Wage Loss Benefits Under The Michigan Workers Compensation Act

The Workers Comp law in Michigan provides strict limits in the form of pre-determined amounts for specific injuries and ordinary injuries. These benefits can come in one of three different forms and they include medical benefits, rehab benefits, and of course wage loss benefits. Wage loss benefits are usually pretty straightforward but there are a few exceptions which include total and permanent disability. For a majority of employees hurt on the job, you will receive 80% of your normal wages. Unfortunately, this is calculated using the after-tax value and not the gross income amount. This means they deduct the taxes off your income and then pay out 4/5 of that value.  If you would like to learn more about specific workers comp laws in Michigan, check out The Clark Law Office's full website.

The Michigan workers compensation act uses a weekly wage to determine your income rather than your salary for the entire year. This can actually work in your favor because they base the weekly wage off of the highest 39 of the 52 weeks out of the year. This may not make a difference under a normal salary position, but if you have just received a raise, your weekly salary will most likely reflect this unless you suffered the injury close to when you got your raise. Another benefit is if you worked less than 39 weeks out of the year. The provision states that week’s where no work was done do not count against you. Suppose you earned a weekly wage of $500 for only 26 weeks out of the year. Your wage loss would be the $500 instead of $250 if they included every week out of the year in the calculation.

Some jobs come with great benefits termed fringe benefits, and the workers compensation act does address this issue. Some employers will continue to give out these benefits even though Michigan law does not require this. However, if the employer decides to cut off these fringe benefits there are some consequences. With the loss of fringe benefits, the employee sustains a larger loss in terms of real income. The value added figure of the benefits is now included in the weekly wage calculation, but there is a maximum limit to this value added figure. The act states that these fringe benefits can’t increase the weekly wage figure to more than 2/3 of the average weekly wage in the state.

A major disadvantage comes in the form of a maximum rate which benefits can be paid. No matter how high your salary or weekly wage may be, you are entitled to a maximum rate which is equal to 90% of that average weekly wage in the state for the year before your injury took place. As an example, if you were to make $100,000 a year or roughly $2000/week, you will not get 80% of that wage, but you would receive 90% of the state average weekly wage. Obviously, this hurts employees making above the average weekly wage. Workers compensation benefits should not be taxed on the state or federal level, but like always there is an exception. If your benefits are delayed and your employer covers interest than those interest payments could be taxed on both the state and federal level.