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The CARES Act Unemployment Expansion, Workers’ Compensation Wage Loss Offset, and Refusing to Return to Work During the Pandemic

Unemployment BenefitsThe Unemployment Offset

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress with overwhelming bipartisan support and signed into law on March 27th, 2020. One feature of the CARES Act is the Pandemic Unemployment Compensation (“PUC”) program, which enhances weekly unemployment benefits administered by individual states by adding an additional $600 weekly supplement to an employee’s maximum weekly unemployment benefit rate. A related program created under the CARES Act, called the Pandemic Emergency Unemployment Compensation (“PEUC”) program, extends the duration of weekly unemployment benefits by adding an additional thirteen weeks to the maximum recovery period each state otherwise allows.

Under the PEUC, unemployed workers in Michigan may now collect unemployment benefits at the State’s rate for which they qualify for up to 39 weeks.[1] However, it is important to note that unlike the 39 weeks of regular State unemployment benefits, the PUC's $600 per week supplement only applies to benefits received between March 29, 2020 and July 31, 2020. As a result, the $600 PUC supplemental benefit ends on July 31, 2020 even if an employee is still collecting benefits under the PEUC’s extended regular unemployment period.

Under MCL 418.358 of the Workers’ Disability Compensation Act (the “Act”), employers are entitled to reduce a disabled worker’s weekly workers’ compensation wage loss benefit (and lump sum advances otherwise due to the injured employee) by 100% of the amount of unemployment benefits paid or payable to the injured employee. This includes a dollar for dollar offset for the additional $600 benefit provided under the PUC. The offset remains in effect during the duration for which an injured worker receives unemployment benefits and includes the additional 13 week extension under the PEUC.

In the past, injured workers and their attorneys have taken the position that employers are not entitled to offset their workers’ compensation wage loss benefits with weekly unemployment benefits beyond those specifically authorized under Michigan law. In other words, their position is that the injured employee’s workers’ compensation wage loss benefit cannot be further reduced by federal enhancements to unemployment benefits. The Michigan Workers’ Disability Compensation Appeals Commission addressed this issue in Bearss v ANR Pipeline, 1997 ACO 11. The Bearss panel stated in pertinent part:

Plaintiff next argues that defendant is not entitled to coordinate MESC benefits beyond 26 weeks since such benefits reflected a federal extension and, therefore, are presumably not employer paid benefits. We disagree with this argument. MESC benefits are always paid by the government. They are not employer paid benefits. Rather employers are taxed after the fact based upon their experience rating. Whether the employers were further taxed to cover the extension is unknown to us and irrelevant to the question. The fact is that the statute allows for coordination of MESC benefits. Therefore, defendant in the instant case is entitled to coordinate whatever MESC benefits plaintiff received "for identical periods of time and chargeable to the same employer".[2] ​​​​​

Furthermore, in Bryce v Chrysler, 2011 ACO 46, the Appeals Commission relied in part on its previous decision in Bearss, stating:

We also reject plaintiff’s argument that defendant could not reduce plaintiff’s benefit rate based by the extended unemployment benefit amount. As both parties indicate, the Appellate Commission already allowed the credit in Bearss. We find no reason to revisit the issue. Bearss is consistent with the overriding policy behind both §§ 354 and 358 of the Act to prevent a claimant from being economically incentivized to remain off work by receiving benefits which in the aggregate make him more than whole. Franks v White Pine Copper Division, 422 Mich 636 (1985).

Again, due to the passage of the CARES Act, Michigan workers may now be entitled to collect unemployment benefits for up to 39 weeks. When adding the $600 supplement to the maximum unemployment rate of $362, an individual on unemployment could receive up to $962 per week through July 31, 2020. Thus, as long as these workers are collecting the $600 supplemental PUC benefit, they will collect more in unemployment than they would otherwise collect in weekly wage loss benefits under the Workers Compensation Disability Act. The maximum weekly workers’ compensation rate in Michigan for 2020 is $934. Given the offsets afforded to the employer under MCL 418.358, these injured worker's weekly wage loss benefits under the Act would reduce to zero at least through July 31, 2020.

May Workers Refuse an Offer of Favored Work During the Pandemic?

