A bipartisan bill that aims to reduce workers’ compensation costs for businesses while increasing benefits for workers injured on the job was signed into law by California Gov. Jerry Brown last week. The dramatic rise in the cost of workers’ compensation insurance for businesses over the past two years, from $14.8 billion to $19 billion, demanded immediate action.
The bill, SB863, makes the current system more efficient, limiting litigation while increasing benefits to permanently disabled workers by $860 million a year. Both labor and business owners approve of the bill. Brown discussed the bill before signing it in a small printing shop in San Diego’s Barrio Logan neighborhood.
We’re saving hundreds of millions of dollars for businesses, we’re getting workers back to work faster and we’re getting them the kind of medical care they need,”
Brown commended both parties for coming together to tackle a serious problem that was facing their state. Via the Imperial Valley News:
These significant reforms save hundreds of millions of dollars for California’s employers while preventing an imminent crisis of skyrocketing rates that would have hurt both injured workers and businesses,” said Governor Brown. “It’s extraordinary to see Republicans and Democrats come together to solve a problem before it becomes a crisis.”
The necessity of the bill came to a head after months of negotiations between labor and business leaders. Changes made by former Gov. Arnold Schwarzenegger in 2004 lead to unexpected cuts in worker benefits. As the cost of insurance grew, both sides became displeased with the current system according to the Mercury News:
The legislation makes substantial reforms to the century-old system in which businesses buy insurance or self-insure to provide medical care and compensation to workers who injure themselves or fall ill on the job.
It changes how benefits are calculated for injured workers, creates a binding arbitration process to resolve coverage disputes and eliminates coverage for conditions that most commonly lead to lawsuits, including insomnia and mental health problems.
The measure also aims to prevent lawsuits by establishing a binding independent review system to resolve medical disputes and shortens the timeline for approval of treatment from two years to three months.
The boost in disabled workers’ compensation will result in each individual worker seeing an average of 29 percent more benefits.