Why Does Workers’ Comp Only Pay 2/3?

I get it. You were hurt at work but relieved when your employer told you, “Don’t worry, we’ve got workers’ compensation insurance and that’ll take care of you.” You may have been pretty surprised, then, to discover that your weekly lost wage benefits are a third less than what you normally make in a week. Is that really “taking care of you?”

Workers’ comp is a support system that provides cash (wage loss benefits) and medical care (medical benefits) for eligible sick or injured employees while they are recovering from their work-related injuries or occupational diseases. As a workers’ comp attorney, I work with clients all the time who need help navigating the workers’ comp system, the filing process, and the different types of benefits.

In this article, I will address some of the most common questions I hear. And yes, you guessed it, one of the top ones is, “Why does workers’ comp only pay 2/3?” Here’s the quick answer:

Lost wages are meant to be approximately equal to your take home pay before your work injury or illness.

But that’s not the end of the discussion. The workers’ compensation system is complicated, and many injured employees can feel overwhelmed and unsure about whether they are receiving the full benefits they may be entitled to.

How Are Lost Wages Calculated?

This cash benefit portion of workers’ comp benefits is called lost wages, lost time benefits, wage replacement benefits, temporary disability (TD), or temporary total disability (TTD), and the basic formula for it is:

Lost wages equals two thirds of your average weekly wages.

North Carolina and South Carolina each have specific formulas for calculating an employee’s average weekly wages (AWW) based on length, timing, and conditions of employment. A workers’ comp attorney can help you determine if the insurance company has chosen the correct formula for calculating your AWW.

North Carolina and South Carolina each set a maximum weekly compensation rate that the weekly wage replacement benefits of an injured worker cannot exceed, and this information will be listed on the state Workers’ Compensation Commission website.

Note: If you are able to return to work but are earning less than before your injury or illness, you may be eligible for another type of lost wages called temporary partial disability (TPD). These benefits equal two-thirds of the difference between your before-the-injury wages and your after-the-injury wages.

Learn More: Temporary Disability and Calculating Your Average Weekly Wage

Now, let’s tackle the specific question of “why does workers’ comp only pay 2/3?”

Why Are My Lost Wages Only 2/3 of My Normal Pay?

I mentioned this earlier, but let’s expand on it a bit.

Workers’ comp benefits are not taxed, and 2/3 of your average weekly wage is approximately what you would have been taking home, after taxes, before you were injured.

If, instead, you were provided the same average weekly wage as before you were hurt, you’d actually be taking home more pay after your injury because no taxes are being deducted.

What if the Insurance Company Calculated My Wages Wrong?

Because the main component of the lost wages formula above is how much you earned in an average week before you got hurt (your average weekly wage), I urge you to consult with an experienced workers’ compensation attorney to ensure that the insurance company chose the appropriate method to calculate this amount.

Warning sign icon.It is not uncommon for an insurance company to miscalculate the amount of your weekly checks. For example, I had a client who was receiving more than $200 less per week than he should have been receiving. After the client hired us, we identified the error and convinced the insurance company to correct the amount of the weekly checks and issue a lump-sum payment for the back-due underpayment.1

Remember, most insurance companies are for-profit, which means they make more by paying you less.

Is 2/3 of my normal pay enough?

Hopefully, 2/3 of your average weekly wage is enough to get you through this time when you are not able to work – especially since workers’ comp disability also generally pays for the medical care prescribed by your workers’ comp doctor.

When Do I Become Eligible for Lost Wage Compensation?

You become eligible for lost wages after having an illness or injury for seven days. These seven days don’t have to be consecutive, and if you miss any part of a day of work because of your disability, that generally counts towards the seven-day period.

Lost wage reimbursement starts seven days after the work accident occurs.

If your eligible illness or disability exceeds 21 days in North Carolina or 14 days in South Carolina, payment for those first seven days will be made in a later check.

How Long Will I Receive Lost Wage Benefits?

