Wage Benefits

Section 354 provides for the coordination or reduction of workers' compensation benefits to the extent the worker receives other benefits paid for by the employer. Thus if you receive, or are entitled to receive, sick and accident benefits, pension benefits, or other similar benefits, your workers' compensation rate will be reduced by the after-tax value of other benefits. For example, Social security benefits are paid 50 percent by the employer and 50 percent by the worker. Accordingly there is a 50 percent reduction for old age retirement social security benefits. On the other hand, social security disability benefits can be reduced if an individual receives workers' compensation. Accordingly there is no reduction in Michigan workers' compensation for social security disability benefits.

Yes. The law provides that the maximum rate of benefits is 90 percent of the state average weekly wage for the year prior to the injury. A worker cannot receive benefits higher than this amount regardless of how high his or her earnings might have been. For the ordinary injury there is no minimum benefit. However, a worker who suffers a specific loss is entitled to a minimum benefit equal to 25 percent of the state average weekly wage. The same applies to a worker who is totally and permanently disabled. In the case of death, the dependents of a deceased worker are entitled to a minimum benefit equal to 50 percent of the state average weekly wage. A listing of the state average weekly wage and the various percentages can be found on State Average Weekly Wage & Maximum Benefit Amounts from 1982-Present.

The provisions dealing with the Average Weekly Wage (AWW) are found in Section 371 of the Act. The basic method of calculation provides that the AWW is based on the highest 39 of the last 52 weeks of gross wages leading up to the date of injury. The Average Weekly Wage (AWW) is then determined by adding together those 39 weeks and dividing by 39. Generally you should receive 80% of the after-tax value of your AWW. In certain circumstances, the value of discontinued fringe benefits such as the cost of health insurance, employer contributions to a pension plan, and vacation and holiday pay may be included in determining the AWW.
If you worked for each of the 52 weeks before the injury but earned a different rate for each of those weeks, the highest 39 weeks would be identified. This is now your AWW, and it is set as of the date of injury. There are special instructions for situations where you work less than 39 weeks during the year prior to your injury. Calculating an AWW is possible even when you only work one day on a new job.

Generally not. Workers' compensation benefits are not subject to either state or federal income tax. Sometimes, however, when benefits have been delayed for a long period of time and an employer or insurance company pays a worker interest in addition to the workers' compensation benefits, those payments of interest may be subject to both state and federal income tax.

If a worker is employed by more than one employer at the time of injury, the earnings from both employers are added together to calculate the average weekly wage. The worker's benefits are based on the total wages from all employments covered by the Workers' Disability Compensation Act. If the job in which the worker was injured accounts for more than 80 percent of the worker's wages, that employer is responsible for all the benefits owing. If, however, that employer was responsible for less than 80 percent of the worker's wages, it pays the entire benefits but is reimbursed a proportional amount by the Second Injury Fund. Note that Section 358 also provides for a reduction in the amount of workers' compensation benefits when unemployment benefits are received from the Unemployment Insurance Agency.

If you are cleared to return to work from a medical professional, but still on medical restrictions that cause you to receive wages less than your AWW, you could receive “partial” benefits equal to 80 percent of the after-tax value of the difference between your new gross pay per week and your previous AWW. If however, you cannot return to your employer of injury, but do have the ability to do some type of work for wages (even if you are not actually working), the weekly wage loss benefit could be reduced to take into account your residual wage earning capacity.

Section 301 defines “wage earning capacity” as the wages the employee earns or is capable of earning at a job reasonably available to that employee, whether or not wages are actually earned. As an injured employee, you have a duty to seek work reasonably available to you and that are within your post-injury abilities, especially if your employer is unable to accommodate your restrictions.

Section 311 of the Act provides that no compensation is paid for an injury which does not last for at least one week (7 days). If the disability lasts beyond one week, the worker is entitled to benefits as of the eighth day after the injury. If a disability continues for two weeks or longer, then the worker is entitled to be paid compensation for the first week of disability from the date of disablement. Your first check is due and payable on the 14th day of disability. However, a benefit check is not considered late until 30 days after the due date. Benefits continue so long as the worker is disabled, which could be for the rest of his or her life. However, benefits can be reduced by up to 50% after age 65 at 5% per year up to age 75, or upon receipt of social security retirement benefits.

If you have met the “14-day rule,” and have been off work for two weeks or longer, then only workers’ compensation wage payments are to be paid from the last day of work.

The paid medical leave benefit may be paid if you did not meet the criteria for payment of the workers' compensation wages for the first 7 days due to the following:

1. You were not off work more than 7 consecutive days, or
   2. You returned to work before the 14th day off work, therefore the WC wages are only paid between the 8th and 13th days. You may choose to use any accrued paid medical leave time for that first week.

Additional information on Paid Medical Leave can be found at the Wage Hour Division.