If you do not have the appropriate workers’ compensation (comp) insurance to provide your employees in the state of Michigan, you can face severe financial penalties, as well as greatly diminish your workplace morale. The overall purpose of workers comp insurance is to protect both the employer and the employee in the case of a workplace-related injury or illness.
Michigan Workers’ Compensation
Any employer who is subject to the Workers’ Disability Compensation Act of Michigan is required to provide workers’ comp insurance to their employees. Such employers include:
A few exceptions do exist such as federal employees who are covered by federal laws, individuals who unload and load shipments onto vessels who are covered by the Longshore and Harbor Workers’ Compensation Act and seamen who are covered by the Merchant Marine Act. Sole proprietors are also not considered employees and do not require workers’ comp.
It should also be noted that partners and shareholder officers in certain smaller corporations and limited liability companies are not considered employees and also become exempt to the state workers’ compensation requirements. The same is true for family members who work for a company in some circumstances.
Workplace Injury Statistics in Michigan
In 2015, Michigan had 96,000 workplace illnesses and injuries in the private sector. This figure does not include the public sector. The Michigan workplace injury and illness incident rate is significantly higher than the average for the whole of the US. And, 94 percent of these filings were injuries rather than illnesses. In the public sector, Michigan had 13,700 reported illnesses and injuries primarily at the local government level.
Self-Insured Versus Commercial Insurance
Most companies, regardless of size, throughout the state of Michigan are insured through commercial insurance carriers that specialize in workers’ compensation. The most reputable carriers will be able to provide competitive premiums and ensure that all necessary and reasonable claims are paid in a timely manner to prevent any legal action by an employee against an employer. It is also possible for a company to become self-insured or to join a group self-insurance policy.
Self-insurance is relatively unique circumstance wherein a company or group of similar companies can prove they are financially sound to handle the monetary responsibilities of any potential workers’ comp claim including legal fees, medical bills, rehabilitation and more. You must apply for special permission with the Workers’ Compensation Agency to receive approval. In the meantime, you still must provide compensation insurance for all eligible employees or you could face financial and legal consequences.
The no-fault agreement in Michigan stipulates that when an employer provides appropriate workers comp insurance to their employees, the employees, in turn, cannot hold the employer liable for any injury or illness obtained on the job. This agreement only holds true if both parties feel they are being treated fairly and justly. Some circumstance may arise that warrants legal action such as if an insurance company does not pay medical bills in a timely manner or if an employer believes the injury or illness was the result of a pre-existing condition.
In many instances, as long as employers and employees have an open dialog, disputes will often be resolved amicably and out of the courts. As an employer, it would behoove you to provide the proper coverage as it shows employees that you care about their well-being which often results in improved working relations and greater job satisfaction. If you do not provide proper coverage, you can face serious financial penalties and severe criminal charges. It is possible to pursue both mediation and court appearances for Michigan workers’ comp claims.
Employers who do not provide the proper compensation coverage are susceptible to a number of judicial and financial penalties. You could be sued by any number of employees were they to fall ill or become injured whilst on the job. These settlements or jury findings can easily cost significantly more than if you were to simply provide insurance from the start.
The Workers’ Compensation Agency could very well stop any organization from employing any person if the company is found to be out-of-line with the compensation act. You could be unable to staff employees as long as it takes for you to receive the proper coverage. These financial losses would be significant and you could lose business as a result. And, for every day that an employer is uninsured, they can spend up to 6 months in jail and a $1,000 fine.
Michigan is quite different from many states regarding premiums. The insurance carriers in Michigan set the premium pricing rather than a designated bureau like many other states. It is believed that open-market competitive pricing provides Michigan employers with better rates; however, this does not deter some carriers from charging significantly more than others. Be sure to do your due diligence and choose the right carrier for your business. Also, keep in mind that some positions and industries will have higher premiums due to the inherent danger associated with some tasks. A librarian is likely to have a significantly lower premium than an individual responsible for cleaning up a toxic spill. Also, some insurance providers will reduce premiums if your company takes proactive measures in workplace safety. Be sure to ask.
If you still seek additional information, contact the following groups, agencies, divisions, etc.:
Improve your bottom line and employee relations by providing the proper workers comp insurance. Do not forget to check around to determine which insurance provider has the right coverage for your business, industry and employees.