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Industry Insider

By Delaney Newberry
Director of Human Resource Policy
Michigan Manufacturers Association
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Legislation introduced last month in both the Michigan House and Senate would bring about reform to the Workers’ Compensation Act that would bring stability to the system. The bill would balance fairness in coverage and compensation for workers and also help employers control costs and be more competitive.

Workers’ compensation is a complex matter. Determining whether an injury is job-related, what medical treatment is necessary and an employee’s ability to return to work are all intricate issues. But workers’ compensation has been made more complicated than it needs to be by an act that is drastically out-of-date with our times and, in many places, very ambiguous and open to subjective interpretation.

The result is a history of lengthy litigation that analyzes the original act and a century of revisions. The outcome is a patchwork of inconsistent and unclear provisions that must be clarified through court rulings. Historically, changes in the Michigan Supreme Court have led to changes in how the law is interpreted.

The reform measures contained in House Bill 5002 are intended to return Michigan’s Workers’ Compensation Act to its original intent and create an act that treats workers fairly and keeps business costs in alignment with other states. This is a crucial step toward making Michigan a more business-friendly state. To do that, we need to move away from subjective interpretations and focus more on definitive legal principles grounded in statute.

Workers’ compensation, which is mandatory for most employers, is insurance that covers wage compensation and medical expenses for workers injured in the course of their jobs. For businesses, workers’ compensation protects a business from being sued in the event an employee faces injury or death as a result of work. However, our 100-year-old Workers’ Compensation Disability Act, does not reflect the state of workers’ compensation today. In practice, companies, administrators and carriers go to the case law as much as the statute.

The proposed legislation would update current law to clarify the definitions of disability, wage earning capacity and wage loss. It would also establish a distinction between total and partial disability, define “personal injury” as one sustained while working or as a result of the job, and specify that injuries without a connection to work are not eligible for workers’ compensation.

The last decade has seen relative stability in court rulings on the workers’ compensation law. It is time for the statute to be updated to provide the clarity and consistency that is vital to an effective workers’ compensation program. Both employers and employees deserve greater certainty about reimbursement for on-the-job injuries. Returning to work — and to the ability to earn income to care for their families — is a critical matter for the injured person. It’s also a critical for the competitiveness of Michigan businesses.

Michigan business owners pay 82 percent more than businesses in neighboring Indiana. Like all costs, the price an employer pays per employee for workers’ compensation affects its pricing schedule and, in turn, its competitiveness. To the extent that businesses are able to reduce costs, they are better able to compete with out-of-state businesses, and the state is able to attract new employers.

Critics of the workers’ compensation reform legislation claim it will reduce the benefits available to those who are injured. They have argued that the bills will eliminate the incentive for business owners to bring back injured employees and that these workers will be forced to compete at a disadvantage with those who are not disabled. MMA contends that this is neither the intent of the bill nor a possible outcome.

MMA agrees with Rep. Brad Jacobsen (R-Oxford), the sponsor of HB 5002, that employers will always have a strong incentive to bring workers back to productive jobs where their knowledge and skills can be utilized. A workforce is often one of the most significant investments a company will make, and it will always be in the employer’s best interest to have a happy, healthy, productive workforce.

The money and time that employers are spending in court trying to resolve the ambiguity within the current Workers’ Compensation Act takes away from the resources that could be invested in growing businesses, adding jobs and making Michigan an economic leader. The revisions encompassed in HB 5002 would return workers’ compensation law to the guiding principle of certainty of reasonable compensation and medical care for all injured workers without unnecessary litigation.

That, as Rep. Jacobsen has said, would be a win-win for Michigan businesses and workers.

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