California Law
California Workers' Compensation Defense Law
Workers' Compensation Defense Law
Like many other states, California has a workers' compensation system to compensate employees for accidental injuries occurring in the workplace. With few exceptions, all employers must carry workers' compensation insurance or demonstrate that they are self-insured and have the financial resources to cover any reasonably anticipated claims. California, like many states, has struggled to create a workers' compensation program that contains costs and balances the interests of injured workers, employers, and insurers. Every businessperson with employees should have a basic understanding of his or her responsibilities under California's workers' compensation law. The workers' compensation system operates under rules substantially different from those used to settle other types of personal injury claims. For this reason, many lawyers specialize in handling only workers' compensation disputes, while other lawyers who routinely do personal injury work never handle workers' compensation claims.
Workers' Compensation: The Basics
Workers' compensation is a state program that requires employers to have an insurance policy covering employees for work-related injuries. When an employee is injured on the job, the employer or the insurance company pays for medical care and lost wages due to the injury. Though the employer (not the employee) pays the insurance premium, the cost of workers' compensation ultimately passes to the consumer in the form of higher prices for goods and services.
The notion of the employer, and eventually the public, paying for employee work-related injuries originated in Germany during the latter half of the 19th century. Among the chief proponents of a German workers' compensation program was Bertha von Krupp of the famed German manufacturer, Krupp Works. Krupp had long believed that taking care of workers was in the best interest of business and in 1884 successfully persuaded Chancellor Otto von Bismark to support workers' compensation for all of Germany.
Workers' compensation did not come to the United States until about 1910, when New York and Massachusetts adopted programs. California adopted its workers' compensation program in 1917. This program is administered by the California Department of Industrial Relations, Division of Workers' Compensation. The California Division of Labor Standards Enforcement, known as the Labor Commissioner's Office, enforces all state labor laws, including those requiring businesses to have workers' compensation coverage.
The advent of workers' compensation relieved injured employees from having to sue their employers to collect any sort of damages. Before workers' compensation, an employee had to prove that the employer had negligently failed to provide a safe work environment. Under workers' compensation, however, employees usually collect benefits regardless of fault. That is, even if an employee is responsible for his or her own accidental injury, the employee is covered by workers' compensation under most circumstances, as long as the injury occurred on the job. The main restriction to the program is that in most cases, workers' compensation benefits are the only form of remedy for workplace injuries. After receiving benefits, an injured employee may not sue his or her employer for further compensation.
Who Is Covered
Only employees are eligible for workers' compensation benefits. Broadly defined, an employee is anyone under oral or written appointment, contract for hire, or apprenticeship, working on a full- or part-time basis. This definition encompasses even aliens who are unlawfully employed, minors, and prisoners in work programs. Not included in this definition, however, are most domestic workers in private homes, volunteers in non-governmental entities, amateur athletes, casual laborers, independent contractors, and anyone who is not subject to the control and direction of the employer.
An employee's injury must arise "out of and in the course of employment" to be covered by workers' compensation. Basically, this means that the injury has to occur while the employee is involved in some activity directly related to his or her job. An employee injured at the job site performing tasks at the direction of the employer is covered, as is an employee who is injured on a business trip, as long as the employee is engaged in employment duties. Workers' compensation coverage even extends to an emergency during which an employee leaves work intending to save life or property. An employee is not covered, however, while participating in off-duty work-related or work-sponsored social, athletic, or recreational events, unless participation is required by the employer. An employee is not covered while traveling to or from the place of employment, except if the employer asks the employee to perform a special duty on the way or if the employee is paid for the commute time. Employees also are not covered when voluntarily participating in employer-sponsored alternative commute programs, unless the employer elects to provide coverage. Employees injured during work breaks when no work is being performed also may not be covered, depending on the circumstances. Employees are not covered if injured while intoxicated at the workplace or if their injuries are willfully self-inflicted. An employee also will not be covered if injured during "horseplay" with another employee, unless the employer knows of and condones such horseplay.
Available Benefits
Workers' compensation entitles an employee to all reasonable and necessary medical care related to the injury. The benefits available to workers include permanent or temporary total disability, permanent or temporary partial disability, and medical and related expenses. Benefits include visits to an approved health care provider, surgery, hospital care, dental or orthodontic treatment, prescription drugs, and medical supplies ordered by an approved physician. An employer cannot be made to pay for emotional distress such as pain and suffering. In the case of a temporary disability, there will be no payments made for the first three days of lost work unless the disability continues for more than 14 days or the employee was hospitalized for inpatient treatment.
An injured employee also may be entitled to payment for lost wages. An employee is entitled to lost wages benefits if he or she is able to work, but has suffered a permanent loss of a bodily function as a result of the injury. Benefit amounts are determined by set state guidelines and can be as high as two-thirds of a worker's salary at the time of the injury.
Injured employees unable to return to work also may be entitled to rehabilitation and training provided through the Division of Workers' Compensation, Vocational Rehabilitation Unit and local community colleges. The employer must provide notice of rehabilitative services to an employee whose disability continues for a total of 90 days. The employee's doctor must determine if the employee is medically eligible for vocational rehabilitation services. An employee's use of these services is not mandatory, but an employee who elects not to use the services must notify the employer in writing of this choice.
