. The Industrial Commission and the Attorney General’s office take a firm position on this issue and may assess fines against employers who are not in compliance with the Workers’ Compensation Act. Specifically, there are two potential methods of penalty:
(1) Under NCGS § 97-94(b1) “Any employer required to secure the payment of compensation under this Article who refuses or neglects to secure such compensation shall be punished by a penalty of $1.00 for each employee, but no less than $20.00 or more than $100.00, for each day of such refusal or neglect and until the same ceases.”
Penalties under this section can be significant. Penalties under section 97-94(b1) are the default penalties assessed by the Industrial Commission. When an initial penalty assessment comes out to a non-insured employer, it will be in the form of a section 97-94(b1) Penalty. The Industrial Commission will give the non-insured employer a certain amount of time to request a hearing or an alternative penalty assessment. If the request is not made timely, the non-insured employer could be left facing this form of penalty.
(2) The NCGS §97-94(b2) Penalty: This is an alternative penalty that is generally available to employers who have not been previously assessed with a penalty for not having insurance. Additionally, it is often necessary for the employer to show proof of current workers’ compensation coverage. The penalties under NCGS §97-94 (b2) are generally much less significant and involve a formula outlined in the statute for the assessment of the penalty.
Once a penalty is assessed, the employer has the right to accept the penalty, contest the penalty by way of a hearing, or request an alternative penalty under NCGS § 97-94(b)(2). At that point, the Industrial Commission and the Attorney General’s office will require certain documents for consideration of a potential alternative penalty. The Industrial Commission and the Attorney General’s office will also consider evidence of the number of employees and whether the business was required to maintain workers’ compensation insurance for some, or all of the times listed in the penalty assessment.
As you can see, these penalties can be significant. At Lewis & Roberts, we have attorneys who are experienced in handling non-insured matters and have had success in eliminating or minimizing penalties to businesses. What is important is to attempt to resolve these matters prior to going to an evidentiary hearing. The consequences of ignoring the Commission’s penalty powers could prove financially devastating to your business. We encourage you to reach out to one of our attorneys to discuss your options should your business receive a penalty notice from the Commission.