Client Alert

As an employer, you already are aware that you must provide worker’s compensation coverage for your employees. But did you know that under North Carolina law, you may also have to provide worker’s compensation for vendors?

The following three scenarios describe how North Carolina’s worker’s compensation law applies to vendors and the companies that hire them:

Scenario 1:
If your company is the principal contractor on a project and you have subcontracted part of the contract to a vendor who is an independent contractor, the vendor’s employees are covered by your worker’s compensation policy if the vendor does not have worker’s compensation insurance. Under this scenario, even though the vendor is not required by North Carolina law to have worker’s compensation insurance (because the vendor has less than 3 employees), your company is still liable if the vendor does not have worker’s compensation insurance.

Scenario 2:
If a vendor is an agent or employee of your company, the vendor’s employees are covered by your worker’s compensation policy if the vendor does not have worker’s compensation insurance. Under this scenario, even though the vendor is not required by North Carolina law to have worker’s compensation insurance (because the vendor has less than 3 employees), your company is still liable if the vendor does not have worker’s compensation insurance.

Scenario 3:
If a vendor is an independent contractor and your company has not subcontracted to that vendor work which your company has undertaken to perform for another entity, the vendor’s employees are not covered by your worker’s compensation policy if the vendor does not have worker’s compensation insurance.

Womble Carlyle regularly represents policyholders in disputes related to insurance coverage. Feel free to contact us if you have any additional questions or if you would like to know more about worker’s compensation coverage for vendors.

This client alert is a publication of the Insurance Coverage Industry Team at Womble Carlyle Sandridge & Rice, PLLC. Readers are urged to consult with their regular contacts at the firm or Cal Adams, the principal author of this client alert.