So you are injured in a car accident and unable to work. The bills are piling up, you job doesn’t offer any type of short-term disability and the stress level is through the roof. What can you do? The answer can be found in the Michigan No-Fault Law.
Under the Michigan No-Fault Law, individuals injured in a motor vehicle accident are entitled to receive wage loss benefits for up to 3 years from the date of the accident. This very important benefit is one of the central tenants of Michigan automobile law. The Law Offices of Lee Steinberg, P.C. and the attorneys of Call Lee Free will explain the wage loss benefit in more detail below.
The wage loss benefit is found under MCL 500.3107(1)(b). It specifically allows for “loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he or she had not been injured.”
This means for 3 years following a motor vehicle accident, an injured person is entitled to wage loss he or she would have earned from work if not for the car accident.
Do I Have to Pay Taxes:
Yes. Although the wage loss benefit is not taxable per se, the wage loss benefit is reduced by 15%. This means you are entitled to receive 85% of your gross wages. If a claimant can show he or she usually pays less than 15% in taxes, then the lower amount of taxes can be utilized.
Is There A Monthly Wage Maximum?
Yes. There is a maximum in wages an injured person can receive in one month. The monthly maximum is based on upon the date of the car accident and changes each year. For car accidents occurring between October 1, 2014 thru September 30, 2015, the monthly maximum is $5,392.00.
The Director of the Michigan Department of Insurance and Financial Services usually updates the monthly maximum at the end of every September. The most recent update, Bulletin 2014-15-INS, sets forth the monthly maximum.
How Do I Prove Lost Wages?
There are many ways to prove lost wages. The easiest and best way is to have your employer complete a Wage, Salary and Benefits Verification Form that detail your rate of pay, hours worked, and dates of disability.
However, completion of this form is not mandatory to receive wage loss benefits from the auto insurance company. Very often, pay stubs from the time of the car accident is sufficient to show what you were earning. Other income documents such as a W2 or Form 1099s are sufficient as well.
What If I Did Not File Taxes?
Some insurance carriers will want tax returns to pay wage loss benefits. However, the filing of income taxes is not required to be eligible for wage benefits. Nowhere in the Michigan no-fault law does it state that the filing of taxes is a condition precedent to receiving wage benefits.
What is Considered Wage Loss?
The statute does not specifically list what counts as lost wages. However, over the years, our state’s courts have come up with various items that count or don’t count as compensable under the no-fault law.
Obviously, basic wages are compensable. Beyond that, missed overtime, COLA raises, step wage increases and profit-sharing plans that are part of the employee’s regular wages are also considered wage loss. Work loss benefits may extend beyond the injured person’s period of disability if the injured person continues to lose income as a result of the car accident.
What is Not Considered Wage Loss?
The no-fault law does not pay for “loss of earning capacity.” This means a person cannot receive wage loss for a job the injured person strived to obtain but did not have at the time of the accident. The law only pays for wages the injured person would have earned it not for the accident. In addition, loss pension contributions, profit sharing payments and fringe benefits are not payable as wage loss under the no-fault law.
What If I Was Unemployed At The Time of the Car Accident?
You may still be entitled to wage loss benefits. Under MCL 500.3107a, persons who were temporarily unemployed at the time of the accident are able to claim wages based upon the last full month of full-time employment prior to the car accident.
However to be considered temporarily unemployed, you could not be unemployed for an extensive period of time at the time of the accident. Further, you must have had a full-time job for at least one-month prior the car accident to be eligible for this benefit.