Michigan Workers’ Compensation Rules for Employers
Michigan requires workers’ compensation at 3 employees, or at 1 working 35 hours a week for 13 weeks. Exclusions, deadlines, penalties and posters.
Michigan Workers’ Compensation
Two coverage tests, no required poster, and the deadlines that start running the moment someone gets hurt
Michigan founders count to three. I have heard the same sentence in Detroit, Grand Rapids and Traverse City: we are only at two people, so the workers’ compensation rule has not reached us yet. Then I ask how many hours the second person works, and the room goes quiet.
Michigan runs two coverage tests, not one, and a business only has to fail either of them. Three employees at one time is the headline. The other test is smaller, quieter and catches almost every growing shop: fewer than three employees, where one of them has worked 35 or more hours a week for 13 weeks or longer in the past year.
This page covers one jurisdiction. How the system works in general, what the exclusive remedy bargain actually buys and how a premium is built all live in our guide to workers’ compensation insurance. Hiring, wages, sick time and termination belong to the Michigan HR compliance guide.
Who Has to Carry Coverage
Michigan sets its coverage duty by headcount and by hours, and the two tests operate independently. MCL 418.115 makes the act apply to all private employers, other than agricultural employers, who regularly employ 3 or more employees at 1 time. It applies equally to private employers who regularly employ fewer than 3 employees if at least 1 of them has been regularly employed for 35 or more hours per week for 13 weeks or longer during the preceding 52 weeks.
Read that second clause slowly. A two-person business with one full-time employee is covered, and so is a one-person payroll where that single person has been full time for a quarter of a year. The Workers’ Disability Compensation Agency states the same rule in plain language on its insurance requirements page.
MCL 418.611 is the section that turns the duty into an obligation to buy something. It requires each employer subject to the act, with the approval of the director, to secure the payment of compensation either by receiving authorization to self-insure or by insuring with an authorized carrier.
| Situation | Michigan rule | Citation |
|---|---|---|
| You regularly employ 3 or more people at 1 time | Covered. The measure is people employed at one time, not full-time equivalents and not payroll dollars | 418.115(a) |
| You employ fewer than 3, and one has worked 35 or more hours a week for 13 weeks in the past 52 | Covered. This is the test that reaches a two-person shop with one full-time employee | 418.115(b) |
| You are a public employer | Covered regardless of how many people you employ | 418.115(c) |
| You farm and employ 3 or more regular hourly or salaried employees, 35 or more hours a week for 13 or more consecutive weeks in the past 52 | Covered on the same terms as any other employer. Piecework payment is outside this test | 418.115(d) |
| You farm and employ 1 or more people 35 or more hours a week for 5 or more consecutive weeks | You must provide medical and hospital coverage under section 315 for those employees, which is narrower than full coverage | 418.115(e) |
| You hire a contractor who has no coverage | As principal you are liable to pay compensation to that contractor’s employees as if you had employed them directly, with a right to be indemnified by the contractor | 418.171 |
| You are below both tests and want coverage anyway | You may assume liability voluntarily, which is the route the act points to for employers outside its reach | 418.121 |
The contractor row is the one that turns a careful company into a claim. If you hire trades and one of them is uninsured, that crew’s injured worker becomes your compensation liability, so a current certificate of insurance from every subcontractor is not filing hygiene. It is the thing standing between you and someone else’s injury.
Coverage is also visible to the state without anyone asking you. When a carrier writes a Michigan employer it files notice of that coverage with the agency, which is how the Insurance Compliance Division builds its picture of who is insured and who is not. An uninsured stretch is not a private matter between you and your files.
Who Sits Outside the Requirement
Michigan writes most of its exclusions into the definition of employee at MCL 418.161, with household domestic service handled separately at 418.118. Almost every exclusion turns on ownership, family relationship or hours worked rather than on the kind of work being done, which is why an employer cannot reason its way out by describing the job.
