Workers Compensation Articles Workers Compenstion Benefits
Workers Compenstion Benefits

Under Sections 301(4) and 401(1) of the Workers' Disability Compensation Act the definition of disability is stated to be: As used in this chapter, "disability" means a limitation of an employee's wage earning capacity in work suitable to his or her qualifications and training resulting from a personal injury or work related disease. The

establishment of disability does not create a presumption of wage loss.

In order to receive benefits, a worker must be "disabled" as defined above. However, the fact that a worker is disabled is not enough to obtain benefits. In addition to being disabled, the injury or disability must be work-related and there must be a wage loss. Benefits can also be denied if the worker has refused a reasonable offer of employment or has established a wage-earning capacity. All of these factors will be discussed below.

Section 373 of the Act contains a special definition of disability for retirees. It makes it harder for a retiree to obtain benefits. A person is considered a "retiree" if he or she is receiving a pension or retirement benefit (but not a disability pension) that was paid for by the employer. To be disabled, a retiree must prove that he or she is unable "to perform work suitable to the employee's qualifications, including training or experience."

In most cases of work-related injuries, the most desirable result is a return to work. Indeed in the vast majority of cases the worker gets better and goes back to work and that is the end of the case. Even if the worker is not completely recovered, it is to the advantage of both the employer and the worker for the worker to return to a job that he or she can perform.

There are certain special types of injuries or disabilities that are treated differently from others.  Section 361 of the Act provides for compensation for certain specific losses. For example, if John Doe loses his thumb while on the job, he is entitled to 65 weeks of compensation benefits regardless of whether he is disabled and regardless of whether he has a wage loss.

If John Doe recovers and returns to work after two weeks, he still continues to receive benefits for the remaining 63 weeks. Assume that John Doe was a skilled watchmaker and is unable to return to work at the end of 65 weeks or assume that he is an ordinary laborer but suffers an infection in his amputation and is unable to work at the end of 65 weeks. Under those circumstances, his situation at the end of 65 weeks is evaluated in the same way as any other "general disability." If he is disabled, has a wage loss, has not refused a reasonable offer of work, and has not established a wage-earning capacity, he will continue to receive benefits.

Generally speaking, the amount of benefits paid is calculated in the same way as for any other injury. The exception is that Section 356(3) of the Act provides a minimum rate of 25 percent of the state average weekly wage for a specific loss. Thus a worker with a very low wage could receive benefits higher than 80 percent of the after-tax

value of his or her average weekly wage.

This is a special category of disability. Workers who meet certain requirements can get additional benefits. Which workers can benefit if they qualify as totally and permanently disabled? Until 1982, relatively low maximums limited the benefits of many disabled workers whose earnings would otherwise have entitled them to a higher rate. Workers who can qualify as totally and permanently disabled, however, may be entitled to have their benefits increase each year as the maximums increase while other disabled workers are limited to the maximum that was in effect on their date of injury.

The number of cases in which there is a large discrepancy between total and permanent disability benefits and regular benefits has greatly lessened over the years. There are, however, still some workers with high wage rates who can receive increases in benefits because they are classified as totally and permanently disabled. Also, coordination of benefits does not apply in the case of total and permanent disability. Most individuals who receive workers' compensation benefits will have those benefits reduced if they are receiving a pension or other benefits from their employer. This reduction or "coordination" does not apply if the worker is totally and permanently disabled.

Finally, the presumption of disability is "conclusive" for the first 800 weeks. This means that if Jane Smith loses an arm and a leg, she is considered totally and permanently disabled for 800 weeks and she receives benefits whether she works or not. After 800 weeks, however, it becomes a question of fact. If because of some skill that she has, Jane has been able to return to work, and is in fact earning a living at the end of 800 weeks, her benefits will be stopped or reduced. If, however, she is still not able to work at the end of 800 weeks, benefits will continue.

Generally, the same principles apply to death cases.  In general, the question of causation is treated the same in death cases as in disability cases. A major difference is that in death cases there must be a dependent in order to receive wage loss benefits. It sometimes happens that a childless, unmarried worker is killed on the job leaving no dependents. In that case, his or her estate receives a burial allowance of up to $6,000 but nothing else.

Children of a deceased worker are conclusively presumed to have been dependent upon the worker. All other individuals including a spouse must prove that they were, in fact, dependents of the deceased worker. If they were only partially dependent upon the worker, this will reduce the amount of benefits that they can receive.

