North Carolina Workers Compensation: Employer Rules
North Carolina requires workers compensation at three employees, and corporate officers count. Coverage, exclusions, posting, deadlines and penalties.
North Carolina Workers Compensation
Three employees turns the mandate on, corporate officers are counted even when they exclude themselves from the policy, and the Form 19 clock is five days, not thirty
A founder outside Raleigh once told me his company had one employee. He and his co-founder were officers of the S-corp, and the receptionist was the only person on the books who was not an owner. He counted one. North Carolina counted three.
That is the trap in this state, and it is not hidden in a footnote. The Industrial Commission spells it out with an example on its own site: a corporation with two officers and one employee has to provide workers compensation coverage. Officers count, and an officer who is excluded from the policy still counts toward the threshold.
If you want the general mechanics of how this insurance works anywhere in the country, that lives in our guide to workers compensation insurance. This page is North Carolina only, and it sits beside the broader North Carolina HR compliance guide.
Who Has to Carry Coverage
Coverage becomes mandatory at three employees. The North Carolina Industrial Commission puts it in one sentence on its page for employers: in general, all businesses employing three or more employees on a regular basis are covered by the Act, and a covered business must obtain insurance or qualify as a self-insured employer.
The statute behind that sentence is N.C. Gen. Stat. 97-2(1), which defines employment to include all private employments in which three or more employees are regularly employed in the same business or establishment. There is no revenue test, no industry test and no waiting period for a new hire.
One exception runs the other way and catches employers who never think of themselves as high hazard. Any employer with one or more employees engaged in activities that involve the use or presence of radiation must carry coverage regardless of headcount. The statute does not list the trades it reaches, so a small business that keeps x-ray or other radiation equipment on site should confirm its status with the Commission or its agent rather than assume the three-employee count settles it.
Counting to Three
Corporate officers are in the count, and excluding them from the policy does not take them out of it. N.C. Gen. Stat. 97-2(2) treats every executive officer elected or appointed under the charter and bylaws of a corporation as an employee of that corporation. The same statute lets the corporation specifically exclude an officer in the insurance contract, and during the policy period that officer is not an employee under the Act.
Those two rules do different jobs, and small employers routinely merge them. Exclusion decides whether that person can collect benefits. It does not decide whether the business has to buy a policy at all. The Commission is explicit that corporate officers are counted in determining whether the corporation has three or more employees.
Nonprofits get a version of the same result. Volunteer officers, directors and committee members of qualifying nonprofit corporations are not employees under the Act when they take no remuneration beyond expense reimbursement, yet once the nonprofit pays anyone else, the statute counts those volunteers for the sole purpose of determining how many people are regularly employed.
Owners run the other direction. Sole proprietors, partners and members of a limited liability company are not automatically counted as employees, and they are not covered unless they elect in, notify the insurer and are actively engaged in running the business.
Who Is Excluded and Who Elects In
The exclusions live in N.C. Gen. Stat. 97-13 and in the definition of employment in 97-2(1), and they are narrower than the folklore suggests. Casual employees, domestic servants, farm laborers below the agricultural threshold, federal government employees in North Carolina and most railroad employees sit outside the Act. Nothing else in the list is a general small-business exemption.
| Worker or role | North Carolina treatment | What the employer does |
|---|---|---|
| Sole proprietor | Not automatically counted as an employee | Outside coverage unless the owner elects in, is actively engaged in the business, and the insurer is notified (N.C. Gen. Stat. 97-2(2)) |
| Partner | Not automatically counted as an employee | Same election, same two conditions. Working partners do not push a small firm to three on their own |
| LLC member | Not automatically counted as an employee | Same election. Members who want benefits must be named to the carrier, not just listed in the operating agreement |
| Corporate officer | An employee of the corporation, and counted | May be specifically excluded in the policy for the policy period. The exclusion does not reduce the headcount that triggers the mandate |
| Volunteer nonprofit officer or director | Not an employee when unpaid beyond expense reimbursement | Still counted toward the number regularly employed once the nonprofit pays anyone else |
| Domestic servants | Outside the definition of employment | No policy required for household staff. Buying one anyway accepts the Act for the life of the policy |
| Farm laborers | Excluded unless 10 or more full-time nonseasonal agricultural workers are regularly employed | Count full-time nonseasonal agricultural workers separately from the general three-employee test |
| Casual employees | Excluded when the work is both casual and not in the course of the employer’s trade or business | One-off help that is part of your usual business is not casual. The two conditions are cumulative |
| Small sawmill and logging operators | Outside the definition of employment in narrow conditions | Applies to an operator with fewer than 10 employees who saws and logs fewer than 60 days in any six consecutive months, whose principal business is unrelated |
| Federal government employees in North Carolina | Excluded from the Act | Federal civilian workers are covered by the federal program administered by the US Department of Labor |
| Railroad employees | Excluded, with exceptions | State-owned railroad companies and electric street railroads remain inside the Act |
| Sellers of agricultural products on commission | Excluded under N.C. Gen. Stat. 97-13(d) | Applies where the producer pays the commission and prepares the product for sale |
| Independent contractors | Not employees when genuinely independent | The label does not settle it. Trucking owner-operators have their own rule under N.C. Gen. Stat. 97-19.1 |
The independent contractor row is the one that turns into a criminal file. The Industrial Commission runs an Employee Classification Section under the Employee Fair Classification Act, and misclassification is defined by statute as avoiding obligations under Chapter 97 and four other chapters by calling an employee a contractor. Our explainer on what an independent contractor is walks through the control questions that decide it.
