Michigan Worker's Compensation Law

Michigan's Governor Snyder issues press release regarding changes to WC Law

Snyder signs bills to update workers' comp, unemployment insurance systems

Monday, Dec. 19, 2011 LANSING, Mich. - Gov. Rick Snyder today signed legislation strengthening the state's Unemployment Insurance program and updating workers' compensation laws. "These bills are critical to our reinvention of Michigan," Snyder said. "Modernizing our unemployment insurance and workers' compensation systems will ensure their solvency and integrity."   House Bill 5002, sponsored by state Rep. Brad Jacobsen, continues the state's mission to protect workers who are injured on the job, while ensuring that the workers' compensation system remains viable. H.B. 5002 is now P.A. 266 of 2011. The bill promotes certainty to workers and employers by codifying years of Supreme Court and Court of Appeals decisions. Under the bill, a person receiving workers' compensation benefits must take a job that is within his or her skill set, and that they can physically perform, if it is available to them. If not, the person risks losing the compensation benefits. "The system's goal must be to help injured workers get back on the job as soon as possible while making sure the benefits they deserve during recovery are paid fully and promptly," Snyder said. "These changes to this 100-year-old act will help ensure that the promise of compensation for injured employees is around for the next century." The legislation supports the Workers' Compensation Agency's goal of gaining efficiencies through electronic filing and results in a savings of over $400,000 through reorganization of the mediation system for contested workers' compensation issues. Benefits held up by contested cases will move more quickly. Legal costs also will be reduced as the bill allows settlements to be entered without an additional hearing before a magistrate. Issues such as fraudulent claims by employees or the failure of employers to secure coverage increase the cost of workers' compensation. H.B. 5002 requires the agency to report to the Legislature on measures taken to address such issues.

 

So Why Have Worker’s Compensation Insurance at all?

 

Depending on the industry, worker’s compensation insurance can be a significant expense.  So, why is it mandatory?  What if there was no worker’s compensation insurance at all?  There was at time, just over 100 years ago when this was true.  As you will discover, employers and employees are far better off with it, than without it.

Worker’s Compensation insurance is a product of the Industrial Revolution.  Before its existence, there were gross disparities between the amount that an injured worker recovered and the amount that employer’s had to pay for those injuries.  An example is instructive.

During the late 1800’s copper was heavily mined out of Michigan’s Upper Peninsula.  Workers and their families migrated from Europe to work the mines.  It was a dangerous work environment.  Explosions and cave-ins were common.   From 1905 through 1911, the mines in the United States killed an average of sixty-one men per year, or more than one per week.  At the end of this unfortunate run, one out of every ten men killed in the United States mining industry died on the Keweenaw Peninsula.[1]  Prior to the advent of worker’s compensation insurance in Michigan in 1912, an injured miner could sue his employer for injuries incurred on the job, but the employer could defend the case with the defenses of assumption of the risk, contributory negligence and the fellow servant rule. 

Pursuant to the assumption of the risk doctrine, the employer did not force the miner into the mine, and the miner understood the dangers associated with the work; therefore the miner could not sue the mine owner.

On the other hand, explosions and cave-ins left widows and children without fathers.  Savvy attorneys then entered the scene.  Coupled with sympathetic judges and juries, the widows and children began to see significant recoveries.  Recoveries so large, and unpredictable, employers were negatively affected.  Some miners, or the families that were left behind, would experience significant recoveries.  Others would get nothing.  It became exceedingly difficult for mine owners to budget and turn a profit.  The same disparities were experienced throughout all industries, especially those involving heavy manual labor or extremely dangerous activities. 

The answer, of course, was the advent of mandatory workmen’s compensation insurance.  (It was not until 1969 that the legislature changed the title from “workmen’s” to “worker’s”.)   Next year marks Michigan’s 100^th year anniversary of mandatory worker’s compensation insurance.  The law is really a tradeoff between the rights and duties of the employer and employee.  No longer can the employer defend on the basis that the injury was caused be the employee’s own negligence, or by a co-worker, or by an assumption of the risk.  In exchange thereof, the employee receives weekly wage loss benefits that equate his weekly take home pay.  Further, the employee is not entitled to pain and suffering damages.  All he can recover for his injury are wage loss, medical and vocational rehabilitation (re-training) benefits.  For amputations, employers are to pay a specific number of weeks for the limb that is lost.  The most that a fully dependent widow(er) may recover is 500 weeks of wage loss benefits. 

In 2010, 24,097 Michigan workers were injured on the job and experienced loss time of 7 days or more.  In the year 2000, that number was 54,207.  Last year, the average litigated case settled for $65,868.14.  Michigan is presently served by 17 Worker’s Compensation Magistrates.[2]  Clearly the employment environment is more predictable and reasonable with it than without it.

 

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[1] KEWEENAW NATIONAL HISTORICAL PARK, Historic Resource Study by Larry Lankton, Department of Social Sciences, Michigan Technological University, For the National Park Service, United States Department of the Interior, 2005

[2] 2010 ANNUAL REPORT, Michigan Workers Compensation Agency.

 

Governor reduces the number of Magistrates to 17

Effective January 26, 2010, the number of Magistrates will be reduced to 17.  The Workers Disability Compensation Act calls for a total number of Magistrates of 30.  However, that number was reduced to 26 by executive order of the Governor back in 2003.

The purpose of the order is that, "productivity and caseload justify a further reduction in the number of members of the Workers Compensation Board of Magistrates, which will contribute to a smaller and more efficient state government."

