Ayers, Whitlow & Dressler

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North Carolina looks to end employer workers' compensation fraud

You've been hurt on the job. You can't go to work but the bills keep coming. You've heard that your employer owes you workers' compensation benefits, but they refuse to pay and even refuse your attempts to communicate with them. Or they may even tell you that you are not their "employee."

Unfortunately, this practice is not uncommon. In North Carolina, estimates show that the practice of misclassification, in which employers label their workers as "independent contractors" rather than as employees to avoid payment of workers' compensation premiums, costs the state $467 million in lost tax revenue each year, just for the construction industry.

The North Carolina Industrial Commission has taken note of these and other practices designed to defraud employees and the government. In addition to putting teeth into laws that already exist, the Commission is recommending additional measures to protect employees, state tax revenue and even those companies that do try to comply with the laws. These measures include:

  • Stop-work orders for employers that attempt to operate without the required workers' compensation coverage;
  • Increased penalties for companies that refuse to comply, including contempt of court orders and arrest warrants; and
  • Making sure that companies that purchase "ghost policies," which allow them to purchase the least expensive coverage to comply with the law, understand that these policies may not be sufficient to cover employees injuries

Some employers purposefully make these decisions to defy the law. Others may mistakenly interpret the regulations and make an error in judgment. The new rules take the latter into account by encouraging employer education on workers’ compensation matters.

In an earlier blog post we discussed what happens when your employer won't pay your claim. If these new measures are passed, then employers will be less likely to try to skirt the law. But even then, some will likely continue their illegal practices.

If your employer has refused to pay your workers' compensation benefits, a consultation with a law firm experienced in these matters can be crucial to receiving what you are owed when the work you perform for your employer has resulted in illness or injury.

Source: Charlotte Observer, "NC Industrial Commission leaders identify laws that could curtail labor fraud," Mandy Locke, Oct. 24, 2014

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