If an employee dies as result of a work-related injury, the employee's dependents--spouse, children, or dependent parents--are entitled to death benefits of up to $150,000, with certain limitations.
The Employer's Responsibilities
With few exceptions, all California employers must cover their employees with workers' compensation insurance. California law requires that employers with one or more employees have workers' compensation insurance coverage. Failure to provide workers' compensation or self-insurance coverage in California is a misdemeanor and may result in a stop order and substantial penalties. The cost of premiums for compensation insurance is determined by factors such as the number of employees a business has, how safe the record of the workplace proves to be, and how much employees are paid. Generally, the greater the payroll or the higher the risk, the higher the premium. However, an employer may be able to lower premiums by establishing programs to provide for a safer workplace and by working with injured employees to minimize lost work time.
The trade-off for an employee's relatively easy route to compensation is a limit to the amount of money that can be awarded for a work-related injury. Employers are immune from liability in lawsuits by maintaining workers' compensation insurance to cover on-the-job injuries, unless they act intentionally to cause injury.
Any insurance broker or attorney should be able to help a business obtain workers' compensation insurance. An employer also may seek help by contacting the Division of Workers' Compensation.
Notice
If an employee is injured on the job and wishes to claim benefits under the workers' compensation program, he or she must notify the employer within 30 days of the date of the injury, the date when the effects of the injury first become apparent, or the date when a medical expert first discovers the injury. Failure to meet this deadline may threaten the employee's right to benefits. The notice must be in writing and must be signed by the employee or, in the event of a death, by a dependent or someone on his or her behalf. In a large company, an employee gives notice by informing his or her supervisor of the injury. In cases in which the employer has sufficient knowledge of an injury to allow him or her to investigate the incident, the employer is said to have "constructive notice."
When an injury or illness results in loss of time from work or requires medical treatment beyond first aid, additional requirements come into effect. Within one working day of receiving notice of such an injury or illness, the employer must provide the injured employee with a notice of benefits and a claim form. Portions of the claim form must be completed by the employee, and additional portions are completed by the treating physician. The attending physician must file the completed form with the employer or the insurance carrier within five days of the treatment. Within five days of receiving the report, the employer or insurance carrier must file the report with the Department of Industrial Relations, through the Division of Labor and Statistics Research. In the event the employee is injured by pesticide poisoning, the treating physician must file the completed report within 24 hours and also must report the incident to the local health officer. In every case of serious injury or death, an employer also must report the incident immediately by telephone or telegraph to the California State Department of the Occupational Safety and Health Administration.
Payment of Benefits
The employer or insurance carrier is obligated to provide necessary medical treatment. Treatment that is "medically necessary" is any medical treatment that assists the employee in recovering or helps to improve the employee's condition. Usually, this treatment ranges from diagnostic procedures to physical therapy, and may include psychiatric counseling, chiropractic care, plastic surgery, medicine, prostheses and other medical supplies, travel expenses (for travel to obtain medical treatment), and attendant or custodial care.
The employer or carrier has the right to authorize the treating health care provider, but may not coerce or threaten the employee in the selection of a physician. If the employee is unhappy with the physician, a different physician may be requested, and the employer must direct the employee to a new health care provider. The employer is not obligated to approve a request for a particular physician.
Refusing to Pay Benefits
Under some circumstances, employers may refuse to pay workers' compensation benefits. An employer may refuse to pay a workers' compensation claim because he or she believes the injury was not work-related or the benefits demanded exceed those justified for the injury. An injured employee may lose the right to receive benefits if the employer has implemented a drug-free workplace program and the employee tests positive for drugs. Benefits may also be jeopardized if an employee fails to follow safety rules and consequently suffers injury.
If the employer and the employee dispute the payment of medical care or lost wages, they should first try to resolve the dispute on their own. If this is unsuccessful, they must seek relief through the Workers' Compensation Appeals Board, which has exclusive jurisdiction over all disputes involving both insured and self-insured employers. The dispute will be referred initially to an administrative law judge, who may conduct a hearing and may take testimony. The findings and order of the judge will be reviewed by the Appeals Board, which may accept, reject, or modify the findings. A party who is dissatified with the results of the arbitration proceedings may apply to have the case reviewed by the California Supreme Court or by the court of appeal for the district in which he or she resides.
Other Employer Responsibilities
Employers are prohibited from discharging or threatening any employee for asserting a valid claim for workers' compensation benefits. However, an employer is not required to hold an injured employee's position until the employee can return to work. It is illegal for an employer to refuse to hire an individual because he or she has a disabling condition from a prior injury. However, if an employee suffers an injury that is made greater because of a pre-existing condition at the time of hiring, the employer's liability is limited. The purpose of this law is to encourage employers to hire people who may have disabilities from previous injuries.
Resources
California Department of Industrial Relations, Division of Workers' Compensation, Information and Assistance Unit, 395 Oyster Point Boulevard, San Francisco, CA 94142, (415) 975-0700.
Stanford D. Herlick, California Workers' Compensation Law Handbook, (Parker & Son, Carlsbad, CA 1994).
California Department of Industrial Relations, Occupational Safety and Health Division, P.O. Box 420603, 395 Oyster Point Boulevard, San Francisco, CA 94142-0603, (415) 972-8835.