Workers’ Compensation Insurance

By on April 17, 2020

What is Worker’s Compensation in Michigan?

Workers’ Compensation Insurance pays for medical expenses, lost wages and rehabilitation expenses to employees who are injured or become sick due to their job.  It will also pay death benefits to the family of an employee killed on the job.

History of Work Comp

Up until 1912, an injured worker had to sue their employer to receive compensation for an on the job injury or illness.  The employee would have to prove that their employer was negligent.  In 1912, many states, including Michigan adopted a “no-fault’ system called Workers’ Compensation.  The reason for was to mandate that the employer had to compensate the worker for an accident or illness (within the course or scope of their job) without the employee having to prove negligence of the employer.

Who Has to Have Workers’ Compensation in Michigan?

In general, if your Michigan business has even one employee, you’re required to carry workers’ compensation insurance. More specifically, the following types of employers must carry workers’ compensation coverage:

All private employers regularly employing 1 or more employees 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks

All private employers regularly employing 3 or more employees at one time (includes part-time employees)

Agricultural employers if they employ 3 or more employees 35 hours or more per week for 13 or more consecutive weeks

Households employing domestic servants if they employ anyone 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks; and

All public employers.

Business owners, such as sole proprietors, partners in partnerships, and corporate officers of small, closely-held corporations are not required to be covered by workers’ compensation insurance. 

How Does Workers’ Comp & Independent Contractors Work?

If Company A hires Company B to do some work, then typically Company B is typically considered an “Independent Contractor” and hence, is not an employee of Company A.  In a situation however, where Company A hires a person who does not maintain a separate business, does not render service to the general public and does not employ others that worker may be considered an employee.  See Section 161(1) (b) of the Workers’ Compensation Act. 

What Are Workers’ Compensation Certificates in Michigan?

If you hire an Independent Contractor it is “Best Practice” to obtain a Certificate of Insurance from their Insurance Agent as to eliminate the possible gray area of whether or not they are an employee or not. 

Employers’ Liability

Employers’ Liability is generally sold in conjunction with a Workers’ Compensation policy.   It is typically referred to as “Part II”.  While in general, an employee is not legally allowed to sue an employer as Work Comp is often thought of as a sole remedy.  There are cases that this may be allowed examples are Consequential Bodily Injury, Loss of Consortium, Dual-Capacity and 3rd Party Over Action.  While these types of claims are rare, they do happen.

Arnouts Insurance has been providing Workers’ Compensation to businesses in Okemos, Lansing, East Lansing, Williamston and Mid Michigan for years. We have the experience to fit the right Michigan Workers’ Compensation policy that fits your business size and the amount of employees that you have. Call our Workers’ Comp experts at 517-347-1466 to learn more.