Who Is Required to Carry Workers' Compensation Insurance in North Carolina and South Carolina?

Many business owners assume workers’ compensation insurance is only required for large companies. In reality, even small businesses in the Carolinas may be legally required to carry workers’ compensation coverage once they hire a few employees.

Understanding these requirements is critical because failing to carry workers’ compensation when required can result in significant fines, penalties, and potential liability for workplace injuries.

Below is a simple breakdown of who must carry workers’ compensation insurance in North Carolina and South Carolina.

Workers’ Compensation Requirements in North Carolina

In North Carolina, most employers are required to carry workers’ compensation insurance if they employ three or more employees.

This rule applies to most types of businesses, including:

• Corporations

• Limited liability companies (LLCs)

• Partnerships

• Sole proprietorships with employees

The requirement includes:

• Full-time employees

• Part-time employees

• Seasonal employees

Corporate officers may count toward the employee total, although they may be able to exclude themselves from coverage depending on the business structure.

Common Exceptions in North Carolina

Certain employers may be exempt from the workers’ compensation requirement, including:

• Agricultural operations with fewer than 10 employees

• Certain domestic employees

• Railroad employees

• Casual employees who are not part of the regular business operations

However, once a business reaches the three-employee threshold, workers’ compensation coverage must be obtained or the business must qualify as a self-insured employer.

Workers’ Compensation Requirements in South Carolina

South Carolina has a slightly different threshold.

Most employers must carry workers’ compensation insurance if they have four or more employees.

This includes:

• Full-time employees

• Part-time employees

• Family members working for the business

• Seasonal employees

The South Carolina Workers’ Compensation Act provides benefits such as medical treatment and wage replacement for employees injured on the job.

Common Exceptions in South Carolina

Some businesses may be exempt from mandatory workers’ compensation coverage, including:

• Agricultural employees

• Casual workers

• Federal employees

• Railroad employees

• Certain real estate agents working under brokers

Even when coverage is not required, many businesses still choose to carry workers’ compensation insurance to protect themselves from potential liability.

Contractors and Subcontractors: A Common Area of Confusion

Independent contractors and subcontractors often create confusion when it comes to workers’ compensation requirements.

Even if a subcontractor has no employees, a general contractor may still require them to carry workers’ compensation insurance. This protects the general contractor from potential liability if the subcontractor is injured on the job.

Insurance companies also frequently review whether someone classified as a 1099 subcontractor is actually functioning as an employee, which can impact workers’ compensation requirements and premiums.

Why Workers’ Compensation Insurance Matters

Workers’ compensation insurance protects both employees and employers.

Coverage typically pays for:

• Medical treatment related to workplace injuries

• Lost wages during recovery

• Disability benefits

• Death benefits for families in severe cases

In exchange for these benefits, employees typically give up the right to sue their employer for workplace injuries.

Quick Summary

North Carolina

Workers’ compensation is required when a business has 3 or more employees.

South Carolina

Workers’ compensation is required when a business has 4 or more employees.

Because employee classifications and subcontractor relationships can impact these rules, many business owners benefit from reviewing their situation with an insurance professional.

Need Help With Workers’ Compensation Insurance?

If you own a business in North Carolina or South Carolina, it’s important to ensure you are compliant with workers’ compensation laws and properly protected from workplace injury claims.

Crosswinds Insurance Agency works with businesses across the Carolinas to structure workers’ compensation policies that meet state requirements and protect your company.

Learn more at:

www.crosswindsinsurance.com

About the Author

Renado Robinson is the President, CEO & Founder of Crosswinds Insurance Agency, an independent insurance brokerage based in Fort Mill, South Carolina. With more than two decades of experience in the insurance industry, Renado began his career with St. Paul Insurance and later Travelers, where he worked his way from mail clerk to underwriter. Today, his agency helps individuals, families, and businesses understand risk and make informed insurance decisions.

Crosswinds Insurance Agency provides personal insurance, commercial insurance, life insurance, and specialty coverages for clients across the Carolinas and beyond.