To comply with North Carolina Workers Compensation Law, employers have several questions when trying to determine worker status. The most common is “if I am an employer and file “1099’s” on a lot of people who work for me, what does that mean for worker’s compensation?” Just because you “1099” for IRS purposes does not mean that those people would be considered independent contractors under the NC Workers’ Compensation Act. If you as the employer exercise “right to control” over those individuals by governing the manner and method in the way in which they do their job, then they may be considered employees under the NC Workers’ Compensation Act.
Insurance carriers not only are trying to make the determination status at the time of loss in order to consider Workers’ Compensation benefits to be paid, they are also questioning the relationship between policy holder and worker at the time of payroll audit. In order to make the determination as to whether an Employer/Employee status exists, consider the following questions:
1) How did the worker obtain the job: application, bid, employment agency, other?
2) Type of pay the worker receives: salary, commission, hourly wage, piecework, lump sum?
3) What specific training or instruction is the worker given by the policyholders?
4) How does the worker receive work assignments? Who determines how and when the assignments are performed?
5) Is the worker required to provide the services personally?
6) If substitutes are helpers are needed, who hires them? Who pays them?
7) What expenses are incurred by the worker in the performance of the services for the policyholder?
8) Does the worker already carry insurance (e.g., general liability, workers comp)?
9) What benefits are available to the worker (e.g., paid vacations, sick pay, pensions, bonuses)?
10) Can either party without liability or penalty terminate the relationship?
11) Does the worker perform similar services for others?
12) What type of advertising, if any, does the worker do (e.g., business listing in directory, business cards, etc)?
The General Assembly of NC Session 2013 H.B.988 is trying to establish a reserve fund for the benefit of North Carolina workers injured on the job eligible for Workers’ Compensation benefits but denied them through misclassification of employment status or failure of the employers to maintain such coverage when required. Not only are employers facing the potential for large additional premium audits by their insurance carrier at the end of their policy terms, the NC General Statute declares employers not in compliance with the Act may be subject to penalties between $50 to $100 for each day of non-compliance.
For an in-depth analysis of your Workers’ Compensation Insurance program, please contact Dawn Howey, AAI, CBIA, CIC at Breeden Insurance Services Inc. at email DawnHowey@BreedenInsurance.com or call 336-236-7624.