The list below is the working version for a small business. The statutory text sits in the definition of employee and in the coverage section at MCL 418.115.
| Worker or setting | How Michigan treats it |
|---|---|
| Sole proprietor | Self-employed rather than an employee. The agency warns that a sole proprietor cannot collect under a policy issued to the sole proprietorship, or under a principal contractor’s policy, where the business is not structured as a business entity |
| Named partners | A policy may exclude coverage by endorsement as to one or more named partners, or the spouse, child or parent in the employer’s family |
| Corporate officers of a small, closely held corporation | May exempt themselves from the act where they are also shareholders and the conditions in section 161 are met |
| Member and manager of a limited liability company | May elect to be individually excluded where the company has no more than 10 members, the person is both manager and member with at least a 10 percent interest, and the members consent by majority vote |
| Ordinary employees of that partnership, corporation or company | Covered. An owner exclusion never reaches the workforce, and it does not change whether the business meets a section 115 test |
| Household domestic servant | A private employer is not liable under the act for a domestic servant employed less than 35 hours per week for 13 weeks or longer during the preceding 52 weeks, unless the employer assumes liability under section 121 |
| Spouse, child or other family member residing in the home | Not an employee for household domestic service, and the householder is not a statutory principal under section 171 |
| Agricultural labor | Covered where the section 115 farm tests are met. Below the 13-week test but at 1 or more employees working 35 or more hours a week for 5 or more consecutive weeks, medical and hospital coverage under section 315 is still required |
| Independent contractors | Outside the act only where the person genuinely fails the section 161 test: maintains a separate business, holds out and renders service to the public, or is an employer subject to the act |
| Casual labor | Michigan carries no general casual labor exclusion of the kind some states use. The questions are whether the person is an employee under section 161 and whether you meet a section 115 test |
Independent contractor status is where most Michigan exposure actually sits. Section 161 treats as an employee every person performing service in the course of the employer’s trade, business, profession or occupation who, in relation to that service, does not maintain a separate business, does not hold out and render service to the public, and is not an employer subject to the act. The agency’s insurance compliance materials publish the 20 common law factors from IRS Revenue Ruling 87-41 as the working reference, and our explainer on what an independent contractor is covers the general distinction.
Where the Policy Comes From
Michigan employers buy workers’ compensation from private insurance carriers, through an agent or directly from the company. There is no monopolistic state fund here, so the purchase is a normal commercial insurance transaction and the standard policy carries employer’s liability coverage along with the statutory benefits.
That last point matters if you compare notes with an employer in a monopolistic state. Where a government fund is the only seller, employer’s liability usually sits outside the fund’s product and has to be arranged separately. Michigan employers get both in one policy, so the live question is which carrier writes you and at what rate, not which state office to apply to.
An employer the ordinary market declines still has a route. The Michigan Workers’ Compensation Placement Facility is a non-governmental association created by the legislature in 1982 to write coverage for businesses that cannot obtain it from private insurers, with placement handled through the Compensation Advisory Organization of Michigan. The Department of Insurance and Financial Services describes it as a residual market whose rates run higher than comparable voluntary coverage, which is the trade for being writable at all.
The third route is self-insurance, and for a company of five to fifty people it is background rather than a decision. MCL 418.611 lets the director authorize an individual employer to self-insure on a reasonable showing of solvency and financial ability to pay benefits and to make payments directly to employees as they become entitled to them. Where the director considers it necessary, security follows: specific or aggregate excess insurance, a surety bond, an irrevocable letter of credit, or claims payment guarantees.
Group self-insurance exists as well, and the agency reviews a fund’s assets, liabilities, claims history, future claims potential and ability to assess its membership before deciding what security to require. Both routes run through the agency’s Self-Insured Programs division, which publishes the current lists of individual self-insurers and group funds.
Whichever route you take, keep the carrier name, policy number and effective dates somewhere you can reach in under a minute. A general contractor will ask before you set foot on a site, and your own subcontractors should be answering the same question for you. If you operate in more than one state, our rundown of requirements by state shows how far Michigan sits from its neighbors.
Posters and What a Worker Receives
Michigan requires no workers’ compensation poster at all. The Workers’ Disability Compensation Agency says so directly in its employer guidance: the law does not require any type of postings, and employers are encouraged rather than obliged to display two agency publications.
Those two are the Employees Know Your Rights poster, WC-PUB-005, and the Rights and Responsibilities publication, WC-PUB-006. Both are free from the agency. Printing them is worth doing anyway, because a worker who knows where to report an injury reports it sooner, and a late report is the most expensive kind.
Nothing has to be handed to a new hire under the workers’ compensation act either. Michigan has no hiring pamphlet requirement of the kind several states impose, so onboarding paperwork carries no comp document by law. Putting the agency’s rights publication into your welcome packet is a choice you make, not a rule you follow.
The one mandatory handover is triggered by an injury rather than by a start date. When you file form WC-100 with the agency and your carrier, a copy of that form must also be given to the employee. Keep blank copies with your injury procedure so that step never depends on someone remembering it.
Two obligations are worth separating in your head. Posting is discretionary and standing. The WC-100 copy is mandatory and transactional, travelling with a single event. Wage notices are a third category again, covered on the Michigan minimum wage page.
