The national Workers' Compensation guide explains the system and the standard policy. This guide covers Michigan's version under the Workers' Disability Compensation Act of 1969 (MCL 418.101 and following) and the Insurance Code's WC rules. Michigan isn't a monopolistic state. Employers buy from authorized insurers or self-insure.

Who must be covered (MCL 418.115–418.119)

• Private employers that regularly employ 3 or more employees at one time. Agricultural employers have separate rules.
• Smaller private employers if at least one employee has worked 35 or more hours a week for 13 weeks or longer in the past 52 weeks.
• All public employers, regardless of size.
• Not covered:
  • Household domestic workers employed less than 35 hours a week for 13 weeks.
  • Commission salespeople who earn at least 75% of pay from sales and have a written agreement saying they're not employees for tax purposes.
• Contractors: a principal is liable for compensation to employees of an uninsured contractor working on its job (171).

Securing compensation (418.611, 418.621)

• An employer must either be authorized by the state to self-insure or buy a policy from an insurer authorized to write WC in Michigan.
• Employers in the same industry with combined assets of $1,000,000 or more may form a self-insurers group.
• The policy must cover all of the employer's businesses and employees.
• Failing to insure is a misdemeanor: up to $1,000, up to 6 months in jail, or both. Each day is a separate offense. The injured employee may also sue the employer in court (641).
• Defenses abolished: an employer can't use the employee's ordinary negligence, a co-worker's negligence or assumption of risk (141).

Exclusive remedy (418.131)

WC is the employee's exclusive remedy against the employer. The only exception is an intentional tort. Intent exists when the employer knew an injury was certain and willfully disregarded that.

What's compensable

• Personal injury arising out of and in the course of employment (301).
• Mental disabilities must arise from actual events of employment, not unfounded perceptions.
• Injuries in an activity whose major purpose is social or recreational aren't covered.
• Ordinary diseases of life the public is generally exposed to outside work aren't compensable (401).

Benefits

Notice and claims (418.381, 418.441)

• Notice to the employer: within 90 days of the injury, or of when the employee knew or should have known about it. Late notice is excused unless the employer shows prejudice.
• Claim: to the employer or the agency within 2 years of the injury.
• Back benefits: no payment for any period more than 2 years before the hearing application.
• For occupational disease, the time runs from when the employee knew or should have known it was work-related.

Policy and market rules

• Notice of coverage: the insurer notifies the state within 30 days after a policy takes effect. No notice is needed for a renewal (625).
• Placement facility: WC insurers must participate in a facility for employers who can't get coverage normally (MCL 500.2301). An agent must offer to place an applicant there on request (2322).
• Unfair practices (MCL 500.2016, 2008):
  • A deposit may not exceed 25% of projected annual premium or $2,500, whichever is greater.
  • An insurer may not require the employer to buy other insurance.
  • The final audit must be completed within 120 days of termination.
  • Audit refunds are due within 60 days of the audit, or they bear 12% interest.
  • On written request citing a payroll change of 20% or more, an audit must be done within 120 days.
• The P&C guaranty association's per-claim cap doesn't apply to WC claims (MCL 500.7925).

Common exam traps

• Coverage applies at 3+ employees, or fewer if one works 35+ hours for 13 weeks. Public employers are always covered.
• Benefits: 80% of after-tax wages. The cap is 90% of the state average weekly wage.
• Waiting period: 7 days, paid back after 2 weeks. Medical has no waiting period.
• Notice: 90 days. Claim: 2 years.
• The intentional tort is the only exception to exclusive remedy.
• Funeral: $6,000. Death benefits: 500 weeks.