California lawmakers approve workers’ comp overhaul

California state Sen. Kevin de Leon (D-Los Angeles) was the principal author of the bill to overhaul the state's workers' compensation system.
(Rich Pedroncelli / Associated Press)

SACRAMENTO — A bipartisan bloc of lawmakers — after being personally lobbied by Gov. Jerry Brown — approved an overhaul of California’s $17-billion workers’ compensation insurance program that promises to hike benefits for injured workers and cut costs for employers.

On the last night of the legislative session, lawmakers gave final approval to a bill boosting payments to permanently disabled victims of on-the-job accidents by about $740 million a year and handing employers a major break on workers’ comp insurance premiums — set to go up as much as 18% in January.

Approval was essential for both workers and employers, the governor told legislators Friday as the package flew through both chambers. The Assembly approved the bill 66 to 4 and the Senate followed with a 34-4 vote, only three days after the measure had its first legislative hearing.


The governor called the proposal an extraordinary bill “to reform a broken system.” The legislation would “avert an imminent crisis where workers suffer and rates will skyrocket,” he said. “We have the chance to make the workers’ compensation system better — much better — for workers and cheaper for business.”

Brown has 30 days to sign the legislation.

The package, which emerged last week after months of negotiations between business and labor groups, streamlines the no-fault-insurance system. Besides the benefit increases, the money-saving provisions of the bill are aimed at reducing litigation and delays in medical treatment.

The cost-cutting comes at a crucial time for the 14.4 million employees in the state as well as their 864,000 employers.

Spiraling healthcare inflation is putting pressure on insurers, and experts estimated that employers would be likely to face big hikes in the premiums they pay when their policies renewed. Supporters warned that without the bill, insurance rate increases would possibly spur layoffs as the state is struggling to revive the economy.

The deal-closer came at midday when Brown secured the support of Senate leader Darrell Steinberg (D-Sacramento). The senator wanted and the governor agreed to support a special fund to provide $120 million a year to victims of catastrophic accidents who can’t return to work.

Assemblyman Jose Solorio (D-Santa Ana), the coauthor of the bill, SB 863, called the package “a historical compromise.” It was put together during nine months of discussions among a small group of labor unions and large employers, including Safeway Inc., Walt Disney Co. and Grimmway Farms, the state’s largest organic grower.

“We took the time to actually listen to each other,” said Angie Wei, a lobbyist for the California Labor Federation who was a key labor negotiator in the lengthy talks that produced the last-minute compromise.

Other workers’ compensation participants, such as lawyers, doctors, chiropractors and other injured-worker service providers, complained that they were frozen out of most of the deliberations until August when the bill emerged in the statehouse.

The bill’s major opponents — advocates for some injured workers and the lawyers who represent them — feared that the legal rewrite was being rushed and could create unintended consequences that could actually reduce benefits.

But SB 863’s principal author, Sen. Kevin de Leon (D-Los Angeles) disagreed. He said change is needed to restore permanent disability benefits taken away from accident victims by a 2004 law pushed through the Legislature by Gov. Arnold Schwarzenegger.

“This reverses a wrong that happened eight years ago,” De Leon said, “and puts $740 million directly back in the hands of injured workers.”