Generally speaking, the amount of benefits is 80 percent of the after-tax value of the wages the worker was receiving at the time he or she was injured. Section 356(2) provides for a minimum benefit rate in death cases. The rate is 50 percent of the state average weekly wage as of the date of injury. This is one of the few circumstances in which a benefit rate can actually be higher than 80 percent of the after-tax value of the injured worker's earnings.

Except in the case of minor children, death benefits are paid for a total of 500 weeks. If disability benefits were paid before the worker died, the 500 weeks are reduced accordingly. Assume John Doe contracted silicosis while working in a foundry. Assume that he was disabled and paid disability benefits for 200 weeks at which time he died. His widow would be entitled to 300 weeks of death benefits (500 less 200 weeks of disability benefits).

If there is a dependent child, benefits continue for a longer period of time. If the child is physically or mentally incapacitated, benefits can continue indefinitely.

An individual injured at work can only receive workers' compensation benefits and cannot sue for other damages. This is provided for in Section 131 of the Act. There are a few exceptions to this rule.

Intentional torts Section 131(1) provides that an "intentional tort" is an exception. This means that if an

employer deliberately takes an action that is specifically intended to injure a worker, the worker can sue the employer.

Suits based on contract or other statutes There are other laws that give workers a right to sue their employers. These include Civil Rights statutes, labor laws, and other similar Acts. The workers' compensation law does not deprive a worker of the right to sue under those circumstances. Workers may also have a right to sue their employer if there was a contract between them which the employer breached. Generally under these circumstances the worker is not suing as a result of a "personal injury or occupational disease." It is lawsuits based on an injury or a disease that the

Section 641(2) of the Act provides that if an employer is covered by the Act but fails to provide security for workers' compensation (see Chapters 2 and 3 above), a worker who is injured on the job may sue that employer for civil damages.

Retaliation Section 301(11) of the Workers' Disability Compensation Act provides that an employer cannot discriminate against an employee because the employee exercised his or her rights under the Workers' Disability Compensation Act.

Section 315 of the Workers' Disability Compensation Act provides that a worker is entitled to all reasonable and necessary medical care. This includes medical, surgical, and hospital services, dental services, crutches, hearing apparatus, chiropractic treatment and nursing care. The responsibility to provide medical care continues indefinitely so long as the need for the care is related to the industrial injury.

During the first ten days of treatment the employer has the right to choose the doctor. After that the worker is free to change doctors if he or she so desires. The worker, however, must notify the employer of the change. In practice, many large employers have company doctors. The worker ordinarily seeks treatment from the company doctor first. If the assistance of a specialist is necessary, the company doctor refers the worker to such a specialist. Small employers, on the other hand, often tell their workers that they should go to their family doctor or some other physician in the community.

In certain circumstances if a worker refuses medical treatment or fails to follow medical advice, he or she may lose the right to continuing benefits. The courts, however, are reluctant to apply this principle and it must be a very serious case before it is applied.

For the most part, the doctors and other medical providers send their bills directly to the employer or its insurance carrier. If for some reason the worker pays the doctor directly, he or she is entitled to be reimbursed by the employer or insurance company. The law provides that medical providers such as doctors and hospitals cannot charge more

than the amount specified in a fee schedule. If they attempt to charge more, the insurance company will pay only the maximum allowed by the schedule. The provider is not allowed to collect the difference from the worker.

A worker can only receive certain specified (l) wage loss benefits, (2) medical benefits, and (3) rehabilitation benefits. In the ordinary case a worker receives 80 percent of the after-tax value of his or her wage loss. It does not matter whether the worker is "totally" or "partially" disabled. Benefits are based on the wage loss and set at 80 percent of the after-tax value of the loss.

Thus, if Jane Smith is unable to work, a determination would be made of her "average weekly wage" before her injury and she would be paid benefits equal to 80 percent of the after-tax value of that amount. If she returned to work and because of her injury received wages less than her average weekly wage, she would receive benefits equal to 80 percent of the after-tax value of the difference.

Prior to 1982 the basic rate of benefits was two-thirds of the worker's gross average weekly wages rather than 80 percent of the after-tax value of his or her wages. When this law was changed, it was also provided that if the two-thirds formula subject to the 1981 maximum limitation would result in a higher rate, the worker is entitled to receive that rate. The tables published by the bureau for calculating the compensation rate indicate when this situation


The provisions dealing with the average weekly wage are found in Section 371 of the Act. The basic method of calculation provides that the average weekly wage is based on the highest 39 of the last 52 weeks before the injury.

