Under the Michigan no-fault law, an injured person is entitled to reimbursement for lost wages resulting from a motor vehicle accident. MCL 500.3107(1)(b). The law specifically reads:
… personal protection insurance benefits are payable for the following:
(b) Work loss consisting of 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. Work loss does not include any loss after the date on which the injured person dies … the loss of income must be reduced 15% unless the claimant presents to the insurer in support of his or her claim reasonable proof of a lower value of the income tax
In plain English, a car accident victim can receive 85% of their gross wages for up to three years from the date of the accident.
For example, a mechanic who earns $1,000 per week was rear-ended in a car crash and injured his back. Because of the injury, he could not work as a mechanic, and his doctor disabled him from working. This man would be eligible to receive $850 from his auto insurance company as a wage loss benefit.
What is Considered Wage Loss under the Michigan No-Fault Law?
Wage loss includes regular wages, overtime, and cost of living adjustments. However, fringe benefits like health insurance and pension benefits are not wage loss benefits under the Michigan no-fault law. In addition, other nontaxable income is not a wage loss benefit and cannot be recouped either.
Further, a person can only get the money they would have earned if the crash did not occur. An injured person cannot claim “loss of earning capacity.” Instead, they can only claim the wages they earned when the car accident disabled them from employment.
What Evidence Do I Need to Show to Get Wage Loss Benefits?
The car insurance company requires a doctor’s work loss slip or medical proof, such as medical records, to receive the benefit. The disability script does not have to be very detailed. Instead, a doctor, physician’s assistant, or nurse practitioner merely has to state the injured person cannot work due to the car accident injuries.
Besides a disability slip, the insurance company will also require proof of income.
Insurance companies usually require the injured person’s employer to complete a wage, salary, and benefits verification form to process lost wages.
The employer must complete the wage verification form and include the employee’s dates of employment, dates absent from work following the accident, the injured person’s hourly wage or salary, and other wage information such as overtime hours and overtime pay.
Pay stubs, tax returns, tax forms, 1099 forms, or other documentation of income are other forms of income. The no-fault law does not define how a person must prove income. However, the more documentation a person can provide to the insurance carrier, the easier it will be to obtain wage loss benefits.
How Do I Make a Claim for Lost Wages?
As mentioned above, an injured person must provide “reasonable proof” of the loss and the “amount of the loss sustained’ to receive work loss benefits. Reasonable proof includes:
- Disability slips from physicians stating the person cannot work because of the car accident injuries
- Medical records that demonstrate the person’s injuries and inability to work
- Having the employer complete a Wage, Salary, and Benefits Verification Form.
- Pay stubs and other documentation to demonstrate the wage rate.
How Much Time Do I Have to Make a Wage Loss Claim?
Under Michigan law, specifically MCL 500.3145, a person must file a claim for no-fault benefits within one (1) year of the accident. The notice must be in writing, and the name and address of the claimant must be given. The notice must also indicate the person injured’s name and the injury’s time, place, and nature.
Which Car Insurance Company Pays My Lost Wages?
This is an important question. An injured person must file a first-party claim against the correct auto insurance carrier. Failing to do so can result in the loss of all no-fault benefits.
There is an order of priority to determine which insurance carrier is responsible. After the significant 2019 reforms, the order of priority changed drastically. The current order is the following:
- Your own auto insurance – if you have car insurance, your car insurance company is responsible for paying PIP benefits. This is true even if your vehicle or vehicles had nothing to do with the accident. If you are a named insured on the policy, your auto insurance must pay all first-party benefits.
- The auto insurance company of a resident relative – this includes a spouse, sibling, child, parent, and possibly other relatives. Again, it doesn’t matter if their car had nothing to do with the crash. That insurance carrier must step up and pay all first-party benefits.
- The Michigan Assigned Claims Plan (MACP) – If an injured person does not have auto insurance and does not live with a relative who has car insurance, then they MUST turn to the Michigan Assigned Claims Plan or the MACP. The MACP is run by the Michigan Automobile Insurance Placement Facility.
What if You Were Not Employed at the Time of the Car Accident?
A person must not be employed on the accident date to receive wage loss benefits. If you were temporarily unemployed during the crash, you may be eligible to receive wage loss benefits.
Under MCL 500.3107a, work loss for an injured person who is temporarily unemployed at the time of the crash or during the period of disability is based on income from the last month of the last full-time job the claimant had before the accident.
Is There a Wage Loss Maximum in Michigan?
Yes. There is a statutory maximum for lost wages a person can receive in one month. This number is adjusted annually. If your earnings exceed the statutory maximum, you can receive reimbursement from the negligent driver’s insurance company through a third-party claim. This is called excess economic loss.
For motor vehicle accidents between October 1, 2024, and September 30,2025, the maximum work loss payment is $7,014 per single 30-day period. The new maximum also applies to survivor’s loss benefits. This is an increase from $6,811 for the prior year.
Do I Have to Pay Taxes on Michigan Wage Loss Benefits?
No. Michigan wage loss benefits “are not taxable income.” This means you don’t have to pay taxes on wage loss payments you receive from the auto insurance company.
Do Self-Employed Workers Get Work Loss Benefits
Yes, self-employed workers and independent contractors are entitled to wage loss benefits, just like a standard W2 employee. However, the calculations are different. A self-employed person or small business owner can’t just take 85% of their revenue and claim that as wage loss. Instead, standard costs and business expenses must be subtracted.
Usually, the insurance company will require tax returns or other financial information to determine wage loss. Wage loss claims for small LLCs and self-employed individuals can be complicated.
Injured in a Car Accident and Need Help Getting Lost Wages? Call the Lee Steinberg Law Firm to Get Results
The legal experts at the Lee Steinberg Law Firm have been handling first-party claims for over 50 years. Our team of tough and aggressive Michigan car accident lawyers knows what it takes to get you the benefits you paid for and deserve.
Call us at 1-800-LEE-FREE (1-866-696-9146) for a free consultation. We can answer your questions. Our office will go after the insurance company for your unpaid wage loss benefits. There is never a fee until we win your case.