Enforcing the Workers’ Compensation laws in North Carolina

The following is a guest blog post written by a colleague and good friend of mine, Kevin Bunn. Kevin is also an exceptional North Carolina workers’ compensation lawyer.

I read Harry Payne’s editorial in last week’s Raleigh News and Observer and was struck by the lack of progress on enforcing North Carolina’s mandatory workers’ compensation laws. With very few exceptions, any business that employs three or more employees in North Carolina must provide for workers’ compensation benefits. Typically businesses do this by buying workers’ comp insurance. Unfortunately a large number of employers cheat the system, either simply refusing to buy the insurance coverage or misclassifying actual employees as “independent contractors.” As a result we see frequently bad and occasionally horrific situations where injured workers go without the workers’ compensation benefits to which they are entitled. Meanwhile, the cheaters get a competitive advantage over the legitimate businesses that play by the rules.

As a workers’ compensation attorney, I know the problems with uninsured employers first hand. A few years ago I represented the widow of a truck driver who died in a fire when his truck ran off the road. The trucking company was uninsured, although the owners acknowledge that they knew they should have had coverage. The simply made a business decision to pay themselves rather than buying workers’ comp. After two hearings and much time they finally paid the claim from their own funds. It would have been much less expensive for them to have simply bought workers’ comp insurance in the first place.

Last year the News and Observer’s Mandy Locke ran an excellent series of articles exposing this employer fraud. There appeared to be a broad political consensus that something needed to be done. Insurance Commissioner Wayne Goodwin convened a bipartisan commission to look into the issue. And as Mr. Payne noted, they discovered that the problem is even worse than believed: “Employers who disobey the (workers’ compensation) law are also likely to cheat the government, their employees and their competitors by failing to pay unemployment insurance taxes, Social Security taxes, and income taxes.” The commission recommended that the legislature provide that the mischaracterization of independent contractors be vigorously pursued and severely punished. Unfortunately, very little has happened since.

It is past time to make some progress on this issue. In a state as technology-savvy as North Carolina it is beyond belief that we cannot meet the challenge of ensuring that businesses comply with the mandatory workers’ comp laws. After all, who do you think pays the cost of the medical treatment and disability for badly injured workers who work for uninsured employers?

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