CA Department of Industrial Relations Backs Workers' Compensation Reform Plan


Sacramento, CA ( - The California Department of Industrial Relations today announced support for a comprehensive plan to reform California's workers' compensation system to protect employees while preventing sharp increases in the cost of doing business in the state.

“Representatives of labor and employers have been working vigorously to reform California's workers' compensation system before projected rate increases push California to a crisis situation,” said Director Christine Baker. “The result of this work is a comprehensive reform proposal that protects workers and employers by improving benefits and ending wasteful litigation.”

Over the last several months, labor and employer groups have met with the Department to develop substantial reforms to the workers' compensation system in California. The Department also met with hundreds of stakeholders at nine statewide public forums and identified systemic problems with the current system including:

  • Low permanent disability benefits
  • Unnecessary delays and disputes in medical delivery
  • Lack of standard fee schedules
  • Poor oversight of medical provider networks
  • Liens overwhelming the courts

California employers paid $16.2 billion for workers' compensation in 2011, and the cost continues to rise. This week, the Workers' Compensation Bureau approved a 12.6 percent rate increase on California businesses while industry analysts also predicted even greater hikes next year. The goal of the reform plan is to prevent these fee increases while also fixing the systemic problems identified by stakeholders. The new plan accomplishes this goal by redirecting benefits to increase payments to disabled workers, while standardizing the process to reduce unnecessary disputes and litigation.

Under the reform plan, up to $1.3 billion can be saved by reducing expenses for liens, out-of-network treatment disputes and other unnecessary expenses. Injured workers would receive approximately $750 million in additional compensation benefits and California employers would save up to $670 million.

The Department of Industrial Relations was established to improve working conditions for California's wage earners, and to advance opportunities for profitable employment in California. Extensive information on workers' rights and employers' responsibilities as well as information for small business owners can be found on DIR's website. DIR is a department within the Labor and Workforce Development Agency.


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