Workers’ compensation (colloquially called “workers’ comp” or “workmans’ comp”) can provide compensation to employees who are injured “on the job” without the necessity of assigning responsibility for the accident. Workers’ compensation is in effect a private insurance contract paid for by the employer with the employee as the beneficiary. While wages and overtime are the purview of federal law, workers’ compensation is a matter governed by state statute. Most employers are required to purchase workers’ compensation insurance, subject to several exemptions, pursuant to the North Carolina Workers’ Compensation Act (“WCA”).^[i]   (Click here to access a brief powerpoint presentation on workers’ compensation)

In North Carolina, employers with three or more employees are required to provide workers compensation insurance to their employees.^[ii] The WCA defines “employee” as “every person engaged in an employment under any appointment or contract of hire or apprenticeship, express or implied, oral or written, including aliens, and also minors, whether lawfully or unlawfully employed, but excluding persons whose employment is both casual and not in the course of the trade, business, profession, or occupation of his employer.”^[iii]  However, agricultural employers are not required to provide workers compensation insurance to their employees unless they employ ten (10) or more regular full-time non-seasonal employees.^[iv]  Note that the farm exemption does not apply to processing entities connected to the farm operation.

Like the Fair Labor Standards Act’s distinction between farm work and work incident to farming in regard to minimum wage and overtime pay, workers’ compensation law likewise distinguishes between that work which is exempt as farming and that which – though supportive of farming – is not exempt. Farm product processing businesses are not considered farming operations who enjoy the exemption, and operators of such facility – though a farmer on the farm – must provide workers’ compensation if the supporting business employs three or more full or part time employees. The distinction is not always clear. The North Carolina Court of Appeals has provided such guidance thus: “Whether an employee is a farm laborer depends, in a large degree, upon the nearness of his occupation to the planting, cultivation, and harvesting of crops… In determining whether an employee is a farm laborer, emphasis is placed on the nature of the employee’s work rather than the nature of the employer’s business.”^[v]  Though not specifically tied to the FSLA dichotomy explored above and its supporting regulatory guidance, the principle of whether work is agricultural production or supporting of production is similar.

A workers compensation policy pays compensation for the employee injuries, and then serves as a bar to legal negligence claims against the employer.^[vi]  Any workplace injury is compensable only if (1) it is caused by an “accident,” and (2) the accident arises out of and in the course of employment.^[vii]  The term “in the course of employment” itself is subject to a number of rules and case law interpretations and includes factors concerning the time, place and circumstances of the accidental injury.^[viii]  Federal law requires that employers hiring H-2A immigrant labor provide workers comp coverage, as well as any other employee working on a farm that hires H-2A labor.^[ix]

Arguably, a farm employer who chooses to forgo providing workers’ comp faces serious financial risk in that an injured employee, with no money to support medical recovery from their injury or compensation for lost work, may have little recourse than turn to their employer for compensation on a liability theory (i.e. that the employer’s negligence played a causal role in their injury). Agricultural and other agribusiness employers should consider the business cost of premiums against the dangerous nature of certain labor tasks in a typical farm operation.^[x]

^Endnotes

^[i] N.C.G.S §97-1 et seq.

^[ii] Id §97-2(1)

^[iii] Id §97-2(2)

^[iv] Id §97-2(1). The exemption also applies to sawmills and logging operations with less than 10 employees “who saws and logs less than 60 days in any six consecutive months and whose principal business is unrelated to sawmilling or logging.”

^[v] Hinson v. Creech, 286 N.C. 156, 158, 209 S.E.2d 471, 473 (1974)

^[vi] N.C.G.S. § 97-10.1. For a schedule of compensation paid based on injury, see N.C.G.S. §97-31.

^[vii] See Pitillo v. N.C. Dep’t. of Envtl. Health & Nat. Res., 151 N.C. App. 641, 645, 566 S.E.2d 807, 811 (2002).

^[viii] Roman v. Southland Transp. Co., 350 N.C. 549, 552, 515 S.E.2d 214, 216 (1999)

^[ix] 8 U.S. Code § 1188(b)(3)

^[x] The Bureau of Labor Statistics keeps data on injuries, illnesses, and fatalities. See agriculture’s most dangerous jobs by reported incident.