“The Ghost Workers,” our three-day report that starts Sunday, is about businesses that cheat by classifying everyday employees as contractors.

That enables a business to avoid paying unemployment taxes and workers’ comp insurance. The cheating business then has an advantage over its law-abiding competitors. That also can leave workers uncovered if they are injured on the job.

Businesses can cheat by buying bare-bones insurance coverage, sometimes called a “ghost policy.”

A business owner, often in the construction industry, tells his insurance agent that he has no employees. He excludes himself from the policy, which is his right as a sole proprietor. He buys a policy to cover a “ghost,” an unknown employee who might unexpectedly join him to work during the year.

These policies can make a business look like it has more insurance coverage for its workers than it has.

A worker covered by a ghost policy is a kind of ghost worker – maybe not a Dead Man Walking but surely a Vulnerable Man Walking. One workplace accident could send a ghost worker to the hospital and leave him out of work. These cases get fought out in court for years, leaving the worker without a way to support himself.

Digging deeper

There are a lot of these vulnerable men (and women) in our state. In North Carolina, businesses with three or more employees are required to buy workers’ comp insurance or certify with the state that they can cover the costs of employees’ injuries.

But as The News & Observer’s Mandy Locke and David Raynor showed in April, at least 30,000 businesses in the state should have workers’ comp insurance, as required by law, but don’t have it.

After that report, we heard from workers, lawyers and business owners about deeper problems involving laborers and businesses, especially in the construction industry. We dug deeper.

Lack of sharing

Last year, the state legislature rewrote portions of the workers’ compensation law. Lawmakers trimmed amounts and length of payments due to workers to help drive down the cost of workers’ compensation insurance.

The changes did not address employers who don’t buy insurance.

House Speaker Pro Tem Dale Folwell, a Winston-Salem Republican who pushed the bill, said he was startled by the apparent number of uninsured employers. “This highlights that there’s a lot of work to do,” Folwell told Locke earlier this year. “Our challenge is to make the cheating less rewarding.”

Several state agencies have a piece of this problem. Locke found that many of the uninsured employers were on the radar of another state agency.

The state could start working toward a solution if the agencies shared more information with each other, as other states do.

But that seems unlikely. To date, the people who run some key state agencies have shown little ambition to join forces to make sure cheating businesses are caught and workers are protected.

It’s almost as if the workers didn’t exist. As if they were ghosts.

Drescher: 919-829-4515 or jdrescher@newsobserver.com. On Twitter @john_drescher