Employers must maintain workers’ compensation coverage

California employers must keep up with changes in the law that governs workers' compensation. A new wrinkle in the law went into effect on January 1, 2013.

About workers' compensation

California and most of the rest of the nation instituted workers' compensation programs about a hundred years ago. This "safety net" program ensures that workers receive treatment for injuries and illnesses incurred on the job. The law is neutral as to fault; eligible workers are treated no matter who is to blame for the injury or illness.

Workers who receive workers' compensation benefits are not allowed to turn around and sue their employers in civil court for the same covered injuries. Almost all California employers are legally obligated to carry workers' compensation insurance, no matter how small their workforce. Roofers, in particular, are even required to carry this insurance if the owner of the roofing company is the only worker.

Besides paying the doctor and hospital bills, workers' compensation plans pay temporary and permanent disability benefits, death benefits and vocational rehabilitation or supplemental job displacement benefits.

A change in calculations

Workers who do not completely recover from workplace injuries are said to have -some permanent whole person impairment. The medical care provider who determines impairment gives the injured employee a percentage impairment rating that is later translated into dollars.

The new provision that took effect at the start of 2013 restricts the treating physician's ability to increase the amount of permanent impairment by adding a sleep disorder or sexual impairment to the equation. These conditions can now be considered only if they resulted directly from the employee's injury as opposed to being added on to as a result of some other injury to a different body part.

The treating physician is also not allowed to add to the permanent impairment rating by considering any psychiatric injury, unless certain requirements are met. The employee must have had a catastrophic physical injury, or the employee must have witnessed or been a victim of violent crime.

Considerations for employers

The changes may make a difference in the amount an employer's workers' compensation insurance will be required to pay to compensate a disabled employee. Employers should check with their insurers to determine whether any change in their policies is warranted.

In tough economic times or in the early days of a company, it may be tempting to forgo the expense of workers' compensation insurance premiums. If the company's sole owners are its only employees, it is generally not mandatory that the company invest in a workers' compensation policy-except for roofers, as already noted. However, if the company hires even one worker, it is a violation of California law to be uninsured for workers' compensation.

The state does not regulate the cost of workers' compensation insurance. Employers should shop around for rates, which generally depend on the industry, the company's payroll amount, any adjustments due to the use of a certified health care organization and the company's reported history of workplace injuries.

Members of some trade organizations can obtain insurance at discounted rates. The State Compensation Insurance Fund must sell insurance to employers who cannot otherwise find an insurer.

In addition, there could be problems in store for a California employer who does not have the required insurance when an employee is injured. The California Labor Code says that failing to carry workers' compensation insurance is a misdemeanor. Violators can be fined up to $10,000 and even imprisoned in a county facility for up to one year. Additional penalties can be applied, and the injured worker can file a civil claim against the uninsured employer.

Any employer who is concerned about violating the law governing workers' compensation coverage needs to consult an experienced California attorney. The attorney will know how to defend an uninsured employer and can provide sound advice to avoid additional legal trouble.