What’s Happening to North Carolina’s Workers’ Compensation Act? (Part I)

In this four-part series we will take note of specific changes to the Workers’ Compensation  Act in North Carolina since 2010, when the Democrats lost control of the Legislature. The Act was created in 1929. Its purpose was to take care of the human wreckage caused by workplace injuries and to make the employer pay for these injuries as a cost of doing business. In exchange for this new no-fault system, the employee gave up the right to sue the employer in civil court and the right to a jury trial; damages for pain and suffering were not allowed; and the employee got limited but supposedly quick payment of disability benefits. The employer paid for 100 percent of medical care, but was given the right to select the medical providers.

 

In 2012 Republican Pat McCrory, the former mayor of Charlotte and a Duke Power employee for many years, was elected governor.  The Democrats had been in control of the state for decades and prior to 2010 Democratic governors had appointed all the  current Commissioners (7) to the Industrial Commission, and  most Deputy Commissioners (20)  were hired by the Democratically appointed Chair of the Commission.  North Carolina has always been a business-friendly state, and before 2010 it was consistently ranked in the top five as one of the best places to do business. It’s a “right to work” state and although some unions are present, the state has always been considered anti-union.

 

From time to time pro-business Democratic legislators would attempt to overhaul the Workers’ Compensation Act. Major legislative changes were made in 1994, for example, and various amendments have been made since then, nearly always initiated by the business community. In 2008 when the national economy crashed, North Carolina’s went with it and what was left of the old manufacturing base of tobacco, furniture and textiles took a nose dive. Unemployment soared to 11.4% by 2010. Fewer employed workers meant fewer claims, less losses and relatively low premiums for workers’ compensation insurance. Wages are relatively low in this state, and you only get two-thirds of your average weekly wage. Additionally, there is a cap on the amount of weekly  disability benefits that can be recovered. For instance, in 2010 the maximum benefit was $834 per week or $43,368 per year (if you had a job paying $86,000.00 per year, plus other benefits,  that’s nearly a 50% drop in income as a result of the workplace injury). If you had a low paying job ($7.20 an hour for 40 hours), your disability rate would be $193.34 per week.  Once the compensation rate is set it never goes up, no matter how many years you may be disabled.

 

With this background in place as the new legislature came in, it immediately began to make changes to the system. Two of the changes were good for injured employees : (1) death benefits went from 400 weeks to 500 weeks, along with an increase in allowed funeral expenses from $3,500 to $10,000.00, and (2) wage loss claims (where an employee goes back to work but at a reduced rate of pay) went from 300 weeks to 500 weeks.

 

The next blog (Part II) will show other significant changes to the system.  Stay tuned.