The Michigan Chamber of Commerce supports legislation to amend the Workers' Disability Compensation Act in response to recent court decisions in the following ways:

• to state that mental disability claims arising from lawful, nondiscriminatory, good faith personnel actions shall not be compensable,
• establishing a specific period of time during which an offer of favored work must remain available when the employee has unreasonably refused the offer,
• and specifying that an employee may be terminated for non-compliance with the employer's rules, regulations, and procedures during the first 100 weeks of reasonable employment, without triggering a presumption that workers' compensation benefits should resume.

Background

In March 2000, the Michigan Supreme Court issued two opinions [McJunkin v Cellasto Plastic Corporation] [Perez v Keeler Brass Company] pertaining to situations when an employee sustains an injury at work and refuses offers of reasonable employment (sometimes referred to as favored work), but at a later date agrees to perform the work that had been refused. In a third related decision [Russell v Whirlpool Financial Corporation], the Court also addressed the issue of termination from reasonable employment. Because these cases were consolidated by the Court, they are commonly referred to as the "workers' compensation trilogy." All three cases were decided unanimously.

In McJunkin, the Court concluded that an employee with a work related disability who first unreasonably refuses an offer of reasonable employment, but later agrees to accept the employment, is entitled to workers' compensation benefits even if the job that had been offered no longer exists. The Court said there is no authority for permanent forfeiture of benefits as the result of an employee's temporary refusal of reasonable employment. The Court set no limit on the length of time an employee could refuse reasonable employment before changing his/her mind. Impact for employers: there is no closure on workers' compensation claims in which the injured worker has refused reasonable work. Even years later, the worker could decide to accept a previously rejected offer and begin collecting benefits again prospectively.

In Perez, the Supreme Court held that if an employee with a work-related disability voluntarily quits reasonable employment, then moves out of the state, then years later returns to the state and offers to work again, the employee is entitled to resume receiving workers' compensation benefits if the employer does not allow the employee to return to work. Impact for employers: The employee would not be entitled to workers' compensation benefits during the time period when he or she had voluntarily quit reasonable work. However, the employee would be again entitled to receive benefits prospectively when he or she offers to return to work after any period of time has elapsed.

In Russell, the Court ruled that if an employer terminates for any reason an employee who has performed favored work for less than 100 weeks following an injury, that employee is again entitled to collect workers' compensation benefits. Impact for employers: if an employee is discharged for just cause, i.e., employee misconduct, absenteeism, the employee would still be entitled to wage loss benefits. This applies a very different standard for employees on favored work than for other employees. The plain language in Section 301(5)e of the Workers' Disability Compensation Act does say, "for any reason." This is the only section where that language appears, other sections say ":through no fault of his or her own." The Michigan Chamber has long identified this section as a potential problem which merits legislative reform.

All three decisions spell out the specific language in the workers' compensation statute that led to these results. For example, again in Perez, Justice Young says,

"... the quoted statutory provisions establish the law in this area. The Legislature chose the words of the statute, and we are bound by them." (emphasis added)

In Russell, Justice Cavanagh said,

"Subsection 301(5) does not grant the employer the right to terminate the employee's ability to return to work. In fact, subsection 301(5)(e) provides that an employee who loses his favored work position 'for whatever reason' shall continue to receive benefits. The plain language of subsection 301(5)(e) considers the possibility that an employee on favored work might lose a job for "just cause." When the employee has been employed pursuant to subsection 301(5)(e) for less than 100 weeks, the Legislature has decided that benefit availability continues."  (emphasis added)

Again, in McJunkin, Justice Kelly writes,

"The Legislature worked a subsequent change or development in the law when it codified the favored work doctrine as the reasonable employment doctrine...The primary goal of judicial interpretation is to ascertain and give effect to the intent of the Legislature...as case law must accurately reflect the legislative enactment on which it is based, (the Court of Appeals decision in) Russell must be abandoned." (emphasis added)

Clearly, the Supreme Court is telling job providers that legislative change is necessary to address the critical issues relating to reasonable employment.

It is also important to note a fourth significant decision released less than three weeks after the trilogy of cases. The fourth case, Calovecchi v State of Michigan, deals with the issue of mental injuries in the workers' compensation system. It also was unanimous.

In Calovecchi, the Supreme Court ruled that compensation is not precluded under the Workers' Disability Compensation Act for mental injuries caused by acts of discipline that do not sever the employment relationship. Writing for the Court, Justice Corrigan said,

"Defendant contends that our failure to extend Robinson to preclude the payment of compensation for mental injuries caused by acts of discipline (and other employer actions) that do not sever the employment relationship would have the 'unfortunate result' of encourag[ing] employers to terminate the employment relationship rather than to impose less severe discipline. This prediction may or may not come true. These policy questions are properly directed toward the Legislature rather than to this Court. Our duty is to construe the text of the statute before us, not to reach the policy result we judges think preferable."  (emphasis added)

The Michigan Chamber has been actively involved in the efforts to clarify the mental injury provisions of the workers' compensation act for nearly five years.

During the last legislative session, two bills were introduced to address these concerns, but neither moved through the process before adjournment. During the current session, one bill - House Bill 4512 (Kuipers) - has been introduced and referred to the House Committee on Employment Relations, Training & Safety.

