What was significant in the California workers’ comp world in 2024?
If you’re involved in the California workers’ comp system as an injured worker, labor advocate or employer, you likely have strong opinions about the fairness and adequacy of the system. But clearly workers’ comp remains a backwater issue for politicians and the public. In the last few years California has seen a property insurance crisis, rising costs for gas, housing, auto insurance, utility bills and food, higher unemployment than most states, and increased concern about crime.
Workers’ comp gets no attention.
But if you’re reading this, you likely care about California’s system, So as I have done for years, here is a subjective list of what stood out in 2024:
1. Usage of the SIBTF has ballooned, and 2024 was a year where the costs associated with the Subsequent Injuries Benefits Trust Fund (the SIBTF) exceeded the costs of operating the “user funded” Division of Workers Compensation and the WCAB. A November 2024 California Department of Industrial Relations announcement of amounts California employers will be assessed to run DIR & DWC programs outlined a large increase in charges for the SIBTF. The letter from the DIR explaining the assessments can be found here: https://www.dir.ca.gov/dwc/DWC_RevolvingFundAssessment/24UFund.pdf
2. 2024 was not a year for any grand workers’ comp deals. Applicant attorneys and labor advocates did get some legislative support for their proposals. But the employer/insurer coalition continued to be powerful, so the applicant bar did not have significant successful results in 2024 in the end.
Bills passed by the legislature but vetoed by Governor Newsom included the following:
• SB 1299 (Cortese) a bill to create a rebuttable industrial injury presumption for agricultural workers who develop or manifest a heat illness injury working outdoors where the agricultural employer failed to comply with existing heat standards
• SB 1058 (Ashby) a bill to allow certain park rangers to draw Labor Code §4850 salary continuation benefits
• SB 636 (Cortese) a bill that would have required that beginning 7/1/2026, for private employers, only a physician licensed pursuant to California law could modify or deny requests for authorization of workers’ compensation treatment
Other workers’ comp related bills that died before reaching Newsom’s desk included:
• SB 1346 (Durazo) (where a UR denial was overturned by IMR, would have excluded that period of time from the 104 week TD cap)
• AB 3106 (Schiavo) (would have required school employers to pay COVID-19 positive employees to stay home per certain RTW guidelines)
• SB 1205 (Laird) (originally a bill to require employers to provide TD to workers who missed time from work to attend medical appointments, later amended to provide that an employer’s denial of an employee request to attend scheduled treatment during work hours be deemed a Labor Code §132A violation)
CAAA did have one victory. The Governor did sign AB 1870 (Ortega) which adds to language that must be posted at job sites. Effective 1/1/25 the poster must include language in English and Spanish informing employees of their rights to consult a workers’ compensation attorney. This bill sends an important message and thus was worthwhile, though there is little evidence that many workers actually consult the posters to learn of their rights.
Other bills that passed and were signed into law are bills that addressed particular needs in the comp system. Those include the following:
• AB 2337 (Dixon) authorizes the use of electronic signatures on workers’ compensation documents
• AB 171 (Assembly Budget Committee) a trailer bill that modifies the time frame for a petition for reconsideration to be denied if not acted on from 60 days from the filing date, changing that to 60 days from the date a trial judge transmits the case to the WCAB
• SB 1455 (Ashby) delays til 1/1/28 a requirement that all contractors have workers’ comp insurance unless they can prove they had no employees, and delays requirement for Contractors State Licensing Board to implement a verification process
• AB 1239 (Calderon) extends a sunset date on a pilot program to allow clams administrators to use debit cards to pay indemnity benefits
Labor did have more success with bills that address particular industry-specific situations. Those include the following:
• AB 2754 (Rendon) amends LC §2810 and §2810.4 to expand joint liability provisions for misclassifying employees as independent contractors to port drayage carriers and their client employers that use contracted labor
• AB 977 (Rodriguez) makes assault and battery against a hospital ER healthcare providers a crime
• AB 2754 (Rendon) amends LC §2810 and §2810.4 to expand joint liability provisions for misclassifying employees as independent contractors to port drayage carriers and their client employers that use contracted labor
• AB 977 (Rodriguez) makes assault and battery against a hospital ER healthcare providers a crime
• AB 1843 (Rodriguez) requires ambulance employers to provide peer representative emotional support on request
• AB 1976 (Haney) requires that Cal/OSHA draft requirements that workplace first aid kits include naloxone opioid antagonists
• AB 2975 (Gipson) requires Cal/OSHA develop workplace violence prevention standards to include a weapons screening policy
• AB 2499 (Schiavo) prohibits discharge, discrimination or retaliation against victims of violence or family members of victims, and addresses paid sick days entitlements
• SB 1105 (Padilla) allows outdoor agricultural workers to use paid sick leave to avoid smoke, heat or flooding declared as a local or state emergency, and prohibits discrimination for claiming such leave
3. The legal wars over employee misclassification continued, as AB 5 and Prop 22 remained the subject of appellate litigation in 2024. The app-based gig employer companies won at the California Supreme Court, which rejected arguments that Prop 22 is unconstitutional.