Generally, you will receive lost wage benefits until you are able to return to work. However, some states set a cap on this time. For example, in North Carolina and South Carolina, there is a maximum limit of 500 weeks for most injured workers to receive TTD lost wage replacement.

I urge you to remember that having a right to workers’ comp benefits does not necessarily mean that you will get these benefits. You may need to fight to receive them – and keep them coming.

What Other Benefits Do I Get Besides Lost Wages?

Wage replacements benefits are just one of the types of workers’ comp benefits that you may receive after getting hurt or sick on the job. The workers’ compensation system is designed to also provide medical care to injured or ill workers.

If your workers’ compensation claim is approved, benefits will usually include full coverage of medical expenses, such as:

  • medical devices
  • prescriptions
  • surgery
  • pain management
  • hospitalization
  • physical therapy
  • chiropractor visits
  • prosthetic devices

Workers’ comp may even reimburse you for your mileage to and from medical treatment and vocational rehabilitation (training so you can do new types of work).

We Have the Experience and Skill to Help You Seek Maximum Workers’ Comp Benefits

At the Law Offices of James Scott Farrin, we have workers’ comp attorneys who have worked for insurance companies in the past and have chosen to now use this inside knowledge to represent injured workers and help them with their workers’ compensation claims.

Best Law Firm US News 2023We are proud that our workers’ comp team includes six attorneys who were listed on the Best Lawyers 2023 “Best Lawyers” list for their work in the area of workers’ compensation.3 In fact, our whole firm was named to the 2023 U.S. News – Best Lawyers “Best Law Firm” list for workers’ compensation, our 8th year in a row!3

We put our clients first every step of the way. And because we work on a contingency fee basis, you won’t have to pay any attorney’s fee unless we recover for you.2

If you think you’re not getting all the benefits to which you may be entitled, we can help. For a free case evaluation, contact us online or give us a call today at 1-866-900-7078.

Text UsText Us

Frequently Asked Questions

Are Workers’ Compensation Benefits Taxable?

In most cases, workers’ compensation benefits are not taxable at the federal or state level in North Carolina and South Carolina.

However, an exception to this rule can occur if you are also receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits. In this case, if your workers’ comp benefit reduces, or offsets, your SSDI or SSI benefit, the amount of the reduction, or offset, is generally reported as a taxable benefit.

Yes, it’s confusing. But a workers’ comp or Social Security Disability attorney can help answer your tax questions.

Does Workers’ Comp Pay Weekly or Bi-Weekly?

Both the North Carolina Workers’ Compensation Act and the South Carolina Workers’ Compensation Act state that workers’ compensation benefits should be “paid in installments weekly except when the Commission determines that payment in installments should be made monthly or at some other period.”

What Happens if You Get Caught Working While on Workers’ Comp?

Your employer’s insurance company may stop your workers’ comp payments if you get caught working while you are still receiving these benefits. You are required by law to report any pay you receive while on workers’ comp, and if you do not do this, you jeopardize your rights to workers’ comp benefits and could even face charges of workers’ compensation fraud.

3For information regarding the standards for inclusion for awards listed, visit www.bestlawyers.com and www.usnews.com.

About the Author

Michael F. Roessler practices workers’ compensation law in North and South Carolina for the Law Offices of James Scott Farrin. Michael is among the less than 1% of attorneys licensed to practice in North Carolina who are North Carolina State Bar Board Certified Specialists in Workers’ Compensation law.a He has contributed several written pieces to legal publications, including the North Carolina Law Review, the Charlotte Law Review, and the Southwestern Law Review. He is a member of the North Carolina Advocates for Justice and the North Carolina Bar Association. In 2022, Michael was named to the “Best Lawyers”b list for Workers’ Compensation Law by Best Lawyers in America.

aFigures provided by the NC State Bar as of 2/21.

bFor more information regarding the standards for inclusion, please visit www.bestlawyers.com.