Monday, December 14, 2015

Worker's Compensation Insurance Update

The General Assembly passed a law this past Session that affects workers' compensation insurance requirements for certain non-profits. Under workers' compensation law, the employer/employee relationship includes private employments in which three or more people are regularly employed in the same business or establishment. More importantly, some lawyers interpreted the old law as applying to “officers and directors employees" whether they were volunteers or paid officers. AMG recognized the negative impact that this law, if interpreted in that manner, could have on our clients as well as many other non-profits: it would requirecommon interest associations to carry and pay for insurance that was not necessary in all cases.
We worked with other industry leaders to advocate removing the possibility that association board members might be covered inthe requirements under the Workers’ Compensation Act. We were able to meet with affected organizations and State legislators to explain and garner support for a clarification amendment. These initiatives, and their subsequent success, are clear examples of the need for the LAC to maintain close and constant contact with legislators representing homeowners across North Carolina.
We are pleased to announce that HB 765, the Regulatory Reform Act of 2015, amended the Workers’ Compensation Act and provides that individuals who are elected or appointed to serve as an officer, director or committee member of such a non-profit corporation, who performs only voluntary service for the non-profit corporation without remuneration except reasonable reimbursement for expenses incurred in connection with the voluntary service, are not employees of the corporation and should not be part of the equation for determining whether workers' compensation insurance must be obtained. However, this bill also says that when such a non-profit corporation employs one or more persons who do receive remuneration, then the officers, directors or committee members are included as part of the number of employees, which triggers the requirement for workers' compensation insurance.
Since most community associations do nothave any employees, but almost all have at least three officers or directors, this new law means that most community associations are not required to obtain workers' compensation insurance. A homeowners association may still elect to obtain workers' compensation coverage for its officers, directors and committee members. A community association that contracts for any work should require all contractors and subcontractors to provide a certificate of insurance verifying that those contractors have workers' compensation insurance, as required by law. 

AMG thanks CAI-NC and it's legislative action committee for much of the above information.

Consult your insurance and legal advisor for information about how this new law may affect your community. 

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