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| Michigan Auto Law

The real truth about “wage earning capacity” and phantom wages under Michigan’s work comp law


Many states, including Michigan where I practice law, are wage loss states. This means under the state’s workers comp system, you have to be disabled to recover wage loss. The theory behind this is that in a wage loss state, there’s a trade-off, where injured workers give up their right to sue in exchange for receiving lost wages and reimbursement of medical expenses.

Theory doesn’t always work well in real life. This seems especially true when it comes to workers compensation.

Today I wanted to share an extremely clever and pragmatic blog post from the office of a Workers Comp Lawyer. Our attorneys often work closely with this law firm when we help car accident victims who were hurt on the job, and have both an auto accident lawsuit and a workers comp case. Alex Berman is President of the Workers Compensation Trial Lawyers Association, and is in my opinion, one of the very best work comp lawyers around. The blog is written by Jeff Kaufman, who is extremely knowledgeable about workers comp.

In, “Who pays for a 28% reduction in premiums?”, Jeff discusses a recently published article from the Insurance Journal regarding dropping workers’ compensation costs in Michigan. It mentions the premium rate going down 28% in the last three years and how employers have saved $277 million.

The article goes on to say: “In a major change, workers’ comp benefit recipients are required to work if they’re offered a job within their skill set that they can physically perform. Workers may risk losing benefits if they refuse to take the job. And litigation over claim disputes is rare.”

Jeff explains that the Insurance Journal’s contention is not an accurate representation of the current workers’ compensation law in Michigan, as employers have always been able to stop payment of wage loss benefits if a person refuses a job within restrictions. In addition, amendments in 2011 permit employers to stop weekly checks if a person simply has a “wage earning capacity.” It no longer matters whether a real job has been offered.

Take a look at the full blog for more about understanding wage earning capacity, including real case examples and a flow chart.

One Comment

  1. Gravatar for Carroll Straus
    Carroll Straus

    The answer to this question is beyond obvious. Workers pay. I did workers comp when it was not as draconian as it is now--but then, everything is draconian now for the 98%.

    And it still sucked for injured workers.

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