Reminder about minimum wage increase on January 1, 2018 and how this could impact workers’ comp benefits in Michigan.
Michigan employees will see an increase in the minimum wage from $8.90 to $9.25 per hour on January 1, 2018. We are strong advocates for a living wage and applaud this change. Increasing the minimum wage will have both a positive and negative impact on workers’ comp. Here is why you should care.
Disabled employees are supposed to receive 80% of their after-tax average weekly wage under workers’ comp. However, weekly checks are capped at 90% of the state-wide average weekly wage. The idea is to limit wage loss benefits to what most people in Michigan earn. High wage earners get stuck with an arbitrary maximum regardless of their income. For example, a factory worker and the CEO are both stuck with a maximum of $870.00 per week in 2017. Increasing the minimum wage will result in a higher state-wide average weekly wage. This means potentially greater wage loss benefits even if income levels remain the same. This is a positive.
Insurance companies can also use a higher minimum wage against disabled employees. Workers’ comp reforms passed in 2011 permit insurance companies to use “wage earning capacity” to reduce or eliminate the payment of benefits. Phantom wages from jobs that may or may not exist are used to offset the 80% weekly rate. It does not matter whether actual wages are paid. This is a negative!
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 (844) 201-9497 for a free consultation today.
Photo courtesy of Creative Commons, by m01229.