The announcement came via Executive Order promulgated on October 29, 2009.

It is assumed at this point that the Governor will attain this goal through attrition.

There was a rumor that a number of hearing sites were to be closed, but that nothing further has developed along those lines.

10 Steps to Take Control of Workers' Compensation Costs

#10. Promptly Investigate All Claims.

For employers time is your worst enemy. Once a case has been filed it can take up to 12 months before it is heard by a Magistrate. If an employee waits for two years and then files a claim, then the time period expands to 36 or more months. That is a long time to remember all of the facts surrounding an alleged injury at work. It is even harder to disprove its occurance after so much time. Further, witnesses may relocate and no longer be available.

A good report of injury is recommended. This is a form that is used by the injured employee to record the injury. It should be signed and dated by the employee and his or her supervisor. Like a police report it should record all of the relevant facts surrounding the incident. The report should be saved for future use. It should also be reviewed along with all other reports of injury from time to time in order to reveal any patterns of injuries. After review and analysis, proper steps can then be taken to address problem areas and consequently to acheive the goal of lowering workers' compensation costs.

The 100 Week Rule

The “100 week rule” comes from Section 301(5)(e) of the Workers Disability Compensation Act:

"If an employee, after having been employed pursuant to this subsection for less than 100 weeks loses he or her job for whatever reason, the employee shall receive compensation based upon his or her wage at the original date of injury."

What it means is that if employee who has sustained a work related injury and who has returned to “reasonable employment” stops working “for whatever reason”, then that employee is entitled to continued wage loss benefits.

So if someone is hurt at work and then comes back to restricted-reasonable work, and works in a restricted capacity less than 100 weeks (2 years), that person is entitled to wage loss benefits when they stop working. The employee needs to be under restrictions when they stop working. The employee is paid wage loss benefits based on the original date of injury. Further, the employee is entitiled to the accelerated, "60 day" status on his or her petition. "60 day" status only means that the petition gets higher priority than other petitions.

It has been successfully argued that in the event that an employee tests positive for drugs during that 100 weeks, that the employee will not obtain wage loss benefits because he or she had refused the offer of "reasonable employment". Testing positive for drugs has the same effect as a voluntary removal from employment.

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).

Changes to the Gaylord and Traverse City Dockets

February 15, 2005 

TO: All Interested Litigants 

FROM: Jack Nolish, Chief Magistrate

WCA Board of Magistrates 

RE: Gaylord and Traverse City Docket Changes

 

With the addition of Magistrates Thomas Moher and Timothy McAree to the WCA Board of Magistrates, I am making the following docket changes for the Gaylord and Traverse City magistrate dockets.

 

In addition to the counties already assigned to Gaylord, cases involving the following counties of injury will now be heard at the Gaylord hearing site location: Antrim, Kalkaska, Emmet, and Charlevoix. Claims currently pending at the Traverse City office with these counties of injury will be transferred to the Gaylord docket. Cindy Burns is coordinating the transfer of these files to the new docket. The Gaylord and Traverse City files will remain housed at our Traverse City office.

 

Magistrate McAree will be handling the Traverse City docket the one week each month occurring when Magistrate Moher is not handling a docket. Magistrate Moher will be handling the Gaylord and UP dockets. A different magistrate will be assigned to handle any case that might present a conflict preventing these magistrates from conducting the hearings. If you are aware of any such cases, please advise as soon as possible.

 

The following weeks are the Gaylord docket weeks: weeks of March 8th, March 29th, April 12th, April 19th, May 10th, May 24th, June 7th, and June 21st. Docket days of the week will continue to be Tuesdays, Wednesdays, and Thursdays.

 

The following weeks are the Traverse City docket weeks: weeks of March 1st, March 22nd, April 5th, May 3rd, May 31st, and July 5th. Docket days of the week will continue to be Tuesdays, Wednesdays, and Thursdays.

 

The UP docket weeks have not changed.

A Hurricane in Michigan?

Did you know that Michigan's worker's compensation act addresses the unlikely event of a hurricane in Michigan?

Section 151 defines agricultural employers. Anyone who hires a person on a farm performing the service of "clearing land of brush and other debris left by a hurricane..." is an agricultural employer. The agricultural employer is subject to the act if he or she hires 3 or more regular employees, not on a piecework basis, 35 or more hours per week for 13 weeks or longer.

I have lived in Michigan all of my life and have yet to encounter a hurricane! Oh sure things get pretty whipped up around here in the fall when Michigan plays Michigan State, but that is a force-of-nature of a different breed.

Michigan's workers' compensation act was first adopted by the Michigan Legislature in 1912. It probably was copied from an eastern seaboard state or from the Federal Employer's Liability Act of 1908. For more historical information see the workerscompinsider.com.

Who should have workers compensation insurance?

Sec. 151 of the Workers' Disability Compensation Act states that every,

". . . person, firm, limited liability company, limited liability partnership, and private corporation, including any public service corporation, who has any person in service under any contract of hire, express or implied, oral or written. . ." is subject to the act.

Sec. 115 defines an employer as,

"All private employers, ... who regularly employ 3 or more employees at 1 time, or . . . who regularly employ less than 3 employees if at least 1 of then has been regularly employed by that same employer for 35 or more hours per week for 13 weeks or longer during the preceding 52 weeks."

There are a few exceptions. Nevertheless Sec. 611 of the act requires that all employers obtain insurance or seek approval from the director to self insure. Therefore if you are an employer as that term is defined in Sec. 115 above, the statute requires workers compensation insurance coverage.