Taking the mystery out of Michigan's workers' compensation insurance requirements

Workers’ compensation insurance protects employers and employees

Simply put, workers’ compensation is used to protect employees from costly medical bills should they become injured on the job. But having the proper coverage in place also protects employers from potential lawsuits should an employee be injured on the job.

Now that we know how workers’ compensation can benefit both employees and employers in Michigan, let’s shift our focus to which businesses in the state need to have this coverage.

Which employers in Michigan are required to have workers’ compensation insurance?

The Workers’ Disability Compensation Act or WDCA requires that any Michigan employer meeting the following criteria have workers’ compensation insurance.

• All private employers employing one or more employees for 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks
• All private employers that currently employ at least 3 employees at one time, including any part-time employees.
• Any agricultural employer that employs 3 or more employees that work at least 35 hours per week for 13 consecutive weeks
• Households that employ a domestic worker if they work 35 hours per week or more for 13 weeks or longer during the preceding 52 weeks.
• All public employers

It’s important to note that in Michigan, a partner in a partnership is considered an employee, and an LLC member who is also a manager is considered an employee under Michigan regulations and would have to be covered by workers’ compensation insurance. Similarly, a corporate officer is considered an employee of the corporation.

There are some circumstances where partnerships, LLCs, and corporations may be excluded from coverage requirements.

Are there any exceptions?

There are limited exceptions under Michigan law including:

• Employers that have not employed at least 1 person for at least 13 weeks
• Agricultural employers that employ less than 3 people
• Households that do not employ domestic workers more than 35 per week
• Sole proprietors
• Family members employed by a sole proprietor
• Partnerships if all employees are partners
• Stock corporations if all employees are corporate officers and own at least 10% stock in the corporation
• LLCs if all employees are members and also managers and own at least 10% of the LLC

Any business that believes they are excluded from Michigan’s workers compensation requirements are required to file WC-337 – Notice of Exclusion, which is provided by the Insurance Compliance Division.

Now that we better understand that most employers need to have a policy, let’s take a closer look at the benefits employees have access to should an on-the-job illness or injury occur.

What does workers’ compensation insurance cover in Michigan?

Michigan workers’ compensation insurance offers the following benefits to employees:

Medical benefits

Injured employees are eligible for all reasonable and necessary medical care, including medical, surgical, and hospital services, dental services, crutches, hearing apparatus, chiropractic treatment, and nursing care when deemed necessary.

Wage loss benefits for temporary or permanent disability

There are no wage loss benefits available for any injury an employee suffers that does not last at least one week. If the injury extends beyond the first week, the employee is entitled to receive wage loss benefits starting on the eighth day after the initial injury or work-related illness. All benefits continue until the worker is able to return to work. Benefits will also continue permanently if the disability is considered permanent.

Vocational rehabilitation

Vocational rehabilitation is available to employees that are unable to return to the same job they did before their accident or injury. Vocational rehabilitation may include continuing education and new job training, and job assistance, depending on the program pursued.

Death benefits

If an Michigan employee dies as the result of an on-the-job accident, family members such as a spouse, children, grandchildren, parents, grandparents, or siblings may be eligible for death benefits, which include funeral expenses up to $6,000 along with a weekly benefit that is adjusted depending on beneficiary eligibility.

For Michigan employers who are unsure how to obtain a policy, let’s look at the most common ways businesses obtain insurance coverage.

How can employers purchase workers’ compensation insurance?

Michigan employers can purchase workers’ compensation insurance through a licensed and approved insurance carrier that offers workers’ comp policies. Businesses that are unable to secure the proper insurance coverage through the private sector can apply to receive coverage through Michigan’s assigned risk pool, which is administered by the Compensation Advisory Organization of Michigan. Employers that wish to be self-insured can secure coverage through a self-insured group program, with a list of self-insurance programs available to download. Employers also have the option to apply directly to the Workers’ Disability Compensation Agency to become an individual self-insurer.

What are the penalties for not complying with Michigan workers’ compensation requirements?

Employers without workers’ compensation insurance might face less-than-favorable outcomes, such as:

• Being responsible for all medical expenses incurred by an injured employee
• Being subject to a lawsuit on behalf of the injured or ill worker
• The inability to hire or employ any persons in their business until the proper insurance is in place
• A fine of up to $1,000 or imprisonment of at least 30 days up to six months for failure to have the required workers’ compensation coverage

What does an employer need to do when an employee is injured?

Any employee injured on the job is required to notify their employer immediately. Depending on the injury, an employee may be seen immediately at the closest emergency room. If the injury does not require emergency care, treatment should be completed by a company-designated physician.

Employees have up to two years from the date of injury to file a workers’ compensation claim, but are required to file notice of injury with their employer within 90 of occurrence.

Once an employer is notified of any injury or workplace related illness, they will need to file Form WC-100 – Employer’s Basic Report of Injury. If for some reason an employer does not file a workers’ compensation claim for their employee, the employee can complete Form WC-117 – Employee’s Report of Claim.

Additional resources for Michigan employers

• Michigan Department of Labor & Economic Opportunity
• Michigan employer insurance requirements
• Michigan workers’ comp FAQs
• An overview of Michigan workers’ compensation benefits