Audit: North Carolina Industrial Commission Ineffective

The North Carolina Industrial Commission was the target of scathing criticism in a report following an investigation launched by the state auditor’s office recently. workerandtheexcavator.jpg

Our North Carolina workers’ compensation attorneys understand that the crux of the problem is the commission’s ineffectiveness to make sure businesses obey laws that require them to carry insurance to cover potential workplace injuries. The commission is the entity responsible for deciding how and if tens of thousands of workers each year will be compensated following an on-the-job accident.

The agency’s reported failure, according to the audit, essentially leaves workers without any guarantee of payment for the work they have lost, as well as the immense burden of paying hefty medical bills. Most of the time, the auditor indicated, the workers employed by these uninsured firms don’t learn that they aren’t covered by workers’ compensation until after he or she suffers an injury and needs to file a claim.

As it now stands, the commission’s current practices don’t identify or track non-compliant businesses on any sort of routine basis. Businesses who violate the law in this regard are only pinpointed after someone is hurt or killed.

The report went on to say that from June 2011 through June 2012, in excess of 11,000 North Carolina businesses either cancelled their workers’ compensation insurance plans or allowed them to lapse. In all, some 30,000 companies that should carry the insurance per state law actually don’t.

That same year, there were approximately 65,000 workers’ compensation claims filed in the state and funneled through the commission. It’s unclear exactly how many of those claims involve employees whose employers don’t actually have coverage.

The law mandates that any company with three or more workers has to have insurance for those workers in case someone gets injured on the job. There are exceptions, however, including domestic servants, federal government employees, farm laborers and some railroad workers.

But businesses skirting the law have little incentive to change. Until last year, the fines and penalties levied against these firms were paltry, and most of the time not collected anyway.

In 2012, the agency started increasing the financial penalties for failure to comply and it did alter a few of its policies. So from 2011 to 2012, the collective amount of the fines for non-compliance went from about $80,000 to $6.5 million. Still, the audit reports only about 2 percent of those penalties have actually been collected.

The commission says the reason for this is that payment of the fines are often put on hold until the company pays the worker what it owes in medical bills and lost wages.

The agency isn’t entirely dodging responsibility, which is encouraging. Administrators say they are working to implement new policies that will allow them to spot non-compliant businesses sooner so they may issue warnings. There is also a question on the table of whether the commission should hire an outside firm to act as a bill collector for those companies that don’t pay the fines in a timely manner.

Recent legislation should help. Workers’ compensation insurance information now has to be shared with the North Carolina Labor Department, as well as the commission. Additionally, new bills have been introduced that would effectively make employers’ insurance policies public information. Another measure proposes firing all the current commission members and instead making them governor-appointed posts.

If you have been injured at work in North Carolina, contact the Lee Law Offices at 800-887-1965.

Additional Resources:
Report: NC fails to track, punish uninsured firms, Feb. 19, 2013, By Emery P. Dalesio, Bloomberg Busin week

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