Given the increase in unemployment benefits and fear of potentially contracting COVID-19 upon returning to work, we anticipate that many employees, including injured employees, will prefer to simply not return if at all possible. Here is one scenario that we believe may show up on your claims desk in the near future.

  • A paramedic injures her shoulder while attempting to lift a patient in February 2020. The paramedic begins receiving both wage loss and medical benefits from her employer’s workers’ compensation carrier. After passage of the CARES Act, the paramedic, who remains off work, decides to apply for unemployment benefits. She is approved and begins receiving the standard weekly unemployment amount based on her wages as a paramedic plus the $600 PUC benefit. In April 2020, the paramedic’s employer offers her a job as a dispatch officer tasked with answering phone calls and arranging ambulance services. Despite her injured shoulder, the paramedic is physically able to perform the offered job according to her primary care physician. She decides to decline the employer’s job offer out of fear of contracting COVID-19.

This type of scenario raises the issue of whether such a refusal to return to favored work is deemed reasonable. Under Section 301(9)(a) of the Act, an injured worker is required to accept an offer of “reasonable employment” or else she will be considered to have voluntarily removed herself from the workforce and is no longer entitled to wage loss benefits. “Reasonable employment” is defined in Section 301(11) of the Act as “work that is within the employee’s capacity to perform that poses no clear and proximate threat to that employee’s health and safety, and that is within a reasonable distance form that employee’s residence.”

Is it possible for an employer to argue that a return to favored work during a pandemic poses no clear and proximate threat to the employee’s health and safety? At this time, there are over 55,000 confirmed cases of COVID-19 in Michigan and over 5,200 deaths. Across the United States, over 1.7 million people have tested positive for the virus and over 100,000 people have died.

This issue will ultimately come down to a factual determination – whether a specific employee’s refusal to return to work in a specific job is reasonable. Individuals who suffer from multiple comorbidities (such as advanced age, obesity, cardiovascular diseases, or other autoimmune deficiencies) will likely have a stronger argument that a return to work in a position that may expose them to significant risk of contracting COVID-19 is unreasonable.

The type of favored work should also inform your decision regarding payment of benefits. Is the favored work a desk position isolated from other employees in an office building? Or does the job require the injured worker to come into close physical contact with the public? Generally, a healthy individual with an offer of favored work presenting a low risk of exposure will have a much more difficult time proving a reasonable refusal.

Conclusion

With the CARES Act expansion of unemployment benefits and the potential for injured workers to refuse an offer of favored work, the COVID-19 pandemic continues to create novel implications in the workers’ compensation realm. We have written extensively about several other important COVID-19 related issues on our blog, including whether death benefits are owed to a worker who dies from COVID-19, the rise in at-home work injury claims, and potential psychiatric claims from essential and first-response workers. There is no doubt that interesting issues will continue to arise. In these uncharted waters, if you find yourself with questions about how COVID-19 impacts any aspect of a workers’ compensation claim, please contact any member of our group. We are here to help.

Alicia Birach...248.785.4172...abirach@fosterswift.com
Mike Cassar...517.371.8110...mcassar@fosterswift.com
Brian Goodenough...517.371.8147...bgoodenough@fosterswift.com
Tyler Olney...248.538.6352...tolney@fosterswift.com
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Mike Sanders...517.371.8210...msanders@fosterswift.com

[1] Under Governor Whitmer’s recent Executive Orders (EO 2020-10 and EO 2020-24), weekly benefits were extended from 20 weeks to 26 weeks. The additional 13 weeks under the PEUC extension increases the maximum duration for unemployment benefits to 39 weeks.

[2] The 2011 amendments eliminated the requirement that benefits be "chargeable to the same employer from whom compensation is being sought.” Nonetheless, the rational behind the opinion remains unchanged and has no effect on the employer’s entitlement to reduce workers compensation wage loss benefits by the amount the employee receives through unemployment for the same period of time.

Categories: Case Law Updates, COVID-19 and Workers' Compensation, Employee Benefits

Photo of Tyler J. Olney
Associate

Tyler Olney focuses his practice in General Litigation and Workers’ Compensation Defense. He has experience in cases involving first and third party no fault defense, insurance defense, commercial and real estate litigation.

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