Minimum wage increase a step in the right direction but is it enough?
Michigan’s minimum wage increase took effect on September 1, 2014. It is now set at $8.15 up from $7.40. The rate will continue increasing by 25% each year until 2018 when it reaches $9.25. Future increases will be linked to the rate of inflation in other Midwestern states.
This comes on the heels of a national movement to increase the federal minimum wage to $10.10. Fast food workers across the United States have been fighting for a $15.00 per hour wage.
We are strong advocates for paying a living wage and support these changes. However, increasing the minimum wage will have an impact on workers compensation benefits.
State Average Weekly Wage
Disabled employees are supposed to receive 80% of their after-tax average weekly wage. This amount is capped at 90% of the state-wide average weekly wage, currently $805.00 per week.
The idea is to limit wage loss benefits to what most employees in Michigan are actually being paid. This means high wage earners are stuck with an arbitrary maximum regardless of their income.
Increasing the minimum wage will result in a higher state-wide average weekly wage. This means potentially greater workers comp benefits even if a person’s salary does not change.
Paying a living wage
Insurance companies can also use a higher minimum wage against injured workers. Recent changes to Michigan’s workers compensation law allow a reduction for a person’s “wage earning capacity.”
A higher minimum wage could result in a greater offset for wage earning capacity. The insurance company will use these imaginary wages to reduce workers compensation benefits. An employee may be told that her or she can work in a position never considered before. A job listed as available might not really exist or already be filled.
Protections must be put in place to stop this type of insurance company abuse. We advocate for a minimum workers compensation rate. No employee should receive less than 50% of his or her average weekly wage.
Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (855) 221-2667 for a free consultation today.
Why your “wage earning capacity” matters under Michigan workers compensation
Photo courtesy of Creative Commons, by uhuru1701.