Workers Compensation is an insurance policy provided by North Carolina General Statutes. Because these are benefits created by statute, the statute provides specific formulas to calculate the amounts due to an injured worker when he or she suffers any permanent injury or when in injured worker is entitled to weekly benefits when not able to work due to a compensable injury. All of these benefits are calculated by using the Average Weekly Wage of the injured worker. In many cases this may seem like an inaccurate method of determining what an injured worker should be paid. For example, a 25 year old worker who is injured making $15.00 per hour will be paid the same amount for the same injury as a 61 year old worker. Obviously the 25 year old worker has many more years for which he cannot earn as much money due to an injury, but the statute does not always account for this.
In any event, there must be a formula to calculate the amount due to an injured worker. The first element of this equation is the Average Weekly Wage of that worker. Chapter 97-2(5) provides several methods of determining this Average Weekly Wage (AWW). The typical method for calculating the AWW is to total the wages earned during the previous 52 weeks of employment and divide that amount by 52. There are provisions for adjusting this calculation if the injured worker missed seven or more consecutive days during that previous 52 weeks. Also, if the employment prior tot he injury was for less than 52 weeks, the calculation can average the weekly pay for the period less than 52 weeks, providing doing so would be fair to both the injured employee and the employer. In certain circumstances, it is appropriate to use the AWW of a comparable employee.
When an injured worker with a compensable injury is excused from work by his or her treating physician, he or she may be entitled to weekly benefits, typically referred to as Temporary Total Disability benefits (TTD). TTD is defined by the statute as 2/3 of the injured worker’s AWW. This calculation can involve multiplying the AWW by as much as 500 weeks. This is one reason why the proper calculation is so critical. Similarly, if an injured worker returns to work, but because of compensable injuries that worker cannot earn as much as he or she earned pre-injury, then that injured worker may be entitled to Temporary Partial Disability (TPD) for the weeks he or she is not able to earn the pre-injury wage, up to 500 weeks.
Additionally, when an injured worker is assigned a Permanent Partial Disability rating by a treating physician, the calculation of the value of that rating is determined by starting with the AWW. This calculation can involve multiplying the AWW by up to 300 weeks. This is another reason that the calculation of the AWW is so critical.
An injured worker is entitled to payroll records which indicate all wages earned during the 52 weeks prior to injury, and sometimes back even further. There is even an Industrial Commission (the Industrial Commission is the court system in North Carolina for hearing Workers’ Compensation claims) Form 22 which should be completed by the Employer to assist in determining the correct AWW. However, there can be mistakes on these forms and all calculations should be checked. It is best to compare the earnings reported by the employer with tax returns and paycheck stubs. As you can see, even a $1.00 difference in the AWW can means hundreds of dollars less than an injured worker should be receiving. A $10.00 difference can mean thousands of dollars.