Michigan Workers' Compensation Law

A Great Article...

How States Differ - Entrepreneur.com - MSNBC.com:
"http://msnbc.msn.com/id/9339501/"

Above is a link to a great article from Edward J. Priz of Entrepreneur.com regarding the need for workers compensation insurance.

What is a fringe benefit?

A fringe benefit is something other than an hourly wage that benefits the employee or enhances the employment relationship.  A fringe benefit refers, obviously, to compensation or benefit other than wages.

Sometimes its easier to describe something by what it is not.  The courts have determined that clearly it is not overtime, premium pay, or cost of living adjustment.  Also it is not employer contributions to union funds, the employer's social security and unemployment compensation contributions, and the employer's workers' compensation insurance premiums.  Although these items may benefit the employee and enhance the employment relationship, they are statutorily mandated and every employer must provide these items and therefore they are not a fringe benefits.

The Michigan courts have determined that fringes include all items of compensation or advantage agreed upon in a contract of hiring which are measurable in money, whether in the form of cash or as an economic gain to the employee.  Hite v. Evart Prod.s Co. 34 Mich. App. 247 (1971).  Furthermore, a fringe benefit "represents a loss to the employee that the employee has to either replace independently or not receive at all." Ember v. Wayne Village, 197 Mich App 307, 311 (1992).

Traditionally, an employer's contribution to health insurance, group insurance benefits, dental benefits, and an employer's contribution to a pension plain are all common fringe benefits. Also, use of a company truck and an employee's receipt of a monthly housing allowance are items that have been determined to be fringe benefits.  Lastly, rent on the company house plaintiff lived in, his phone bill and free beef, could be bargained for as fringe benefits within the meaning of MCL 418.371(2).

Statutory Employment

"Statutory Employment" is found in Section 171 of the Workers Disability Compensation Act.

"Statutory Employment" unfortunately occurs all too frequently with employers who do not carry workers compensation insurance. It is a criminal misdemeanor to operate without the insurance.

An example is illustrative: Assume contractor A is without workers compensation insurance for its employees. Assume also that Contractor A enters into a contract with Principal B to perform some service. Assume also that Employee C is hired by Contractor A and performs some work for Principal B, and is hurt on Principal B's job-site. Because Contractor A is uninsured for workers compensation purposes, Principal B becomes the "statutory employer" of Employee C, and Employee C can make a workers compensation claim against Principal B.

In Peck/Auto Club Ins. Asso, vs. Elliott's Amusements, LLC, 2005 ACO #140the Workers Compensation Appellate Commission addressed the differences between a statutory employer and a direct employer.

Peck was hired by Elliott's to build and operate an amusement park game. When the carnival season ended in Michigan, Elliott's permitted its manager to use the carnival equipment for a three week carnival in Florida. The manager asked Peck to come to Florida and erect and operate the equipment. Peck was involved in a serious accident en-route to Florida, sustaining injuries. Was Peck an employee of Elliot's at the time of the accident? Or was Peck an employee of the manager for the independent venture in the State of Florida? Elliott's had workers compensation insurance while the manager did not, so it was to Peck's benefit to assert that he was an employee of Elliott's.

Peck won. The Workers Compensation Appellate Commission determined that Peck was a direct employee of Elliott's at the time of the automobile accident. It also commented that even if Peck was not a direct employee, then Elliott's was a statutory employer because its manager had hired Peck and the manager was uninsured. The Commission determined that Elliott's and its manager were in a joint venture together. Whenever there is a joint venture, each entity involved in the joint venture has liability and therefore must be insured.