Where to Buy the Policy
North Carolina employers buy from private insurance carriers. There is no monopolistic state fund here, and the Industrial Commission does not sell coverage. Its workers compensation bulletin lists four routes, and the difference between two of them is the thing employers most often get wrong about their own coverage.
| Route | Who it fits | What it takes |
|---|---|---|
| Conventional and open market | Nearly every small employer | An agent writes coverage solely for your business. Contact an agent about coverage needs and available types |
| Assigned risk market | Employers with thin history or risk that the open market declines | Call the North Carolina Rate Bureau, which the Commission names as the contact point, and ask to be placed with an agent |
| Self-insured fund | Members of a trade association that runs a fund | Blanket coverage funded by member contributions based on headcount, payroll and the rate assigned by the Rate Bureau. You are a fund member, not a self-insurer |
| Individual self-insurance | Large employers with the balance sheet to back claims | A license from the Commissioner of Insurance under Article 5 of Chapter 97, the route N.C. Gen. Stat. 97-93(a)(3) names alongside Article 47 of Chapter 58 for group self-insurance |
| Keeping the self-insurance license | Same | Deposits, surety bonds or letters of credit under N.C. Gen. Stat. 97-185 and specific and aggregate excess loss coverage under 97-190, all administered by the Department of Insurance |
Premium tracks payroll, not the three-employee count that decides whether you need a policy at all. The North Carolina Rate Bureau sets rates by type of employment and bases premiums on each one hundred dollars of payroll. Policies are written annually, and the Commission says the premium moves with injury claims and with changes in headcount and payroll, which is why a year-end audit can change the bill after the policy year has closed.
What You Post and What You Hand Over
North Carolina handles employee notice through a poster rather than a new-hire packet. N.C. Gen. Stat. 97-93(e) requires every complying employer to post, in a conspicuous place in places of employment, a notice stating that employment is subject to the Workers' Compensation Act and whether the employer carries insurance or qualifies as self-insured.
Commission Rule 11 NCAC 23A .0201 names the form. It is Form 17, the Workers' Compensation Notice to Injured Workers and Employers, and it has to carry three filled-in fields: the name of the insurer, the policy number and the dates of coverage. A blank Form 17 on the wall is not a posted notice.
There is no state workers compensation pamphlet you are required to hand a new employee on day one, and no signature form the state collects at hire. The handing-over duties in North Carolina are triggered by an injury instead, and they are specific.
| Obligation | When | Authority |
|---|---|---|
| Post Form 17 with insurer name, policy number and coverage dates | While coverage is in force, in a conspicuous place at each place of employment | N.C. Gen. Stat. 97-93(e); Rule 11 NCAC 23A .0201 |
| Amend the posted Form 17 | Within five working days of a change in coverage | Rule 11 NCAC 23A .0201(b) |
| Remove any notice saying you are covered | Within five working days of a lapse or loss of self-insured status | N.C. Gen. Stat. 97-93(e) |
| Tell the injured worker your carrier name and policy number | On actual notice of a claim, or when you report it to the carrier | Rule 11 NCAC 23A .0301(b) |
| Give the employee a copy of the completed Form 19 | When the report goes to the carrier or administrator | Rule 11 NCAC 23A .0104(b) |
| Give the employee a blank Form 18 | With that copy of the Form 19 | Rule 11 NCAC 23A .0104(b) |
| New hire workers compensation pamphlet | Not required by North Carolina | No state handout requirement located in Chapter 97 or the Commission rules |
Nothing stops you from covering this at onboarding anyway, and it is the cheapest insurance there is against a supervisor improvising after an accident. The list of everything else a North Carolina new hire needs sits in our guide to hiring employees in North Carolina.
