Workers' Compensation

All California employers must provide workers' compensation benefits to an employee who is injured or becomes ill due to his or her job. Employers must give every new employee, either when the employee is hired or by the end of the first pay period, written notice of the employee's right to receive workers' compensation benefits should the employee be injured on the job.

The cost of workers' compensation insurance is the employer's responsibility. An employer may not require an employee to pay any of the cost of its workers' compensation coverage, including any out-of-pocket medical expenses.

The workers' compensation program in California is administered by the Division of Workers' Compensation (DWC) in the Department of Industrial Relations. The Workers' Compensation Appeals Board adjudicates disputes between injured employees, insurance carriers and employers as to the merits of an employee's claim.

Premiums: Workers' compensation insurance premiums charged to an employer are generally based on its business type (classification), claim history (loss experience) and the total wages it pays (payroll). An employer in California is placed in one of more than 400 different classifications.

Employers in the same classification may have very different loss experience, which causes their insurance premiums to be different. Employers are subject to an experience modification rating, which is applied to their premium, when their premiums meet an amount set by law over a three-year period. This so-called "ex-mod" is used to determine the premium it will be charged relative to other employers in its classification. An ex-mod of 100 percent means an employer's loss experience is average. One with a higher loss experience than such an employer would pay a higher premium.

Coverage: California's workers' compensation system covers nearly all employers and employees. To be entitled to workers' compensation benefits, a person must be an employee of a covered employer as those terms are defined in the Labor Code.

Employer Defined: Labor Code section 3300 defines an employer as:

1. The state and every state agency.

2. Each county, city, district, and all public and quasi-public corporations and public agencies therein.

3. Every person including any public service corporation, which has any natural person in service.

4. The legal representative of any deceased employer.

Employee Defined: Labor Code section 3351 defines employee as "every person in the service of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed." The term includes aliens, minors, corporate officers and directors while rendering actual service for the corporation for pay (except that where they are the sole shareholders thereof, they and the corporation become covered only if they elect to do so), domestic employees (other than one who is employed by his or her parent, spouse or child), and all working members of a partnership who receive wages irrespective of profits from the partnership (except that where the working members of the partnership are general partners, the partnership and the partners become covered only if they elect to do so. If a private corporation is a general partner, "working members of a partnership" includes the corporation and its officers and directors who are its sole shareholders).

Employee Exclusions: Labor Code section 3352 excludes from the definition of employee various categories of other persons. The exclusions do not pertain to agricultural employment.

Responsibilities of Employers: California's workers' compensation laws require employers to:

1. Secure workers' compensation insurance for employees, either under a policy from an insurer or by obtaining a certificate of consent to self-insure. (Failure to do so is a misdemeanor for which criminal penalties and injunctive action may result.)

2. Provide compensation benefits within a reasonable period to an injured employee. (Failure to comply may result in the employee's total benefits being increased 10% as a penalty against the insurer and employer.)

3. Provide within one working day after learning of an injury a claim form and a notice of potential eligibility for benefits to the injured employee or, in the case of death, to his or her dependents. The notice must include a description of the procedures and help available to the employee. (For more information about the claim form and notice, see "Workers' Compensation" in the section "Posters, Notices and Disclosures" on page 106 and "Notice of Injury by Employee" and "Employee Claim Form" in this section.)

4. File with the insurance carrier an "Employer's First Report of Injury" within five days after learning of a reportable injury. See explanation of "Reportable Injury" in this section.

5. Post and keep posted in a conspicuous place frequented by employees during the workday a notice stating either the name of the current compensation insurance carrier or the fact that the employer is self-insured, who is responsible for adjusting claims and the employee's rights.

6. Give every new employee, either when the employee is hired or by the end of the first pay period, written notice of the employee's right to receive workers' compensation benefits should the employee be injured on the job. This is in addition to the posting requirement mentioned above.

7. Notify an injured employee of the availability of rehabilitation services when the disability exceeds 27 days. A copy of the notification must be forwarded to the State Department of Rehabilitation. Either the employer or its insurer must comply with this requirement.

8. Give an employee, together with the last payment of temporary disability indemnity, a notice stating the employer's position on the payment of permanent disability indemnity to the employee. For more details see "Permanent Disability Indemnity" in this section.