Injury Reporting Deadlines
Michigan gives the employee 90 days to give notice and 2 years to claim, while the employer reports immediately once an injury crosses a severity line. The notice and claim periods sit in MCL 418.381, and the employer report runs on form WC-100.
| Who acts | Deadline | Detail and citation |
|---|---|---|
| Employee to employer | 90 days | Notice of the injury, measured from the injury or from when the employee knew or should have known of it. Failure is excused unless the employer proves prejudice (418.381) |
| Employee, to make a claim | 2 years | Oral or written claim to the employer, or a written claim to the agency. In case of death, 2 years after the death (418.381) |
| Employer to the agency and the carrier | Immediately | Form WC-100, once the injury results in disability extending beyond 7 consecutive days not counting the date of injury, a death, or a specific loss (agency general rules) |
| Employer to the employee | With the filing | A copy of the WC-100 must be given to the employee |
| Employer to MIOSHA, fatality | 8 hours | Report by phone. Separate duty under the safety statute, not the compensation act |
| Employer to MIOSHA, hospitalization, amputation or loss of an eye | 24 hours | Report online or by phone to the injury report line |
| Waiting period before wage benefits | 7 days | No compensation for an injury that does not disable the employee from earning full wages for at least 1 week. If incapacity extends beyond a week, compensation begins on the eighth day after the injury (418.311) |
| First payment of compensation | 14th day | Compensation becomes due and payable on the fourteenth day after the employer has notice or knowledge of the disability or death, and all accrued compensation is paid then (418.801) |
| Late payment penalty | $50 per day | Added where weekly benefits are unpaid more than 30 days after becoming due and there is no ongoing dispute, capped at $1,500 (418.801) |
| Employee choice of physician | 28 days | The employer furnishes medical care, and after 28 days from the inception of that care the employee may treat with a physician of their own choice on notice to the employer (418.315) |
One structural point saves a lot of confusion. The employer files the WC-100 with both the agency and the carrier, so Michigan is not a state where the insurer alone talks to the department. Your name is on that filing, and the timing standard is immediate rather than a comfortable number of days.
The severity lines are worth memorizing because they decide whether you file at all. Disability beyond 7 consecutive days, a death, or a specific loss are the three triggers. Anything below that is still recorded in your own file and still reported to your carrier as a matter of practice, because a strain that looks minor on day 2 can cross the line on day 9.
Two safety deadlines run separately and much faster. A work-related fatality goes to MIOSHA within 8 hours, and an in-patient hospitalization, amputation or loss of an eye within 24, under the agency’s reporting rules. Meeting one does not satisfy the other.
What Going Uninsured Costs
The biggest cost of going uninsured in Michigan is not a fine. It is losing the lawsuit protection that workers’ compensation exists to provide. Under MCL 418.641, an employee of an employer that violated section 611 or section 171 is entitled to recover damages in a civil action for a work injury, notwithstanding the exclusive remedy provision that would otherwise bar the claim.
That single sentence converts a capped, scheduled benefit into an uncapped jury question about pain, suffering and the employer’s own conduct. A back injury that a policy would have handled as wage loss and medical bills becomes a negligence case with your business on one side of it.
| Exposure | Consequence | Citation |
|---|---|---|
| Criminal | Failing to comply with section 611 is a misdemeanor, and each day of failure is a separate offense. The agency describes the exposure as a $1,000 fine, imprisonment, or both | 418.641 |
| Civil suit by the injured worker | The employee may recover damages from the employer in a civil action for a work injury, notwithstanding the exclusive remedy provision | 418.641 and 418.131 |
| Injunction against operating | On complaint, an injunction issues unless the employer proves it is not subject to the act or furnishes a surety bond securing all of its liability. It perpetually enjoins employing any person at any time the employer is not complying | 418.645 |
| Loss of exemptions from execution | An employer that had not complied at the time of injury loses the statutory exemptions of property from seizure and sale on execution as to a judgment on the award | 418.647 |
| Personal liability of officers and directors | Where the uninsured employer is a corporation, its officers and directors are individually, jointly and severally liable for any portion of the judgment returned unsatisfied after execution against the corporation | 418.647 |
| Liability for someone else’s crew | A principal that contracts with an uninsured contractor pays compensation to that contractor’s employees as if it had employed them, and then chases the contractor for indemnity | 418.171 |
| Late benefit payments once covered | $50 per day beyond 30 days past due where there is no ongoing dispute, capped at $1,500 | 418.801 |
Read the officers and directors row twice if you run a corporation. Michigan does not stop at the corporate shell when an award against an uninsured employer goes unsatisfied, and the liability is joint and several, which means the person with assets pays first and argues about shares later.