The ABC employment test used by the California Supreme Court 2018 decision in Dynamex Operations West v. Superior Court was adopted by the legislature in 2019 as AB 5, but legal challenges followed. In June 2024 the U.S. Court Of Appeals for the Ninth Circuit ruled in Lydia Olson V. State of California that AB 5 was not unconstitutional as a violation of the Equal Protection Clause: https://cdn.ca9.uuscourts.gov/datastore/opinions/2024/06/10/21-55757.pdf
And in July 2024, Uber, Lyft and DoorDash won a big victory for their business models. On July 25 the California Supreme Court issued its ruling in Hector Castellanos v. State of California (see pdf of the opinion below), rejecting arguments that Prop 22 is unconstitutional.
The outcome was not unexpected, as observers of the oral argument before the court noted that the court seemed unsympathetic to the arguments challenging the constitutionality of the 2020 initiative called the “protect App-Based Drivers and Services Act”, which became Business and Professions Code Sections 7448 through 7467.
The court rejected the argument that the initiative was prohibited by Article XIV Section 4 of the California Constitution, which provides for legislative plenary power over California’s workers’ compensation system. In so doing they hold that section does not prevent “the people’s initiative power”.
Under the terms of Prop 22, amendments would take a seven-eighths majority of both houses of the California legislature. That would be practically impossible, of course.
The California Supreme Court declined to rule on hypotheticals such as how it would deal with an act of the legislature providing workers’ compensation to app-based drivers.
A pdf of Hector Castellanos v. State of California can be seen here: HectorCastellanosV.StateOfCalifornia(7.25.24)
Challenging Prop 22 has been a major priority of the California labor movement. But for the foreseeable future it appears that app-based drivers will be covered only by the scheme set up under Prop 22. It’s an inferior benefit system.
However, other companies are losing in litigation to avoid application of AB5 and the ABC test to their businesses. For example, in March 2024 in a ruling by Judge Roger Benitez of the U.S. District Court Southern District, the California Trucking Association and an owner-operators association failed in their effort to be exempted from AB5: https://caselaw.findlaw.com/court/us-dis-crt-s-d-cal/115973792.html
4. Some new regulations were adopted by the DWC in 2024, and more regulatory changes are in development
After multiple comment periods, new QME process regulations were adopted effective February 26, 2024. Those regs deal with QME appointment rules, reappointment denial criteria, continuing education and report writing requirements etc. Perhaps the most important feature is Section 33 (a) which was amended to change from 60 to 90 days the time allowed for scheduling the initial appointment after a request is made for the appointment. Those regs can be found here: https://www.dir.ca.gov/dwc/DWCPropRegs/2023/QME/Index.htm
In December 2024 the DWC adopted an amended Physician Fee Schedule and Pharmaceutical Fee Schedule which among other things addresses fees for compounded drugs and physician dispensing. These regs, adopted after multiple amendments, are effective July 1, 2025. They can be found here: https://www.dir.ca.gov/dwc/rulemaking/dwc_rulemaking_approved.html
Proposed new utilization review regulations were still pending at the end of 2024 after a public hearing set on July 25, 2024: https://www.dir.ca.gov/dwc/DWCPropRegs/2024/Utilization-Review/Index.htm
In December 2024 the DWC posted a forum containing draft Supplemental Job Displacement Benefits regs. Those regs propose to tighten requirements for return-to-work counselors and specify what educational program providers can be used. This follows 2024 indictments of several prominent vocational counselors and vocational school owners. Key stakeholder groups submitted comments in the forum on the regs. These regs, which are not yet at the formal rulemaking stage, can be seen here: https://www.dir.ca.gov/dwc/ForumDocs/2024/SJDB-RTW/Index.htm
And the DWC held meetings with some stakeholders about other possible changes to MPN regulations, though those have not entered the rule making phase yet.
