10% Penalties in Workers’ Compensation for Willful Conduct – But I thought Workers’ Compensation was No-Fault?

Ordinarily, Workers’ Compensation is not about fault or bad conduct, however, NCGS § 97-12 proscribes a 10% increase or decrease in compensation paid by the employer depending on whether the employee or employer acts badly.  There are two ways an employer can be penalized 10%: 

1. Willful failure of the employer to comply with any statutory requirement; and
2. Willful failure of the employer to comply with any lawful order of the Commission. 

A common example of a willful breach of a statutory requirement is a violation of an OSHA regulation.  If an employer violates OSHA and it results in death or injury to an employee, the employer may be subject to paying an 10% increase of the employee’s benefits to the employee because of the violation. 

Just as an employer can be subject to paying more, the employee can be subject to getting paid less. There are three ways an employee can be subjected to a 10% decrease in benefits: 

1. Willful failure of the employee to use a safety appliance;
2. Willful failure of the employee to perform a statutory duty;
3. Willful breach by the employee of any rule or regulation adopted by the employer and approved by the Commission and brought to the knowledge of the employee prior to the injury compensation. 

It is important to note that for a 10% increase or decrease in benefits to occur, the breach or failure must be the cause of the injury or death.  For instance, if an employee fails to use a safety appliance while working and is injured but would have been injured even had he used the safety appliance then the employee would not be subject to a 10% decrease in benefits.