Get a quick overview of workers' compensation insurance coverage and claims for a Michigan business owner.
Most Michigan businesses with employees are required to pay for workers' compensation insurance (WC or workers' comp insurance). The insurance provides compensation to employees who suffer work-related injuries. Here are some basic facts that you need to know about workers' comp insurance in Michigan as a business owner and employer.
Generally speaking, if your Michigan business has even one employee, you're required to carry workers' compensation insurance. More specifically, the following types of employers must carry workers' compensation coverage:
In addition, some business owners, such as sole proprietors, partners in partnerships, and corporate officers of small, closely-held corporations are not required to be covered by workers' compensation insurance.
The Michigan Workers' Compensation Agency (WCC) is the primary state agency that handles workers' comp claims. Most of the law for WC insurance is contained in Michigan's Workers' Worker's Disability Compensation Act (Chapter 418 of the Michigan Consolidated Laws). In addition to the Act, there are also administrative rules that cover workers' compensation in Michigan.
In Michigan, workers' compensation insurance is available through private insurance companies. There is also an option to self-insure, but this may not be advisable for smaller businesses, in part because it requires that a lot of money be set aside to cover potential claims.
Unless there is a dispute, employee injury claims often are handled between your business, your insurance company, and the employee, and the WCA is not involved. However, if an injury results in an employee disability of seven or more days, a so-called specific loss, or a death, you must report the injury to the WCA using Form WC-100, Employer's Basic Report of Injury. Injuries that require medical treatment but don't result in at least seven days of disability do not need to be reported.
If and when you begin paying benefits to an injured employee, you also must file Form WC-701, Notice of Compensation Payments. Beyond these initial steps, there are subsequent steps to the WC claims process, not covered here.
If you or your insurer thinks your employee's workers' comp claim isn't valid, and benefits are denied, the employee can file an Application for Hearing. You should receive a copy of the Application and then, within 30 days, you must file a written response. If you now choose to accept the claim, you or your insurer will file Form 100, Employer's Basic Report of Injury. However, if you continue to dispute the claim, you or your insurer will file Form 107, Notice of Dispute and Form WC-251, Carrier's Response.
After these various forms are filed, the next step usually is informal mediation conducted by a WCA representative. After that, if the matter remains unresolved, it moves to a hearing before a magistrate. Beyond that, there is an option to appeal to the Michigan Compensation Appellate Commission and the Michigan Court of Appeals.
If you don't carry workers' compensation insurance, an injured employee can sue you for damages in civil court. In addition, the WCA can prohibit your business from having any employees until you have WC insurance. Furthermore, you may be subject to a fine of $1,000, imprisonment for a period ranging from 30 days to six months, or both, with each day that you go without workers' comp insurance considered a separate offense. Many of the penalty rules are contained in Section 418-461 of Michigan's Workers' Disability Compensation Act.
There are many other workers' compensation rules for Michigan employers, such as putting up posters about workers' compensation coverage. The Nolo website has a section devoted to workers' compensation. In addition, the Michigan Workers' Compensation Agency website also contains many useful resources including useful FAQ pages.