5. In 2024 in the California appellate courts there were few groundbreaking workers’ comp case law developments:
Other than the Hector Castellanos Prop 22 case noted above, there are a few 2024 Court of Appeal and WCAB en banc decisions worth noting:
6. California workers’ comp costs and insurance rates remained stable, but inflation continued to eat away at the value of permanent disability indemnity payments received by California injured workers
In April 2024 the WCIRB requested a 0.9% increase in the non-binding benchmark advisory pure premium, which proposed to increase the advisory rate from $1.41 per $100 of payroll to $1.42. Public members of the WCIRB voted to recommend a 3.3% decrease, but were outvoted. In July 2024 Insurance Commissioner Lara split the baby, issuing a new advisory rate of $1.38 per $100 of payroll, a 2.1% decrease from the prior $1.41. Lara’s decision can be found here: https://legaldocs.insurance.ca.gov/CyberDOCS/autopapiact.asp?AppINT=-1&mode=no&autopapiurl=%2FCyberDOCS%2FLibraries%2FDOCS%5FWEB%2FCommon%2Fviewdocact%2Easp%3Flib%3DDOCS%5FWEB%26doc%3D362028%26rendition%3Dhtml%26noframes%3Dyes&SCICO=false
Average workers’ comp rates charged employers have remained stable as well. According to the September 30. 2024 WCIRB Quarterly Experience Report industry average charged rates for 2024 are $1.61 per $100 of payroll, compared to $1.60 per $100 of payroll. By comparison, in 2003 the figure was $6.40 per $100 of payroll, and in 2014 $3.19 of payroll: https://www.wcirb.com/sites/default/files/2024-12/quarterlyexperiencereport-2024q3.pdf
According to a 2024 WCIRB report, allocated loss expenses (ALAE), expenses directly incurred in handling claims, have increased significantly in recent years.
7. Concern about the impact of fires and indoor and outdoor heat on workers continued to mount
In June 2024 Calmatters.org published a series of articles documenting the substantial hurdles and red tape California firefighters face in getting treatment for post-traumatic stress: https://calmatters.org/series/california-firefighters-trauma-wildfires/
The article presents very specific examples of CalFire workers in distress. Delays and the lack of psychologists and psychiatrists willing to take industrial cases due to payment issues and authorization problems render many CalFire workers unable to access treatment. The article claims that despite the 2020 enactment of a PTSD presumption, these problems persist.
In June 2024 a blog post from CAAA “CalFire Battles More Than Flames” noted that mental health issues are contributing to a staffing crisis and high turnover at CalFire: https://www.caaa.org/?pg=latestnews&blAction=showEntry&blogEntry=109049
In 2024 there was great controversy about indoor heat standards. The Occupational Safety and Health Standards Board voted to adopt long-developed indoor heat standards, but Governor Newsom’s administration balked before they were to be approved by the Office of Administrative Law. This was detailed in an earlier blog post: https://www.boxerlaw.com/workerscompzone/indoor-heat-regulations-in-turmoil/
Displeased that the Standards Board had voted to proceed, Newsom removed Laura Stock of UC Berkeley, one of the Standards Board members ,and demoted another. The indoor heat standards were finally approved in July 2024, with prisons excepted.
Meanwhile, a proposed federal workplace heat standard rule was unveiled at mid-year by the U.S. Department of Labor and at year’s end 2024 is still in the comment process : https://www.osha.gov/heat-exposure/rulemaking
There was also increasing concern about stone worker silicosis, and the Occupational Safety and Health Standards Board voted to adopt regulations: https://www.dir.ca.gov/DIRNews/2024/2024-111.html
8. Severe staffing problems at Cal/OSHA and the State Labor Commissioner and problems at EDD’s SDI and UI programs continued
As noted in my blog entry “California Trouble”, these are collateral issues that can impact California workers’ comp: https://www.boxerlaw.com/workerscompzone/california-trouble/
In early 2024 the Assembly Labor and Employment Committee held a hearing on labor enforcement issues and staffing problems at the California Labor Commissioner and Cal/OSHA.
Even with money for additional positions and some relaxed hiring rules, achieving and maintaining adequate staffing is a tall order, though DIR Director Hagen claimed at a December 2024 CHSWC meeting that the DIR is making progress on hiring.
9. User funding protected the California Division of Workers’ Comp from cuts and freezes that will affect many other state programs:
Largely protected by “user funding” from assessments on employers, the California system fared well in the state budget. Included were 71 new positions at the DWC, 13 over 3 years at the WCAB and money for EAMS.
10. As always there were plenty of studies about aspects of the California system, most funded by employer-side research groups
Stay tuned. I’ll soon be posting my annual quiz about likely 2025 California workers’ comp happenings.
Julius Young
510.835.8870