9. Give an employee, upon request, a form to indicate the employee's personal physician.

Other employer obligations as to occupational illnesses and injuries are covered in the section "Cal/OSHA Safety and Health Requirements" starting on page 1.

Reportable Injury: An employer must file a complete report of every occupational injury (including an illness) incurred by an employee that results in lost time beyond the date of the injury or requires medical treatment beyond first aid. The report must be filed with the insurer within five days after the injury has been reported to the employer. "Lost time" means an absence from work for a full day or shift beyond the date of the injury, and "first aid" means any one-time treatment of minor scratches, cuts, burns, splinters, and so forth, that does not require a physician's services.

Specifically, an injury requiring only first aid need not be reported. Such first aid may be provided by the employer or a physician or other health-care provider. To avoid opening a workers' compensation claim, an employer may choose to pay for the medical treatment of these minor industrial injuries. The employer should ask the medical provider to bill it directly. However, the employer should be aware that a second treatment, other than mere observation, of an injury will bring it within the definition of a reportable injury. In this case, the employer must provide the injured employee with an Employee Claim form and submit an Employer's Report of Occupational Injury or Illness to its workers' compensation insurer.

Only an injury that arises out of employment triggers the employer's duties under the workers' compensation laws. Thus, an employer who is positive an alleged on-the-job injury is fraudulent (i.e., no injury exists or it did not arise out of employment) may choose to refuse to provide a claim form and medical treatment to the individual and to report it to the insurer. An employer taking this route must be sure it can prove its position, as the individual alleging the injury may seek to adjudicate the issue before the Workers' Compensation Appeals Board. The outcome hinges on the weight of the evidence and the credibility of testimony, and the employer faces penalties should it be held the employee did indeed incur a covered injury.

Notice of Injury by Employee: An employee must notify his employer about a work-related injury within 30 days after incurring it. The notice of injury must to be in writing and signed by the injured person or someone on his behalf. However, knowledge of an injury obtained by the employer, or by the employer's manager, supervisor, or other person in authority, or knowledge of the assertion of a claim of injury sufficient to enable the employer to investigate the facts, is considered sufficient notice.

Employee Claim Form: Within one day after learning of an injury, an employer must give the injured employee a claim form and a notice of potential benefit eligibility. The form must state the injured employee's name and address and the time, place and nature of the injury. The notice must include: a description of the procedures and help available to the employee; the procedure used to start proceedings to collect benefits; the telephone number of the Office of Benefit Assistance and Enforcement; and a statement that the employee has the right to consult with the Office of Benefit Assistance or an attorney.

The completed claim form must be filed with the employer by the injured worker or, in the case of death, by a dependant of the decedent employee, or by an agent of the employee or dependant.

Form to Indicate Physician or Chiropractor: An employee may be treated by his or her own personal physician or personal chiropractor for an injury requiring more than first aid immediately after the injury if, before the injury, the employee notified the employer in writing of the name of the regular personal physician or personal chiropractor who previously directed the employee's medical treatment and who has the employee's medical history and records. At the time of hire, each new employee must be given a pamphlet describing workers' compensation coverage and a form for the employee to designate her personal physician or personal chiropractor. The employer may require an employee who selects his or her own personal physician or personal chiropractor to be examined by a medical consultant of the employer's choice, at the employer's expense, at reasonable intervals. Here is a sample form:

Pre-Designation of Personal Physician or Personal Chiropractor

Pursuant to California Labor Code section 3551(b)(3) I, the undersigned, declare the following:

If I were to incur a work-related injury or illness, I desire to be treated by:

A. the company's designated physician or medical facility.

B. my personal physician or personal chiropractor as noted below.

If B. above was marked, please complete this portion:

Personal Physician/Personal Chiropractor Information:

Name:

Address:

City: State: Zip:

Phone Number:

I authorize the company to verify that the above-named physician or chiropractor is my regular personal physician or chiropractor. I authorize my personal physician or personal chiropractor to supply the company with information to establish his or her status as such, and I release my personal physician or personal chiropractor from liability for any damage that may result from furnishing that information to the company.

Employee Name:

Employee Signature:

Date:

Disability Benefit Payments: Disability benefit payments include the services of a physician, hospital care, physical restoration, dental care, prescriptions, medical and surgical supplies, crutches, X-rays, laboratory tests and studies and all other necessary and reasonable apparatus and care ordered by the treating physician. There are no deductibles. The employer or its workers' compensation insurance carrier pays for all medical and hospital care.