The Michigan Chamber of Commerce supports legislation to amend the Workers' Disability Compensation Act in response to recent court decisions in the following ways:

• to state  that mental disability claims arising from lawful, nondiscriminatory, good faith personnel actions  shall not be compensable,
• establishing a specific period of time during which an offer of favored work must remain available when the employee has unreasonably refused the offer,
• and specifying that an employee may be terminated for non-compliance with the employer=s rules, regulations, and procedures during the first 100 weeks of reasonable employment, without triggering a presumption that workers= compensation benefits should resume.

Background

In March 2000, the Michigan Supreme Court issued two opinions [McJunkin v Cellasto Plastic Corporation] [Perez v Keeler Brass Company] pertaining  to situations when an employee sustains an injury at work and refuses offers of reasonable employment (sometimes referred to as favored work), but at a later date agrees to perform the work that had been refused.  In a third related decision [Russell v Whirlpool Financial Corporation], the Court also addressed the issue of termination from reasonable employment.  Because these cases were consolidated by the Court, they are commonly referred to as the "workers' compensation trilogy."  All three cases were decided unanimously.

In McJunkin, the Court concluded that an employee with a work-related disability who first unreasonably refuses an offer of reasonable employment, but later agrees to accept the employment, is entitled to workers' compensation benefits even if the job that had been offered no longer exists.  The Court said there is no authority for permanent forfeiture of benefits as the result of an employee's  temporary refusal of reasonable employment.  The Court set no limit on the length of time an employee could refuse reasonable employment before changing his/her mind.  Impact for employers: there is no closure on workers' compensation claims in which the injured worker has refused reasonable work.  Even years later,  the worker could decide to accept a previously rejected offer and begin collecting benefits again prospectively.

In Perez, the Supreme Court held that if an employee with a work-related disability voluntarily quits reasonable employment, then moves out of the state, then years later returns to the state and offers to work again, the employee is entitled to resume receiving workers' compensation benefits if the employer does not allow the employee to return to work. Impact for employers: The employee would not be entitled to workers' compensation benefits during the time period when he or she had voluntarily quit reasonable work.  However, the employee would be again entitled to receive benefits prospectively when he or she offers to return to work after any period of time has elapsed.

In Russell, the Court ruled that if an employer terminates for any reason an employee who has performed favored work for less than 100 weeks following an injury, that employee is again entitled to collect workers' compensation benefits. Impact for employers: if an employee is discharged for just cause, i.e.:  employee misconduct, absenteeism, the employee  would still be entitled to wage loss benefits. This applies a very different standard for employees on favored work than for other employees. The plain language in Section 301(5)e of the Workers' Disability Compensation Act does say, "for any reason." This is the only section where that language appears, other sections say "through no fault of his or her own."  The Michigan Chamber has long identified this section as a potential problem which merits legislative reform.

All three decisions spell out the specific language in the workers' compensation statute that led to these results. For example, again in Perez, Justice Young says,

"... the quoted statutory provisions establish the law in this area. The Legislature chose the words of the statute, and we are bound by them."   (Emphasis added)

In Russell, Justice Cavanagh said,

"Subsection 301(5) does not grant the employer the right to terminate the employee's ability to return to work.  In fact, subsection 301(5)(e) provides that an employee who loses his favored work position - for whatever reason - shall continue to receive benefits. The plain language of subsection 301(5)(e) considers the possibility that an employee on favored work might lose a job for 'just cause.' When the employee has been employed pursuant to subsection 301(5)(e) for less than 100 weeks, the Legislature has decided that benefit availability continues." (Emphasis added)

Again, in McJunkin, Justice Kelly writes,

"The Legislature worked a subsequent change or development in the law when it codified the favored work doctrine as the reasonable employment doctrine  . . .  The primary goal of judicial interpretation is to ascertain and give effect to the intent of the Legislature  . . .  as case law must accurately reflect the legislative enactment on which it is based, (the Court of Appeals decision in) Russell must be abandoned." (Emphasis added)

Clearly, the Supreme Court is telling job providers that legislative change is necessary to address the critical issues relating to reasonable employment.

It is also important to note a fourth significant decision released less than three weeks after the trilogy of cases.  The fourth case, Calovecchi v State of Michigan, deals with the issue of mental injuries in the workers' compensation system. It also was unanimous.
 
In Calovecchi, the Supreme Court ruled that compensation is not precluded under the Workers' Disability Compensation Act for mental injuries caused by acts of discipline that do not sever the employment relationship.  Writing for the Court, Justice Corrigan said,

"Defendant contends that our failure to extend Robinson to preclude the payment of compensation for mental injuries caused by acts of discipline (and other employer actions) that do not sever the employment relationship would have the 'unfortunate result' of encourag[ing] employers to terminate the employment relationship rather than to impose less severe discipline.  This prediction may or may not come true.  These policy questions are properly directed toward the Legislature rather than to this Court.  Our duty is to construe the text of the statute before us, not to reach the policy result we judges think preferable." (Emphasis added)

The Michigan Chamber has been actively involved in the efforts to clarify the mental injury provisions of the workers' compensation act for nearly five years.

During the last legislative session, two bills were introduced to address these concerns, but neither moved through the process before adjournment.  During the current session one bill, House Bill 4512 (Kuipers) has been introduced and referred to the House Committee on Employment Relations, Training & Safety.

The Michigan Chamber of Commerce supports the proposed amendment to the Michigan Constitution of 1963 sponsored by the state legislature under House Joint Resolution E that will be on the August 6, 2002 statewide primary election ballot for voter approval.

The proposed amendment would amend Section 12 to Article IV, to provide that the state officers compensation commission’s determination of certain salaries and expense allowances become effective only upon approval by the legislature for the following legislative session.