Workers' Compensation and Phantom Wages
Workers’ Compensation (WC) is a program to help people who get hurt or sick due to their work. Nearly all employers are required to have WC benefits for employees, which can include medical care, replacing lost wages, and guidance for injured workers to return to work. The Michigan Workers' Disability Compensation Act ideally ensures the availability of WC for all who need it, regardless of who or what is at fault for the injury or illness. Many employees in Michigan are cheated out of their rightfully owed WC, however, as employers have free reign to limit the benefits they provide depending on the “expected” earnings of the employee and decide the injured employee’s treatment without employee input.
Public Act 266, passed in 2011, reformed the WC system to make it very difficult for injured workers in Michigan to receive fair compensation for work-related injuries or illnesses. It does this by upholding “phantom wages” as a reasonable cause for lowering the benefits workers are owed. Employers could claim that an injured worker’s benefits can be reduced by the earnings the worker would have made at another job in the future, known as “phantom wages”, even if the worker cannot find a job or applies for work and is not hired. Based on a purely unfounded idea of how much an injured worker may make in the future, their WC can be significantly limited. Beyond “phantom wages”, the bill gives employers the choice of what treatment and doctors an injured worker must see, and the worker cannot switch their treatment for 28 days, even if the treatment is not effective or the worker wants a new doctor. For injured or sick workers who often cannot return to work and need specific forms of care, the potential for employers to limit WC and control treatment leads to severe financial hardship and long-term health consequences. As the “phantom wage” excuse is codified in Michigan law, legal resources are limited in their potential to find justice. We want to advocate for injured workers to receive the WC they deserve and the repeal of the “phantom wages” law.
Legislators must target the disastrous law institutionalizing the legitimacy of using “phantom wages” to decide the benefits employees receive. There have been efforts in the legislature to do this, such as Senate Bill 74 introduced in February of 2025. Increased public pressure is needed to raise awareness to the struggles injured workers’ face in earning WC and ensure new legislation is passed to guarantee rightfully-owed benefits for workers.