In addition to all necessary medical treatment, an employee is entitled to mileage fees from home to the place of treatment and/or examination and back.

Medical Treatment: An employer may require an employee injured on the job to be treated by a physician designated by the employer within the first 30 days of the injury, unless the employee could not report the injury before receiving emergency services or the employee previously indicated, in writing, that he or she wanted to be treated by another physician. Despite the 30-day provision, however, after an injury has been incurred where the employee has not previously indicated another physician, the employee may orally or in writing request another physician.

Premium Calculations: The premium an employer pays for workers' compensation insurance is based on earnings of employees. The earnings of each employee are multiplied by an occupational classification rate for the class of employee.

Traveling To or From Work: Generally, workers' compensation does not cover an employee while going to or returning from work. However, this rule has many exceptions. If the employee's travel to or from work benefits the employer, then the trip is considered as having been made within the scope of employment. For example, the trip of an employee told to pick up supplies on the way to work is covered. Also, if an employee is expected to perform a service for the employer, such as bringing other employees to work, then the time traveling is covered.

Injuries sustained during the course of "special missions" are compensable, even though part of the trip could be considered going to or returning from work. For example, an employee who is not required to report to work at any particular place but travels in the course of his duties is considered to be on a special mission. Where an employer provides transportation to or from work, the employee is inferred to be within the scope of employment. This also applies to employees driven to work by an employee paid by the employer to provide car-pooling services, even though the employee uses his own vehicle. Traveling time is also covered under workers' compensation where the employer pays or reimburses employees for the time spent or expenses incurred in traveling to or from work.

Exclusive Remedy; Exceptions: With some exceptions, workers' compensation is the exclusive remedy available to an employee for a job-related injury. Thus, an employee injured on-the-job generally may not sue or get tort damages from his employer. However, an injured employee may sue his employer if it failed to cover him with workers' compensation insurance, or may apply for workers' compensation benefits as though he were covered, or both.

Serious and Willful Misconduct: Where an employee is injured due to his employer's serious and willful misconduct, the amount of compensation otherwise recoverable is increased by one-half. There is no limit on the recoverable compensation, and the liability is not insurable. Serious and willful misconduct involves: (1) a deliberate act done to injure another, (2) an intentional act with the knowledge that serious injury is a probable result, or (3) an intentional act with a reckless disregard of its possible consequences. An employer must have known of the dangerous condition or safety order violation and failed to take corrective action either deliberately or with a reckless disregard for the consequences.

Illegally Employed Minors: A minor under 16 years of age who is injured while employed illegally (e.g., working during school hours or after 10 p.m.) is awarded an additional amount equal to 50 percent of his workers' compensation benefits. There is no cap on the award, and the liability is not insurable, so the employer must pay it.

Discrimination - Labor Code Section 132a: Labor Code section 132a prohibits an employer from discharging an employee for filing a claim for the payment of workers' compensation benefits or a complaint with the Workers' Compensation Appeals Board, or for testifying or making known his intention to testify in a case under consideration by the Board.

A common problem associated with on-the-job injuries is where an injured employee misses work due to the injury and is discharged for poor attendance. The California Supreme Court has held that an employer may not discharge an employee solely because of absences from work due to a job-related injury.

Another problem associated with Labor Code section 132a is where an injured employee has returned to work but is chronically absent or does not perform up to company standards, especially where the employer tolerated such performance or attendance before the injury. Extreme caution should be used in this situation.

An employer should consult legal counsel before discharging any employee who has incurred an on-the-job injury. Discriminating against an employee because of an occupational illness or injury is a misdemeanor, and the employee's compensation may be increased by one-half up to $10,000. Also, the employee may be entitled to reinstatement and reimbursement for lost wages.

Penalties: Employers face significant criminal and civil penalties for failing to procure either workers' compensation insurance or authorization by the State of California to be self-insured. An employer lacking this insurance is fined $1,000 for each employee on its payroll. For example, an employer with 10 employees would be fined $10,000. In addition, investigators will close the employer's business until the insurance is procured. While it is closed, the employer must still pay its employees their regular pay for up to 10 days.

Postings: Required postings are discussed in the section "Workers' Compensation" on page 106.