| How Workers' Compensation Works | | | | rate assigned to each corresponding employee |
| All California employers must provide workers' | | | | classification. Classifications are developed and |
| compensation benefits to their employees under | | | | assigned by the workers' compensation Insurance |
| California Labor Code Section 3700. There are | | | | Rating Bureau (WCIRB) in most cases. |
| five basic types of workers' compensation | | | | Rating |
| benefits - medical care, temporary disability | | | | Workers' compensation insurers assign a specific |
| benefits, permanent disability benefits, vocational | | | | rate to each occupational classification code. |
| rehabilitation services, and death benefits. | | | | Currently, California workers' compensation |
| How Is Coverage Structured in a Workers' | | | | insurers operate under an "open" rating system. |
| Compensation Policy? | | | | This means that individual companies set rates |
| Workers' compensation coverage is offered under | | | | based on their ability to adequately cover losses |
| Part One of a workers' compensation insurance | | | | and expenses in each classification (occupational |
| policy. In Part One, the insurance company agrees | | | | business class). Open rating requires that all |
| to promptly pay all benefits and compensation | | | | workers' compensation insurers file their rates and |
| due to an injured worker. Employers Liability | | | | all applicable supplementary rate information with |
| insurance can provide important coverage in | | | | the California Dept. of Insurance. Rates must be |
| addition to workers' compensation insurance. | | | | adequate to maintain the solvency of an insurance |
| Employers Liability is offered under Part Two of a | | | | company. The Insurance Commissioner will not |
| workers' compensation and Employers Liability | | | | approve rates if they are inadequate to cover an |
| Insurance policy. Employers Liability Part Two | | | | insurer's losses and expenses, unfairly |
| protects the employer against instances where an | | | | discriminatory, or create a monopoly in the |
| employee's injury or disease is not considered | | | | marketplace. The rate itself is expressed in dollars |
| work related. | | | | and cents and is multiplied by each $100 of payroll |
| How Is Workers' Compensation Insurance | | | | per classification. |
| Purchased? | | | | Insurance Claims |
| Employers must purchase workers' compensation | | | | The California Dept. of Industrial Relations, Division |
| insurance from either a licensed insurance | | | | of Workers' Compensation assists employers and |
| company or through the State Compensation | | | | employees with workers' compensation claims. |
| Insurance Fund (SCIF). SCIF is a state-operated | | | | When disputes arise regarding a workers' |
| entity that exists in order to transact workers' | | | | compensation claim, the Information and |
| compensation on a non-profit basis. SCIF | | | | Assistance Unit attempts to resolve the dispute. |
| competes with private workers' compensation | | | | If they are unable to resolve the dispute, then a |
| insurance companies for business and also | | | | formal application for adjudication can be filed with |
| operates as the insurer of last resort if private | | | | the Workers' Compensation Appeals Board. The |
| companies are not willing to offer workers' | | | | Workers' Compensation Appeals Board has |
| compensation insurance. | | | | exclusive jurisdiction over dispute resolution. |
| What Happens to an Employer Who Does Not | | | | Issues That Complicate the Workers' |
| Purchase Workers' Compensation Insurance? | | | | Compensation System in California |
| Employers who fail to purchase workers' | | | | Despite what appears to be a straightforward and |
| compensation insurance are in violation of the | | | | well orchestrated system, there are many issues |
| California Labor Code. The Director of the | | | | that complicate the efficient and cost-effective |
| Department of Industrial Relations has the | | | | implementation of workers' compensation in |
| authority to issue a stop order against any | | | | California, among those issues are: |
| company who is discovered to be unlawfully | | | | • the cost to employers of insurance |
| uninsured for workers' compensation. A stop | | | | premiums; |
| order closes down business operations until | | | | • type and scope of coverage; |
| workers' compensation insurance is secured. | | | | determination of injury or illness; |
| How Are Workers' Compensation Premiums | | | | • benefit amounts; |
| Calculated? | | | | • cost of vocational rehabilitation; fraud |
| Classification | | | | on the part of doctors, workers and employers; |
| Workers' compensation premium calculation is | | | | . timeliness of benefit payments; uncovered |
| based upon how employees are classified | | | | workers; attorneys' fees. |
| according to their specific work duties and the | | | | |