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workers comp

06 Apr

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Workers’ Compensation FAQ

April 6, 2012 | By |

What is Workers’ Compensation?

Enacted in Michigan in 1912, workers’ compensation is the first form of no-fault insurance. Prior to 1912, workers were required to prove negligence on behalf of their employer to recover damages from their employers. Once the workers’ compensation system was enacted, the burden of proof by employees was removed and employers were required to provide compensation for workers injured while on the job.

Additionally, the Workers’ Compensation Act protected employers by limiting the damages that a worker can recover to wage loss benefits, costs of medical treatment, and defined rehabilitation services. Prior to the act, workers could recover for damages such as pain and suffering, loss of enjoyment of life, and other damages awarded to them.

What does Workers’ Compensation cover?

For the employee who suffers a work-related injury or illness, workers’ compensation covers wage loss benefits, medical treatment, and rehabilitation. In exchange for the benefits provided under workers’ compensation, employees are prevented from filing suit against their employer in connection with the work related injury or illness, with few exceptions.

Who is required to carry Workers’ Compensation?

Michigan statute requires all public employers to carry workers’ compensation. Private employers must carry workers compensation if they regularly employ 3 or more workers at any one time; or they regularly employ at least 1 worker for 35 hours or more per week.

Workers’ compensation is voluntary for any other employer to manage the risks associated with worker injuries, and should be carefully considered. Sole proprietors, contractors, and sub-contractors have unique provisions under the workers’ compensation law, and should become familiar with state requirements.

Penalties for employers who do not comply with the Workers’ Compensation Act could include costly fines, imprisonment, and civil damages brought against the employer by an injured employee. Further, each day that an employer is uninsured serves as a separate offense under Michigan statute.

How can I manage the costs of Workers’ Compensation?

There are several ways an employer can manage the costs of workers’ compensation. Here are some suggestions:

  • Choose your insurance agency carefully. Exclusive and captive agents are limited to offering only one carrier for workers compensation, while independent agents represent multiple insurance companies, and have the ability to compare policies for the best value.
  • Implement a formal safety program. Many employers who implement safety measures such as written safety procedures, prompt claims reporting, and return-to-work programs find that they are able to effectively reduce the costs of workers’ compensation.
  • Talk about safety with your employees. Provide training for injury prevention, and allow for meetings that address safety issues.

For more detailed information about workers’ compensation in Michigan, visit www.michigan.gov/wca, or talk to a licensed insurance professional.

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