California Workers’ Compensation Reform

The basics

Employers are holding their breath that new legislation that went into effect in April of this year will succeed in bringing sanity to California’s Workers’ Compensation quagmire. The goal of the legislation has been to strike a balance between workers and employers that would allow a truly injured worker to get appropriate medical care, but limit the burden to the employer.

Why SB 899?

According to State Senator Chuck Poochigian, sponsor of the legislation, there were several compelling reasons for quick reform to current laws:

  • Current costs for medical claims are unreasonably high. The average cost of a workers’ comp. medical claim in California in 2002 was $35,201 (The national average was less than half that amount–$15,320).
  • Because of an ‘arbitrary and subjective’ disability system, employees with similar injuries often receive vastly different compensation or injury awards. The new law seeks to eliminate the discrepancies and assure that all injured workers are treated fairly.
  • The new legislation attempts to improve California’s return-to-work rate, which is currently the worst in the nation.
  • Employers have complained that penalties designed to protect workers have levied excessive fines for minor infractions.

What changes with SB 899?

The new law presents some sweeping changes to the workers’ compensation system. Some of the major changes include:

  • Employers can now create networks of physicians and health care providers for an employee who seeks medical attention because of a workplace injury.
  • When an employee disagrees with the original diagnosis, or is unhappy with the quality of medical care, he or she can obtain a second or third opinion within the employer’s physician network. If there is still a disagreement, an employee can seek an IMR, or independent medical review, from a state-certified physician. If this review determines that the employee is not receiving appropriate care, the employee could seek medical treatment outside of the employer network.
  • Medical treatment must be made available within one day of the injury.
  • The new law encourages return-to-work policies by implementing a two-tier disability schedule. Employees who are not able to work, or are not offered re-employment receive a 15% disability payment increase. Employees who receive a return-to-work offer will see a 15% decrease in disability payments.

For more information about recently enacted workers’ compensation reforms, visit the division of workers’ compensation website at

Sources: “2004 Workers’ Compensation Package Provides Comprehensive Reform: SB 899 Inserts Common Sense into Our Dysfunctional System.” Capitol Update.

“California Workers’ Compensation Reform.” SHRM Online.