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If your business has employees in the state of California, you’ll need to make sure you adhere to California’s Workers’ Compensation Insurance laws. Workers’ Compensation provides medical and financial benefits for employees who suffer work-related injuries or illnesses or for their survivors in the case of an employee death.
California requires all employers who have at least one employee to obtain Workers’ Compensation Insurance. In California, an “employee” is generally defined as someone who works part-time or full-time for an organization or individual and is not an independent contractor.
The California Workers’ Compensation Act (WCA) defines all of the requirements for Workers’ Comp in California, and the Division of Workers’ Compensation (DWC) monitors, enforces, and administers the program. Ensuring your company is in compliance is critical, as there are serious penalties and fines for those who fail to abide by state regulations.
Almost all workers are covered under Workers’ Compensation in California. If you provide work or services for an employer, and you are not an independent contractor, you will likely be eligible for Workers’ Compensation Insurance.
The following are categories of employees that are eligible for Workers’ Comp coverage:
- Full-time and part-time employees
- Apprenticeships and internships
- Contract employees
- Domestic workers
- Undocumented workers
Under Workers’ Compensation in California, employers are required to provide the following benefits to employees who are injured in the course of employment:
- Medical expenses, including treatment, medicine, supplies, physical therapy, chiropractic services, and acupuncture
- Expenses required to obtain medical treatment, including travel expenses and interpretive services
- Marriage and family therapy treatment
Temporary Total Disability Benefits
- If an injured employee is unable to return to work, he or she is eligible to receive Temporary Total Disability (TTD) benefits while recovering, which provides two-thirds of a worker’s average weekly wage pre-injury.
- The DWC establishes minimum and maximum benefit amounts, which change yearly. In 2020, the minimum TTD benefit was $194.91 per week and the maximum TTD benefit was $1,299.50 per week.
- TTD benefits are available for up to 104 weeks in a five-year period or until the injured worker has recovered enough to return to work.
Temporary Partial Disability Benefits
- An injured employee may be able to return to work while recovering in a partial or limited capacity. If the employee works fewer hours or receives lower wages during this time, he or she may be eligible for Temporary Partial Disability (TPD) benefits. TPD benefits provide two-thirds of the difference between a worker’s pre- and post-injury average weekly wage.
- The DWC establishes minimum and maximum benefit amounts, which change yearly. In 2020, the minimum TPD benefit was $194.91 per week and the maximum TPD benefit was $1,299.50 per week.
- TPD benefits are available for up to 104 weeks or until the injured worker has recovered enough to fully return to work.
Permanent Disability Benefits
- If an injured employee is unable to resume work responsibilities after recovering from an injury due to partial or permanent disability, he or she may be eligible for Permanent Disability (PD) benefits.
- The amount that is paid out for PD benefits depends on a number of factors, including how impaired you are and how this affects your ability to earn a living, your age at the time of injury, and how much of the injury was caused by your work versus other factors.
- The DWC establishes minimum and maximum benefit amounts, which may change yearly. In 2020, the minimum PD benefit was $160 per week and the maximum PD benefit was $290 per week.
- PD benefits are available for a fixed number of weeks for partial disabilities and for the rest of your life for permanent disabilities.
Supplemental Job Displacement Benefits
- An injured worker with a permanent partial disability who does not return to work within 60 days of his or her temporary disability period may be eligible for a Supplemental Job Displacement Benefits (SJPD) voucher worth up to $6,000.
- SJPD vouchers may be used for education, job training, and skills enhancement expenses.
- Employers are required to pay up to $10,000 to cover funeral expenses.
- A worker’s surviving dependents may be eligible to receive two-thirds of the deceased employee’s average weekly wages, up to the maximum lifetime total of $320,000.
Failure to adhere to the Workers’ Compensation laws set out by the WCA can result in significant fines and even imprisonment. In order to avoid any costly penalties, it’s important to consult the WCA or your insurer to ensure you are in compliance. Below are the major ways in which companies can be penalized:
Failure to Purchase Coverage
- Failure to purchase Workers’ Compensation Insurance is a misdemeanor in California, punishable by a fine or imprisonment in county jail for up to one year, or both.
- A first offense fine is the greater of $10,000 or twice the premium amount the employer should have paid.
- A subsequent offense fine is the greater of $50,000 or three times the premium amount the employer should have paid.
- Failure to pay compensation will result in the employee receiving an additional 10 percent of the benefits he or she should have been paid.
Late or Unfiled Reports and Filings
- Fines of varying degrees will be issued by the DWC if an employer is late to submit or fails to submit required reports or filings.
- Failure to file the required annual report of insurance distributions will result in a penalty of $1,500 or five percent of all incurred liabilities from the previous annual report, whichever is less. This penalty is incurred every 30 days that the annual report is incomplete or not submitted.
- Failure to maintain the required security deposit with the DWC will result in a penalty of $5,000 or 10 percent of the deposit increase, whichever is less. This penalty is incurred every 30 days that the deposit remains unpaid.
- Failure to pay the required assessments will result in a penalty of $2,500 or 100 percent of the assessment amount, whichever is less. This penalty is incurred every 30 days that the assessments remain unpaid.
According to the National Academy of Social Insurance Workers’ Compensation Report (October 2019), the average employer cost for Workers’ Compensation in California was $1.83 per $100 of covered wages. This figure is estimated across all insurers and all industries, so the cost to your particular business may vary.
The claims process in California begins with the employee. If an employee suffers a work-related injury or illness, he or she must report the condition to a supervisor within 30 days. Any delays beyond 30 days may result in a denial of the claim.
The employer will have the employee fill out a claim form, and upon receiving a completed claim form, the employer will file the claim with their insurer. In addition, the employer is required to authorize medical treatment within one day of receiving the claim from the employee.
Within 14 days of filing a claim, the insurer will notify the employee as to the status of the claim. It will either be approved, denied, or held for further investigation. During the investigation period, the employee is eligible to receive medical treatment but generally no other benefits. The investigation can take up to 90 days to complete.
For more information on California Workers’ Compensation laws and requirements, please visit the following resources: