N.C. Workers Compensation = 30,000 Uninsured Employers

Monday, April 23, 2012 | 0

Uninsured employers have plagued the workers' comp system for many years. Was anyone actually shocked there are 30,000 employers (with more than two employees) that have no policy to cover their workers if injured on the job? I was shocked when this number hit the workers' comp blogosphere.

A very intelligent newspaper reporter for the Raleigh News and Observer compared the number of employers with three or more employees and compared the number to number of companies covered under a workers' compensation policy. The result was a shocking 30,000 companies.

North Carolina should not feel alone. The same type of investigation was performed in New York finding that one of three companies in the state did not have a workers' comp policy in place in case their employees sustained an on the job injury. These uninsured companies basically shortchanged the WC system out of $1 billion.

The North Carolina Rate Bureau (NCRB) is the workers' comp rating organization for any companies that operate in North Carolina. The NCRB reports to the North Carolina Industrial Commission (NCIC) when any company's policy is non-renewed. There was nothing being done after the uninsured companies were reported to the NCIC.

Gov. Beverly Perdue wanted to get to the bottom of how 30,000 employers were not paying for workers' compensation coverage. The Industrial Commission's response was they would review their internal policies on handling uninsured employers. This means nothing will probably be accomplished without a push from the Legislature.

West Virginia's Workers' Compensation Commission has provided some great examples of how to make companies come into compliance. West Virginia sent out personnel state-wide placing warning signs on all businesses informing the public of their non-compliance.

The North Carolina Department of Motor vehicles should be the best example for the NCIC to follow. If a resident of North Carolina lets their automobile policy lapse one day, the NCDMV sends out a $50 fine letter. I actually received one for having one day of non-coverage when switching carriers a few years ago.

North Carolina has no uninsured employer fund that would function as a safety net when there is no policy to cover an injured employee's benefits. This would likely be a great time to consider starting a fund of this type.

I am sure this story will resurface again due to the startling numbers that were discovered by the reporter. Hopefully, there will be a more positive report the next time.

James J. Moore is owner of J&L Risk Management Consultants in Raleigh, N.C. This column was reprinted with his permission from his Cut Comp Costs blog.