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