How to calculate wage loss benefits when the insurance company says you can find work somewhere else.
Our biggest complaint about legislative reforms passed in 2011 involve the controversial decision to allow insurance companies a credit based upon “wage earning capacity.” It does not matter whether the injured employee is actually working or can even find a new job.
These “phantom wages” are then used to offset workers’ comp benefits. It’s a horrible change that is causing real financial hardship for Michigan families. Here is an example of how the math works.
Rick S. is a machine operator who suffers a back injury when lifting a 100 pound metal part at work. He normally earns $14.00 per hour and has an average weekly wage of $560.00. His employer does not offer light duty and refuses to accommodate his 10 pound lifting restriction. He is married with 1 child and the sole wage earner.
Rick S. is supposed to receive 80% of his after-tax average weekly wage. This amount equals $368.10 per week. Not exactly a windfall for a person who cannot do his job because of a serious workplace injury. He cannot sue for pain and suffering because workers’ comp is the exclusive remedy.
The insurance company refuses to pay full weekly benefits because their vocational expert says he can work as a cashier at McDonalds making $8.15 per hour, minimum wage. Rick S. is only given 80% of the difference between his after-tax average weekly wage ($460.13) and his hypothetical wage-earning capacity ($326.00). This equals just $107.30 per week. Rick S. must support his family on just 19.2% of total wages.
Meanwhile, the pure premium rate has decreased 32.7% in 4 years. This has saved hundreds of millions for employers. Where do you think these savings are coming from? Ask Rick S.
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.
Photos courtesy of Creative Commons, by uhuru1701.