If John Doe received a wage of $500 per week for each week for the last year before the injury, there is no problem. His average weekly wage is $500. If he worked for each of the 52 weeks before the injury but earned a different rate for each of those weeks, we would look at the 39 highest weeks. We would then 23 determine the average by taking the total wages for those 39 weeks and dividing them by 39.

If John worked less than 39 weeks during the year prior to his injury, we divide the total earnings by the number of weeks he actually worked. Weeks in which no work was performed are not included in this calculation. Thus, if he worked for only 30 weeks during the year prior to his injury and earned a total of $9,000, the average weekly wage would be $300 ($9,000 divided by 30).

Under certain circumstances the value of fringe benefits may be included in determining the average weekly wage. "Fringe benefits" include things such as the cost of health insurance, employer contributions to a pension plan, and vacation and holiday pay. Sometimes when a worker is injured, the company continues to provide fringe benefits.

There is nothing in the law that requires the company to do this. However, if benefits are not continued, the worker has suffered a greater loss of income. The value of fringe benefits that are not continued is added to the value of the cash wages to determine the worker's average weekly wage. There is a limit, however. Fringe benefits

cannot be used to raise the benefit to more than two-thirds of the state average weekly wage.

The bureau publishes tables that do this for you. Many factors are included in this calculation including the tax filing status, the number of dependents, and the state and federal tax rates. For each year since 1982 the bureau has published a table which translates a given average weekly wage into an amount equal to 80 percent of the after-tax

value of that wage earned. The law provides that the determinations made by this table are conclusive and binding upon the parties. The law provides that the maximum rate of benefits is 90 percent of the state average weekly wage for the year prior to the injury. A worker does not receive benefits higher than this amount regardless of how high his or her earnings might have been.

Section 311 of the Act provides that no compensation is paid for an injury which does not last for at least one week. If the disability lasts beyond one week, the worker is entitled to benefits as of the eighth day after the injury. If a disability continues for two weeks or longer, then the worker is entitled to be paid compensation for the first week of disability. Benefits continue so long as the worker is disabled. This could be for the rest of his or her life. Benefits are reduced 5 percent each year beginning with the year of the worker's 65th birthday. This reduction continues until the worker is 75 years of age. At that time benefits have been reduced to 50 percent. They continue at that level for the rest of his or her life.

Under ordinary circumstances there are no adjustments in the level of benefits. The worker is paid benefits based upon his or her wage and/or the state average weekly wage at the time of injury. There are no increases even though the worker might have received increased wages had he or she continued to work. There are a few exceptions to this circumstance. Workers with dates of injury between 1965 and 1979 were given a one-time increase effective January 1, 1982.Adjustments are also made based on changes in the number of dependents of the worker.

Section 161(1)(b) provides that if an illegally employed minor is injured, he or she is entitled to double compensation. This does not apply if the minor fraudulently uses permits or certificates of age in order to obtain the job. Section 354 provides for the "coordination" or reduction of workers' compensation benefits to the extent the worker receives other benefits paid for by the employer. Thus if a worker receives sick and accident benefits, pension benefits, or other similar benefits, his or her workers' compensation rate will be reduced by one dollar for each dollar in other benefits that are received. If the other benefits are taxable, such as a pension benefit might be, there is an adjustment to represent the after-tax value of the benefit received.

Social security benefits are paid 50 percent by the employer and 50 percent by the worker. Accordingly there is a 50 percent reduction for social security retirement benefits. Social security disability benefits are already reduced if an individual receives workers' compensation. Accordingly, there is no reduction in workers' compensation for social security disability benefits.

If a worker is employed by more than one employer at the time of injury, the earnings from both employers are added together to calculate the average weekly wage. The worker's benefits are based on the total wages from all employments. If the job in which the worker was injured accounts for more than 80 percent of the worker's wages, that employer is responsible for all the benefits owing. If, however, that employer was responsible for less than 80 percent of the worker's wages, it pays the entire benefits, but is reimbursed a proportional amount by the Second Injury Fund.

Under special circumstances a worker may request an advance payment of his or her weekly benefits. The worker is paid the "lump sum" and future benefits are stopped or reduced until the amount is recovered. In computing the recovery, the employer is given credit for the interest it could have earned on the money.