Injury Reporting Deadlines
Two clocks run at once, and the employer clock is the short one. The employee has 30 days to give written notice under N.C. Gen. Stat. 97-22. You have five days from knowledge of the accident to get Form 19 to the Commission through your carrier, and the form itself says so in capital letters.
| Step | Who acts | Deadline | Form |
|---|---|---|---|
| Give written notice of the accident | Employee | Immediately or as soon as practicable, and no later than 30 days | No form required. Form 18 also serves as notice |
| Report the injury to the carrier or administrator | Employer | On knowledge of the injury | No form. The Commission also requires you to give the worker your carrier name and policy number |
| File the first report of injury | Employer, transmitted through the carrier | Within five days after knowledge of the accident, when the employee misses more than one day or medical charges exceed $4,000 | Form 19 |
| Deliver the Form 19 copy and a blank claim form | Employer | When the Form 19 is submitted | Form 19 copy plus blank Form 18 |
| Report a work-related death | Employer | Within five days of knowledge of the death | Form 19, then Form 29 within 45 days of notification |
| Deny the claim | Employer or carrier | Within 14 days after written or actual notice of the injury or death, with a detailed statement of grounds | Form 61 |
| File the employee’s own claim | Employee | Within two years of the accident, or of the last payment of medical compensation when no other compensation was paid | Form 18, or Form 18B for lung disease |
| Occupational disease notice | Employee | 30 days from the date competent medical authority advised the employee of the disease | Same notice rule under N.C. Gen. Stat. 97-58(b) |
| Fatality or in-patient hospitalization report | Employer | 8 hours for a fatality, 24 hours for a hospitalization, amputation or loss of an eye | N.C. Department of Labor safety and health rules, a separate clock from Chapter 97 |
That last row is the one employers merge with the rest. It is a different agency, a different form and a different deadline, and filing a Form 19 does nothing to satisfy it. Those safety reporting and recordkeeping duties are covered in our guide to OSHA requirements for employers.
Penalties for Going Without
The civil penalty is a daily meter. Under N.C. Gen. Stat. 97-94, an employer who refuses or neglects to secure coverage is punished by a penalty of one dollar per employee, not less than twenty dollars and not more than one hundred dollars, for each day of the refusal or neglect and until it ceases.
A first-time violator has one way out of the daily arithmetic. Subsection (b2) lets the employer produce a current policy and the payroll records for the gap, after which the Commission recalculates the penalty as the per employee cost of the current policy times the average number of employees during the gap, plus ten percent. It is available only to an employer not previously penalized under the section.
| Violation | Exposure |
|---|---|
| Refusing or neglecting to secure coverage | $1.00 per employee per day, minimum $20 and maximum $100 per day, running until the violation ceases (N.C. Gen. Stat. 97-94(b1)) |
| First-time violator electing the alternate penalty | Per employee cost of the current policy times the average headcount during the gap, plus 10 percent (97-94(b2)) |
| Willful failure to secure coverage | Class H felony |
| Neglecting to secure coverage | Class 1 misdemeanor |
| An individual with the ability and authority to bring the business into compliance who does not | Class H felony if willful, Class 1 misdemeanor if neglectful, plus a civil penalty up to 100 percent of the compensation due to employees injured during the gap (97-94(d)) |
| An injury while uninsured | The employee elects between compensation under the Act and a claim at law, and the Commission prioritizes paying the worker over collecting the penalty |
| How far back the penalty reaches | The civil penalty does not apply to a period of noncompliance that occurred more than three years before the date the Commission first assessed it (97-94(c)) |
| Failing to file the Form 19 report | $5 to $25 for each refusal or neglect, assessable by the Commission (N.C. Gen. Stat. 97-92(e)) |
| Deducting any part of the premium from an employee’s pay | Class 3 misdemeanor, punishable only by a fine of up to $500 (N.C. Gen. Stat. 97-21) |
Enforcement is neither passive nor manual. The Commission's Compliance Division runs a Noncompliant Employer Tracking System that cross-references data from other state agencies to surface employers with no policy, and the Criminal Investigations and Employee Classification Division employs sworn law enforcement officers. Collection of assessed penalties runs through the Office of the Attorney General.
The scale is visible in the Commission's own reporting. In its annual report for fiscal year 2024-25 the Commission initially assessed $5,519,337 in non-insured penalties, modified that to $4,403,916 once alternate penalties were calculated, brought 519 non-insured employers into compliance, and processed 471 misdemeanor charges for failure to maintain coverage. Anyone can check a business through the Commission's insurance coverage search, and general contractors do.
What to Do When Someone Gets Hurt
The order matters, and the first step is medical rather than administrative. Form 17 tells the employer to provide all necessary medical services first, then report to the carrier and file the Form 19. In an accepted claim the employer or its carrier directs medical treatment, so the referral you make in the first hour tends to become the treating relationship.
