Does Workers’ Compensation in NC Apply to Contractors and Subcontractors?

Workers’ compensation insurance in NC protects workers who are injured or fall ill in work-related incidents. Employers are required to purchase this policy, which pays for the medical costs of injured employees and reimburses their lost wages.

Can Contractors or Subcontractors Benefit from Workers’ Compensation?

Independent contractors, subcontractors, or freelancers can benefit from workers’ comp insurance purchased by companies that hire them. The policy pays for their medical costs and lost wages as a result of work-related illnesses or injuries. By paying for these expenses, the policy also helps protect hiring companies or employers from financial loss.

Laws in NC on Worker’s Compensation

Under North Carolina’s general statute § 97-19, an employer-employee relationship must exist for an injured worker to qualify for workers’ compensation benefits.

Here is what the state’s workers’ comp law requires of you if you’re a general contractor or intermediate subcontractor:

  • You should ensure that any lower-tier contractor you hire has proper coverage. This can be done by obtaining a certificate of insurance. If you hire a subcontractor without workers’ comp, you’re responsible for obtaining coverage for their employees. You would be liable for their workplace injury benefits, too.

  • If you’re a general contractor with less than three employees, you’re not required to cover your staff with workers’ comp. However, you are still liable for workplace injury benefits for your subcontractor’s employees.

General Interpretations of Workers’ Compensation Laws in NC

  • Residential property maintenance

    Generally, an apartment owner should maintain and repair the units they rent out to tenants. However, this doesn’t make them a general contractor. When they hire people or firms to do the repair work, they essentially create a subcontractor relationship. If the repairers are injured at work, the apartment complex may be liable for the resulting workers’ comp claims.

  • Trucking

    There’s a contractual relationship between intrastate/interstate owners/operators and the motor carriers leasing their trucks. In NC, the truck driver/owner should carry a workers’ comp policy. If they don’t, the motor carrier bears this legal responsibility.

  • Gasoline producers, distributors, and dealers/store owners

    Take the example of an oil producer who contracts a distributor to sell gasoline. If this distributor offers the product through dealers or convenience store owners, this might establish a subcontractor relationship. What if an employee of one of the dealers without workers’ comp insurance is injured at work? The distributor might be responsible for the workplace injury claim.

  • Domestic services

    Under workers’ compensation rules in NC, hiring a domestic servant doesn’t make you liable for their compensation. However, if you hire someone for professional work outside the realm of “domestic services’, for example, if you enlist a certified nurse for in-home care services, you may be liable for their workers’ comp benefits.

  • The borrowed servant doctrine

    Sometimes, you can be employed by two different employers at the same time. You become a “borrowed servant” once you start working for a party other than your actual employer. If you’re injured while working for this second employer, the borrowed servant doctrine may come into play regarding your workers’ comp benefits. Both employers may be liable to pay for your work-related injury claim.

Contact us at Pittman Insurance Group today to learn more about workers’ compensation insurance for contractors in NC. We’ll help you find the right coverage to protect your business and employees.

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