In most states, there is a process for obtaining reimbursement for an over payment of comp benefits. I would be extremely surprised for an employee-friendly state such as Michigan to allow your employer to take from your current wages what was ultimately their mistake. I would talk to an attorney for two reasons. First, to check and make sure there was a mistake in the first place (employers and insurance companies lie all the time). Second, to make sure they are following the letter of the law in reimbursing themselves. Best of luck!
Workers' Compensation law is based upon each individual state statute. In Michigan, under
statute 418.833(2) When an employer or carrier takes action to recover overpayment of benefits, no recoupmentof money shall be allowed for a period which is more than 1 year prior to the date of taking such action.
Various cases in Michigan indicate that a 50% reduction is normal and customary. See Everden v. Leaseway Motorcar Transport Company, No. 244260 (Mich. App. 11/20/2003) (Mich. App., 2003), Franks v. White Pine Copper Div., Copper Range Co., 422 Mich. 636, 375 N.W.2d 715 (Mich., 1985)
Contrast this with the law in Florida which states that the employer/carrier is only allowed to recoup 20% of any check until the total amount overpaid is recouped.
Workers Compensation in any state is a complicated matter and you should consider meeting with a workers compensation lawyer in your local area. There may be issues regarding the the carrier's eligibility to recoup and calculation issues.