One of the most frustrating aspects of getting involved in a car accident is the inability to work. Not only do you lose the daily ritual of going to work, but you obviously lose the important pay checks that come in every two weeks. In some cases, you can potentially lose your job due to the inability to work.
However, under the Michigan no-fault law, you are entitled to receive lost wages. Under MCL 500.3107(1)(b), the car insurance carrier is responsible for paying “loss of income” an injured person “would have performed during the first 3 years after the date of the accident if she or she had not been injured.” This means you are entitled to payment of lost wages for up to 3 years from the date of the car accident if you are unable to work due to your car accident injuries.
Most people think the payment of lost wages comes from the at-fault driver’s insurance company. This is not true. Instead, the no-fault carrier responsible for paying all Michigan no-fault benefits, usually your own car insurance carrier, is responsible for paying lost wages.
In addition, it doesn’t matter if you were at-fault for causing the accident. Because Michigan is a no-fault state, even if you caused the car accident you are still entitled to lost wage benefits.
How do I Figure Out the Amount of My Lost Wages:
Wage loss benefits are subject to a 15% reduction for taxes. So in most cases to figure out the amount of lost wages you are entitled to, take your gross wage amount (pre-tax wages) and multiply it by .85.
There is a monthly maximum amount a person can receive in lost wages benefits. Currently the amount is $5,282.00 per month. The monthly maximum amount changes every October.
What if I Cannot Work for More Than 3 Years from the Date of the Car Accident?
The no-fault insurance company responsible for paying lost wages only has to pay lost wages for 3 years from the date of the car accident. However, if you are unable to work for more than 3 years from the date of the accident, you may be able to make a claim for “excess lost wages” against the motorist who caused the accident.
What if I am Self-Employed?
Figuring out wage loss benefits for self-employed individuals is more complicated. This is due the fact many self-employed individual’s income is erratic. Also complicating matters are that self-employed individuals have business costs and expenses which are deducted to minimize the taxable income of the business.
However, if a self-employed person paid himself or herself a wage, the lost wages from not working is a benefit and must be paid to the injured person. This is true even if the business shows a net loss for income tax purposes.
What if I Was Paid in Cash?
You can still collect wage loss benefits. Under current law, you also don’t have to file income taxes to be eligible for wage loss benefits either (although it would be a good thing to file your taxes).
What About Other Lost Compensation, like Lost Contributions to Pensions or 401(k)s?
The Michigan no-fault law only allows for payment of lost wages. Unfortunately, you cannot sue for loss of earning capacity. This means you cannot sue for potential raises you may have earned in the future. Furthermore, you also cannot collect payment for lost fringe benefits, such as lost employer contributions to pension plans and 401(k) plans. The value of lost health insurance benefits is also not compensable.
What if I was Temporarily Unemployed at the Time of the Car Accident?
You are still eligible for wage loss benefits if you were temporarily unemployed at the time of the car accident. However, the court will look at how long you have been temporarily unemployed. Although there is no magic amount of time, if you have been unemployed for a long time before the accident, you may not be able to obtain wage loss benefits.
In addition, the law says that the wages a temporarily unemployed individual is entitled to is the income he or she received at their last full time job. This means if a person is temporarily unemployed, and he or she never had a full time job before the car accident, that person cannot obtain wage loss benefits from the car insurance company.
The Lee Steinberg Law Firm, P.C. has been helping Michigan residents get their wage loss benefits for over 40 years. We work throughout the state of Michigan. If you have any questions about wage loss benefits, or car accident law in general, please give us a call at
1-800-LEE-FREE or 1-800-533-3733.