The injunction is the quiet one. It does not fine you and it does not close a single job. It bars you from employing anyone at all during any period you are out of compliance, which for most small businesses is the same thing as being closed.
What to Do When Someone Gets Hurt
Work the same sequence every time, in this order. The first three steps happen the same day, and the rest run on the clocks in the table above. Deciding whether a claim is legitimate is not on the list, because that judgment belongs to the carrier.
Then keep the file. Injury reports, restrictions, return-to-work offers and the date each was sent are exactly what a carrier asks for later, and our walkthrough of the workers’ compensation audit shows how payroll classification and claim history feed next year’s premium.
Most of this is documentation discipline rather than legal judgment. FirstHR keeps injury forms, acknowledgments and policy documents attached to the employee record, so the copy you handed someone in March is still findable in November without anyone reconstructing it from memory.
Safety programs sit next door and reduce how often you run the sequence at all. Michigan operates its own state plan through MIOSHA, and the federal baseline is covered in our guide to OSHA requirements for employers.
Frequently Asked Questions
Does a Michigan business with 2 employees need workers’ compensation?
Often yes. Michigan uses two tests and a business only has to fail one. The act reaches private employers who regularly employ 3 or more people at 1 time, and equally private employers with fewer than 3 where at least 1 has been regularly employed 35 or more hours a week for 13 weeks or longer in the preceding 52. A two-person shop with one full-time employee is covered by the second test even though the headcount never touches 3.
Can I leave myself out of the policy as the owner?
Usually, and the route depends on the entity. A sole proprietor is self-employed, and the agency warns that a sole proprietor cannot collect under a policy issued to the sole proprietorship or under a principal contractor’s policy where the business is not a business entity. Section 161 lets named partners and corporate officers of small, closely held corporations exempt themselves, and a member-manager of a company with no more than 10 members holding at least a 10 percent interest may elect exclusion with the members’ consent.
Where does a Michigan employer buy a policy?
From a private carrier licensed to write workers’ compensation in Michigan, through an agent or directly. There is no monopolistic state fund, so employer’s liability comes bundled in the standard policy. An employer the ordinary market will not write can go to the Michigan Workers’ Compensation Placement Facility, created by the legislature in 1982 for that purpose. Self-insurance requires authorization from the director under MCL 418.611 on a showing of solvency and financial ability, usually backed by security.
What workers’ compensation poster does Michigan require?
None. The agency states that the law does not require any type of postings for workers’ compensation, then encourages employers to display two free publications: the Employees Know Your Rights poster, WC-PUB-005, and the Rights and Responsibilities publication, WC-PUB-006. Other Michigan laws do require postings, including MIOSHA safety notices and the wage and sick time sheets, so the poster wall still matters. It simply does not carry a comp notice naming your carrier the way neighboring states demand.
How fast does a work injury have to be reported?
The employee has 90 days to give notice of the injury and 2 years to make a claim, and failure to give notice is excused unless the employer proves prejudice. The employer reports immediately on form WC-100, to the agency and to its carrier, once the injury results in disability extending beyond 7 consecutive days not counting the date of injury, a death, or a specific loss. A copy goes to the employee. MIOSHA runs separate 8-hour and 24-hour clocks for fatalities and severe injuries.
What happens if I have no coverage and someone gets hurt?
You lose the protection the system exists to give you. The injured employee may sue for damages in civil court notwithstanding the exclusive remedy provision, which turns a scheduled benefit into an uncapped claim. Failure to comply is a misdemeanor with each day a separate offense, the agency can obtain an injunction barring you from employing anyone while out of compliance, and where the employer is a corporation the officers and directors are individually, jointly and severally liable for an unsatisfied judgment.
Are independent contractors and household workers covered?
Genuine independent contractors are outside the act, but section 161 defines the category narrowly: a person is an employee if, in relation to the service, they do not maintain a separate business, do not hold out and render service to the public, and are not an employer subject to the act. The agency publishes the 20 common law factors from IRS Revenue Ruling 87-41 as the reference. Household domestic servants working under 35 hours a week for 13 weeks in the preceding 52 fall outside the employer’s liability, and resident family members are not employees.
Michigan amends chapter 418 more often than most employers check it. Our Michigan hiring guide covers what has to be in place before a first employee starts, and coverage belongs on that list rather than on a task you get to once the headcount feels big enough.