Misclassification Prevents Thousands From Receiving Workers’ Compensation Coverage

July 30th, 2015

Most businesses in North Carolina are required to carry insurance to cover costs related to employee injuries. Unfortunately, many companies skirt these requirements by “misclassifying” their employees as independent contractors—who are exempt from North Carolina workers’ compensation coverage—rather than as company employees.

An article from The Charlotte Observer noted a study conducted by several media outlets that found thousands of employees were not covered by North Carolina workers’ compensation. The practice also resulted in the state missing out on an estimated $467 million in taxes.

So, what’s being done to put a stop to misclassification in North Carolina?

Legislators passed laws aimed to prevent misclassification, but the penalties aren’t strong enough to deter the behavior. Companies are only punished for misclassifying workers after a first offense. Even then, the penalty is only $1,000 in fines per misclassified worker. There are no criminal penalties against misclassifying workers.

Failing to provide North Carolina workers’ compensation coverage to qualified workers puts employees at risk. That’s why our North Carolina personal injury attorneys at HensonFuerst are hopeful lawmakers will consider stiffer penalties for companies caught misclassifying workers.