After a serious workplace injury, you may be unable to return to the job you had before the accident. You might assume that if you’re not currently working, your workers’ compensation check should simply be based on the wages you lost.
Michigan workers’ compensation law is more complicated.
One important concept is “wage earning capacity.” Michigan law looks not only at what an injured employee is actually earning but, in some situations, at what the employee is capable of earning in reasonably available employment.
That distinction can have a major effect on weekly wage-loss benefits. An employer or insurance carrier may argue that although you can’t return to your old job, you retain the ability to earn money elsewhere, and that your workers’ compensation benefits should therefore be reduced.
What Does “Wage Earning Capacity” Mean in Michigan?
Michigan’s Workers’ Disability Compensation Act defines wage earning capacity as the wages an employee earns or is capable of earning at a job reasonably available to that employee, regardless of whether the employee is actually earning those wages.
That last part is critical.
Suppose you earned $1,200 per week before an injury and cannot return to your previous physical job. The fact that you currently earn $0 does not necessarily mean the workers’ compensation system will always treat your post-injury earning capacity as $0.
If evidence establishes that you remain capable of performing reasonably available work for substantial wages, that alleged earning capacity can become part of the wage-loss calculation.
Disability and Wage Loss Are Connected But Aren’t Identical
Michigan workers’ compensation law defines disability in terms of a limitation on an employee’s wage-earning capacity in work suitable to the employee’s qualifications and training. The statute also makes clear that establishing a disability does not automatically create a presumption of wage loss.
In other words, proving that your injury prevents you from doing your old job is not necessarily the end of the analysis.
Michigan courts have emphasized that an injured worker may need to address other jobs within the worker’s qualifications and training, rather than showing only an inability to perform the pre-injury position.
This is why disputes about education, experience, transferable skills, physical restrictions, and available employment can become so important.
How Can Wage Earning Capacity Lower a Workers’ Comp Check?
Michigan distinguishes between total and partial disability for wage-loss purposes.
If a work injury causes total disability and wage loss and the employee qualifies for benefits, the statute generally provides weekly compensation equal to 80% of the employee’s after-tax average weekly wage, subject to the statutory maximum.
For partial disability, the calculation is different. Michigan law generally provides 80% of the difference between the employee’s pre-injury after-tax average weekly wage and the employee’s post-injury wage earning capacity, again subject to the applicable maximum.
That means a dispute over your post-injury earning capacity can directly affect the size of your weekly check.
What If the Insurance Company Reduces or Stops Your Benefits?
A reduction or termination of benefits doesn’t necessarily mean that the insurance company’s position is legally correct.
Michigan explains that workers’ compensation benefits are typically paid by the employer, insurer, or self-insured employer rather than by the state. When a claim becomes disputed, an injured employee may need to file an Application for Mediation or Hearing (Form WC-104A) with the Workers’ Disability Compensation Agency.
The dispute may involve medical evidence, the employee’s ability to work, the availability of suitable employment, job-search efforts, actual earnings, or several of these issues at once.
Why Legal Guidance Matters
Wage earning capacity is one of the more complicated parts of Michigan workers’ compensation law because it can require evaluating both medical and vocational evidence.
Duff Law can help injured Michigan workers evaluate benefit reductions, disputed earning-capacity claims, and the evidence needed to challenge an insurer’s position.