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What must a ‘temporarily unemployed’ car accident victim show to collect wage loss benefits?

August 29, 2014 by Steven M. Gursten

Must must show ‘actively seeking employment’ & ‘unemployed status’ not permanent; judges call Home-Owners’s argument ‘legally unfounded’

temporarily unemployed and wage loss

Michigan’s No Fault law is clear about what a car accident victim, who was “temporarily unemployed at the time of the accident,” must show to collect No Fault wage loss benefits.

First, to make the claim under No Fault, an accident victim must be injured in a motor vehicle accident, and the injury must be serious enough that she is now unable to work.  To make the wage loss claim as temporarily unemployed, however, she must also show:

  • She was “‘actively seeking employment’” at the time of the accident.
  • Her “‘unemployed status would not have been permanent if the [accident-related] injury [which is disabling her working] had not occurred.’”

Recently, the Michigan Court of Appeals reaffirmed this as settled points of law in a case where Home-Owners Insurance Company was trying to muddy the wage loss law’s clear message in order to create a new rule that the auto insurer and other insurance companies could use to deny wage loss claims  based on “temporary unemployment.”

The decision is an important one.

In Jones v. Home-Owners Insurance Company, Home-Owners insisted the only way a car accident victim could show she was “temporarily unemployed” at the time of a motor vehicle accident (i.e., “would have been employed were she not injured”) was if she had “documentation from a prospective employer that a job was available within [her] skill set.”

In other words, Home-Owners’s wanted the court to agree that a person needed proof of “an actual job offer” to prove she met the No Fault law’s legal definition of “temporarily unemployed.”

Fortunately, Home-Owners’s proposed new legal interpretation (an example of how a claim adjuster or insurance company can engage in their own pernicious example of judicial activism) fell flat with the Court of Appeals two-judge majority:

“[W]e reject as legally unfounded Home-Owners’s argument that [wage loss] benefits [for a car accident victim who was temporarily unemployed at the time of the accident] must be paid only when a claimant substantiates receipt of an actual job offer made before an accident.”

Applying the existing law to Angel Jones’s claim for No Fault wage loss benefits, based on her having been “temporarily unemployed” at the time of the car accident that disabled her from working, the judges agreed Ms. Jones had proved her case:

  • “Jones presented evidence of her work history at Origami [Brain Injury Rehabilitation Center], where she had ceased working full-time four months before the accident. In the interim, Jones actively sought full-time work …”
  • “[T]he evidence supported a reasonable inference that Jones would have obtained employment as a parent advocate had the accident not intervened. … Only days before the accident, Jones learned of a promising job opportunity and expressed confidence that she would have been hired. The trial evidence included the job posting and [a] recommendation that Jones ‘would be a good candidate’ for the position. … Jones produced … evidence directly corroborating that she planned to apply and was qualified for the position.”

Bottom line, the Court of Appeals said:

  • “The jury was entitled to infer that based on Jones’s employment record, her qualifications, and the job requirements, the patient advocate position likely would have been offered and accepted.”
  • “[A]  reasonable jury could conclude that Jones was only temporarily unemployed at the time of the accident.”

Accordingly, the Court of Appeals upheld the Wayne County Circuit Court jury verdict awarding Ms. Jones $38,124 in unpaid wage loss benefits – and $42,698.88 in interest for those “overdue benefits.”

No Fault wage loss benefits

Under Michigan’s No Fault law, if a car accident victim’s accident-related injuries prevent her from returning to work, then she is entitled to collect No Fault wage loss benefits.

No Fault wage loss benefits cover “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.” (MCL 500.3107(1)(b))

Significantly, the No Fault law also takes into consideration the person who was “in between jobs” or “temporarily unemployed” at the time of a car accident.

In that instance, No Fault wage loss benefits for a  “temporarily unemployed” car accident victim are “based on earned income for the last month” that the car accident victim was “employed full time preceding the accident.” (MCL 500.3107a)

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