The failure mode I see is not bad faith, it is memory. Nobody writes down who was told, on what date, or which clinic the supervisor called. FirstHR keeps the incident record, the acknowledgement and the employee file in one place, so the dates that decide a North Carolina claim are not living in someone's text messages.
What the Policy Pays
North Carolina pays two-thirds of the average weekly wage for total disability, capped by a maximum weekly compensation rate that the Commission recalculates every year and publishes effective January 1. The cap that applies to a claim for its whole life is the rate for the year the injury happened, not the current year.
| Benefit | Amount | Duration or limit |
|---|---|---|
| Maximum weekly compensation rate, injuries in 2026 | $1,446.00 per week | Fixed for the life of that claim |
| Maximum weekly compensation rate, injuries in 2025 | $1,380.00 per week | Fixed for the life of that claim |
| Temporary total disability | Two-thirds of the average weekly wage, up to the year’s maximum | Up to 500 weeks from the first date of disability, with extended compensation available under N.C. Gen. Stat. 97-29(c) |
| Waiting period | Nothing for the first seven days of lost time | Those seven days become payable if the disability continues beyond 21 days |
| Medical compensation | Reasonable medical, surgical, hospital, nursing and rehabilitative services, medicines and sick travel | Ends two years after the employer’s last payment of medical or indemnity compensation unless the employee applies for more on a Form 18M (N.C. Gen. Stat. 97-25.1) |
| Travel reimbursement | IRS standard mileage rate for the period of travel | Payable when authorized treatment requires 20 miles or more round trip |
| Death benefits | Two-thirds of the average weekly wage, up to the year’s maximum | 500 weeks from the date of death, then for life or until remarriage for a spouse unable to work because of a disability at the date of death, and to age 18 for a dependent child (N.C. Gen. Stat. 97-38) |
| Burial expenses | Up to $10,000 of actual funeral and burial cost | Paid to whoever paid the expenses |
| Late payment of compensation | 10 percent added to the unpaid installment | Applies to any installment not paid within 14 days after it becomes due, unless the Commission excuses the delay (N.C. Gen. Stat. 97-18(g)) |
Those numbers are what the premium is buying, and premium itself moves with payroll and class codes rather than headcount, which is why the year-end reconciliation can change the bill. If that process is new to you, our guide to the workers compensation audit explains what the carrier is checking. Payroll totals feed it, and North Carolina pay rules sit in our North Carolina minimum wage page.
Frequently Asked Questions
How many employees before North Carolina requires workers compensation?
Three. The Industrial Commission states that businesses employing three or more employees on a regular basis are covered by the Act and must insure or qualify as self-insured. One employee is enough where the work involves the use or presence of radiation. Domestic service sits outside the definition of employment, and agriculture does too unless 10 or more full-time nonseasonal agricultural workers are regularly employed.
Do corporate officers count toward the three?
Yes. Every executive officer elected or appointed under a corporation's charter and bylaws is an employee of that corporation, and the Commission uses two officers plus one employee as its worked example of a business that must carry coverage. An officer can be excluded from the policy, but the exclusion does not lower the count.
Are sole proprietors, partners and LLC members covered?
Not automatically. They are not counted as employees and are not covered unless they elect to be included, are actively engaged in the operation of the business, and the insurer is notified of the election. On election they get employee benefits and take on employee responsibilities under the Act.
Does North Carolina have a state workers compensation fund?
No. Coverage comes from private carriers in the open market, from the assigned risk market through the North Carolina Rate Bureau, from a self-insured fund run for members of an association, or from individual self-insurance licensed by the Commissioner of Insurance. Occupational accident insurance is not a lawful substitute for any of them.
What are the penalties for not carrying coverage?
One dollar per employee per day, with a floor of $20 and a ceiling of $100 per day, until the violation stops. Willful failure is a Class H felony and neglect is a Class 1 misdemeanor, and both apply personally to anyone with the ability and authority to bring the business into compliance. A first-time violator may qualify for the alternate penalty.
How fast does a work injury have to be reported?
The employee gives written notice immediately or as soon as practicable, and no later than 30 days. The employer files Form 19 through its carrier within five days after knowledge of the accident whenever the employee misses more than one day or medical charges exceed $4,000, and hands the employee a copy plus a blank Form 18.
What has to be posted at a North Carolina workplace?
Form 17, the Workers' Compensation Notice to Injured Workers and Employers, in a conspicuous place, showing the insurer name, the policy number and the dates of coverage. Amend it within five working days of a change in coverage, and remove any notice claiming coverage within five working days of a lapse.
Injury paperwork is one piece of a bigger state picture that includes E-Verify, new hire reporting and the written wage notice. When you are done here, the rest sits in the North Carolina compliance hub.