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Carolina Workers’ Compensation: No Excuse for State Permitting “Ghost Policies”

The state is doing a poor job of tracking whether your employer has workers’ compensation insurance, designed to compensate you if you are injured on the job. While North Carolina work-safety inspectors fan out across the state each day in search of violations, they are not asking for proof that an employer has workers’ compensation insurance as required by law.

A review by the News & Observer found 300 businesses inspected last year, where coverage appeared to be expired at the time of inspection. All that’s required is a simple crosscheck of information held by the state Department of Labor. This North Carolina agency is in charge of workplace safety, and the state Industrial Commission, which oversees workers’ compensation claims.It’s just that no one in state government is checking.

Our Asheville workers’ compensation lawyers know it’s far from the only criticism of the state-run system. NBC News reports that 26 states (including North and South Carolina) administer their own system under federal oversight. Such programs have been blamed in the past for cozying up to employers, conducting lax inspections and not keeping victim’s properly informed.

A study by the Occupations Safety and Health Administration found that state-run systems in North and South Carolina were not collecting levied penalties. South Carolina was also accused of misclassifying violations. Federal inspectors have blamed OSHA for a lack of oversight of state systems. OSHA has promised to revamp the system.

The state systems in North and South Carolina also do a poor job of publishing violations. While federal violators are easily found in press releases on OSHA’s website by state, a visit to the North Carolina Industrial Commission’s website reveals the last press release was issued in June and details a fraud claim.

Dealing with the state-run bureaucracy in the wake of a serious accident at work should always be done with the help and guidance of an experienced attorney. However, an employer’s lack of workers’ compensation insurance is a particularly egregious gamble that forces injured workers to pay the price. The Charlotte Observer reports a typical scheme to get around the requirement to carry workers’ compensation insurance is classifying employees as independent contractors. An owner can then exclude himself, as allowed by law, and purchase a cheap “ghost policy” for an as-yet unhired employee.

For a small construction company with 5 employees, the resulting premium might be $850 a year, compared to $30,000 to purchase the proper coverage. However, in the event of an injury, an uncovered employee is left victimized and without proper coverage. While it’s unclear how many of the 140,000 polices sold to North Carolina businesses each year are these “ghost policies,” the North Carolina Rate Bureau is aware of at least 16,000.

Employers must purchase workers’ compensation policies to protect employees who are injured on the job. Those injured on the job are entitled to lost wages, short-term disability and medical expenses. Access to workers’ compensation is vital to making a proper recovery after being injured in the workplace. There is no more basic obligation of state watchdogs than to ensure that such coverage is in place.

If you’ve been injured on the job, contact Grimes Teich Anderson LLP. Call 1.800.533.6845. No Attorney Fees Until You’ve Been Paid.

Additional Resources:
Inept bureaucracy lets dishonest businesses win, By Mandy Locke and David Raynor, The News & Observer, Aug. 21, 2012.

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