Calculate Your Workers’ Compensation Rate
If you have a filed workers’ compensation claim, it is critically important to determine your correct average weekly wage and workers’ compensation rate. The general rule for determining a workers’ compensation rate is to take your annual earnings for the full year prior to the work injury and to divide those annual earnings by the 52 weeks in that year and then multiply that number by 66 and two-thirds percent (.667). For example, if you had become injured on November 18, 2014, you take your prior year of earnings (November 18, 2013 through November 17, 2014) and divide that number by 52 and then multiply that number by 66 and two-thirds percent (.667). [Math using annual income of $35,000 ÷ 52 = $673.08 × .667 = $448.75] See N.C. Gen. Stat. § 97-2(5). Each year, the N.C. Industrial Commission sets a maximum workers’ compensation rate, and the maximum that applies to your claim will depend on the year you were injured or diagnosed with an occupational disease. See North Carolina Industrial Commission website.
However, there are many important additions and exceptions to this general rule that employees are unaware of. Due to the confusion surrounding workers’ compensation rates, we have developed the following myth busters:
Myth #1: My overtime does not factor into my workers’ compensation rate. False.
Your overtime must be included in your workers’ compensation rate. The inclusion of overtime wages can make a huge difference in your out-of-work earnings or eventual permanent partial disability rating.
Myth #2: Only my paycheck earnings are factored into my workers’ compensation rate. False.
The following are benefits that North Carolina courts have determined, in some cases, should be considered as “wages” for the purposes of determining your workers’ compensation rate:
1. Room & Board
2. Per diem pay
3. Company car
7. Tax-deferred contributions to company retirement accounts
NOTE: Employer’s contributions to an employee’s retirement account have generally been excluded by courts.
Myth #3: I always have to divide my annual earnings by the 52 weeks in the year prior to my injury. False.
Besides the first and general method detailed above, there are four other methods used by the court to calculate your correct average weekly wage. These methods are considered in sequential order (1,2,3,4,5) by the court.
Second, if you missed more than 7 consecutive calendar days during your prior year of earnings, those weeks may be deducted from your calculation and not counted towards determining your workers’ compensation rate. Third, if your employment prior to the injury is less than 1 year (52 weeks), then you can divide by the number of weeks that you worked, provided that outcome is considered “fair and just”.
Fourth, if you only worked for a very short period of time before your injury or your employment was casual in nature, you can ask the court to use the earnings of another person in “the same grade and character employed in the same class of employment in the same locality or community” as you. Fifth, if none of the other methods would be considered “fair,” the court or Industrial Commission can use a different proposed method which would most nearly approximate the amount the injured employee would be earning were it not for the injury. This fifth method can be applied in many situations where using the other methods would result in unfair results. Please see N.C. Gen.Stat. 97-2(5) for more information, or contact an attorney that specializes in workers’ compensation.
Myth #4: I cannot remember what I earned during the 52 weeks before my injury. I have to just guess my earnings, right? False.
If you request what’s called a Form 22, your employer is required to fill out your prior 52 weeks of earnings, including overtime and all other per diem, bonus, etcetera benefits. Your employer/carrier must sign the Form 22 asserting that the numbers included on the form are a “true and correct statement of days worked and earnings of this employee.” If your employer makes a false statement for the purposes of denying workers’ compensation benefits, it may result in civil and/or criminal penalties!
Myth #5: I am a volunteer firefighter injured during that line of work. Is my correct WC rate $0.00? False.
Volunteer firefighters, by statute, are given a special exception to the general rule. At a minimum, they are provided with 2/3rds of the maximum weekly benefit amount found on the North Carolina Industrial Commission website. The maximum benefit for an injury occurring in 2014 is $904.00, so two-thirds of that wage totals $602.66.
In summary, calculating your workers’ compensation rate must be done on a case-by-case basis using the specifics of your wages and your unique employment history. In some cases, determining a fair rate can be complex, confusing, and can sometimes require litigation. If you have questions about your correct rate, please contact an attorney or firm that specializes in workers’ compensation.