The Basics of California Workers' Compensation

How Workers' Compensation Worksrate assigned to each corresponding employee
All California employers must provide workers'classification. Classifications are developed and
compensation benefits to their employees underassigned by the workers' compensation Insurance
California Labor Code Section 3700. There areRating Bureau (WCIRB) in most cases.
five basic types of workers' compensationRating
benefits - medical care, temporary disabilityWorkers' compensation insurers assign a specific
benefits, permanent disability benefits, vocationalrate 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 underbased on their ability to adequately cover losses
Part One of a workers' compensation insuranceand expenses in each classification (occupational
policy. In Part One, the insurance company agreesbusiness class). Open rating requires that all
to promptly pay all benefits and compensationworkers' compensation insurers file their rates and
due to an injured worker. Employers Liabilityall applicable supplementary rate information with
insurance can provide important coverage inthe 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 acompany. The Insurance Commissioner will not
workers' compensation and Employers Liabilityapprove rates if they are inadequate to cover an
Insurance policy. Employers Liability Part Twoinsurer's losses and expenses, unfairly
protects the employer against instances where andiscriminatory, or create a monopoly in the
employee's injury or disease is not consideredmarketplace. The rate itself is expressed in dollars
work related.and cents and is multiplied by each $100 of payroll
How Is Workers' Compensation Insuranceper classification.
Purchased?Insurance Claims
Employers must purchase workers' compensationThe California Dept. of Industrial Relations, Division
insurance from either a licensed insuranceof Workers' Compensation assists employers and
company or through the State Compensationemployees with workers' compensation claims.
Insurance Fund (SCIF). SCIF is a state-operatedWhen disputes arise regarding a workers'
entity that exists in order to transact workers'compensation claim, the Information and
compensation on a non-profit basis. SCIFAssistance Unit attempts to resolve the dispute.
competes with private workers' compensationIf they are unable to resolve the dispute, then a
insurance companies for business and alsoformal application for adjudication can be filed with
operates as the insurer of last resort if privatethe 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 NotIssues 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 thewell orchestrated system, there are many issues
California Labor Code. The Director of thethat complicate the efficient and cost-effective
Department of Industrial Relations has theimplementation of workers' compensation in
authority to issue a stop order against anyCalifornia, among those issues are:
company who is discovered to be unlawfully• the cost to employers of insurance
uninsured for workers' compensation. A stoppremiums;
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
Classificationon the part of doctors, workers and employers;
Workers' compensation premium calculation is. timeliness of benefit payments; uncovered
based upon how employees are classifiedworkers; attorneys' fees.
according to their specific work duties and the