We're a Nonprofit in NC: Do We Need Workers Comp?

A North Carolina nonprofit needs workers compensation once it has three or more employees regularly employed, counted the same way as any business. Volunteer officers and directors who serve without pay are not employees for benefits, but once the nonprofit has even one paid worker, those volunteers count toward the three-employee test.

Who this is for: North Carolina nonprofit boards and directors sorting out whether paid staff and volunteers create a coverage duty.

The short version

Paid staff trigger the rule. Three or more regularly employed workers make coverage mandatory (G.S. 97-2).
Unpaid volunteer officers are not employees. Officers, directors, and committee members who serve for no pay beyond expenses are not employees for benefits.
But they can count toward three. Once the nonprofit pays even one person, unpaid volunteer officers are counted toward the three-employee threshold.
Some volunteers stay covered. Volunteer firefighters, rescue-squad members, auxiliary police, and similar are not swept into the unpaid-officer exclusion.
Buying a policy opts you in. An otherwise exempt nonprofit that buys coverage is treated as accepting the Act for its workers.

How the counting rule works

This is the part boards miss. A nonprofit with two paid employees might think it is under the three-employee line. But if it also has unpaid volunteer officers or directors, those volunteers are added to the count once there is at least one paid worker, which can push the organization to three and into the mandate. The volunteers do not receive benefits from this; they count only for the headcount test.

People	Employees for benefits?	Count toward three?
Paid staff	Yes	Yes
Unpaid volunteer officers or directors	No	Yes, once there is one paid worker
Pure volunteers with no office	No	No
Volunteer firefighters, rescue squad, auxiliary police	Covered	Covered

What this means for a small nonprofit

If your nonprofit has one or two paid staff and a working board, add the unpaid officers to your count before you assume you are exempt. Cross the line to three and you must carry coverage, even though the volunteers themselves are not paid. When in doubt, it is safer to price a policy than to guess, because an injured paid worker at an uninsured nonprofit can bring the same penalties any employer faces.

A Charlotte example

Illustrative, not a quote. A Charlotte community nonprofit employs two paid part-time staff and has a volunteer board of five unpaid directors. Because there is at least one paid worker, the unpaid directors are counted toward the three-employee test, so the nonprofit is over the line and must carry workers comp for its paid staff. The directors get no benefits from being counted; they simply push the headcount past three. See our nonprofit workers comp page.

Real questions North Carolina owners ask

Does my North Carolina nonprofit need workers comp?

Once it has three or more employees regularly employed, yes, counted like any business. Paid staff count, and unpaid volunteer officers can be added to the count once there is one paid worker.

Do unpaid board members count toward the three?

They can. Volunteer officers and directors are not employees for benefits, but once the nonprofit pays even one person, they are counted toward the three-employee test.

Do our volunteers count as employees?

Generally no. Officers, directors, and committee members who serve for no pay beyond expense reimbursement are not employees for benefits.

Do any volunteers stay covered?

Yes. Volunteer firefighters, rescue-squad members, auxiliary police, and similar are not swept into the unpaid-officer exclusion and remain covered.

What if we buy a policy while exempt?

Buying coverage is treated as accepting the Act for your workers for the life of the policy, so they are covered even if you were not required to carry it.

Why do boards get this wrong?

They count only paid staff and forget that unpaid officers are added once there is a paid worker, which can push a small nonprofit past three and into the mandate.

Why North Carolina owners choose Morrow

We shop the right market for you. In North Carolina you buy workers comp on the open market from any private insurer licensed in the state, because North Carolina has no state fund, and if no carrier will take you the North Carolina Rate Bureau runs a guaranteed fallback plan, so we can shop your rate freely and still have a backstop for hard-to-place work.
We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.

Related North Carolina guides

Every North Carolina business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.

This guide is general information, not legal advice. North Carolina rules and penalty amounts can change, so verify current requirements with North Carolina Industrial Commission or a licensed advisor before you rely on them. Last updated: July 2026.