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January 12, 2021

Your 2021 California Workers’ Compensation Roundup

The California workers’ compensation system, just like others around the country, has been dramatically impacted by the COVID-19 pandemic. In short, 2020 was a game-changer for the industry.

Here are just a few of the recent and ongoing developments employers should be watching:

COVID-19 Workers’ Comp Claim Volume Trending Up Again. COVID-19 monthly claim volume spiked 9 percent in October before more than doubling in November. See the California Workers’ Compensation Institute (CWCI) press release of December 22, 2020, for details.

The Effects Of COVID On Future Workers’ Comp Costs And Rates Remains Uncertain. In May 2020, California Insurance Commissioner Ricardo Lara took action to reduce premiums and exclude certain COVID claims from experience rate calculations. In June, he ordered new regulations to mandate that insurance companies recompute workers’ compensation premium charges for policyholders to reflect pandemic-related reduced risk of loss. But with the high unemployment rate, the number of people working from home, and an economy in chaos, the effects of COVID on workers’ compensation rates and costs going forward is still unclear.

California Workers’ Comp Benefit To Increase In 2021. California’s State Average Weekly Wage (SAWW) rose 4.3774 percent to $1,383 in the year ending March 31, 2020. CWCI reports this increase will boost temporary total disability (TTD) and permanent total disability (PTD) rates for 2021 work injury claims and other California workers’ comp benefits that are tied to SAWW increases. California’s current TTD/PTD maximum rate is $1,299.43 per week, but the increase in the SAWW will raise the maximum to $1,356.31 per week for claims with injury dates on or after January 1, 2021.

Legislation in 2020 largely centered around COVID-19. Bills signed by Governor Newsom include:

  • AB 685, effective January 1, 2021, adds to and amends the Labor Code to require that under specified circumstances employers provide notification to employees when there have been workers who tested positive and provide notices to public health departments.
  • AB 3012 amended Insurance Code § 1063.1 to expand “covered claims” to include: (1) benefits under the workers’ compensation law of states other than California if the injured worker is a California resident and not otherwise entitled to coverage from another organization similar to CIGA; (2) obligations for medical services provided by a medical facility owned by a state or federal agency; and (3) claims to arise under a policy that has been statutorily allocated or assumed by a company that later becomes insolvent, if the claim would have been covered had the original company been liquidated.

Hot Button Issues. California Workers’ Compensation law is complex and always evolving. Here are some of the hot button issues to watch going forward:

  • Potential regulatory activity on home health care, medical-legal billing, and pharmacy billing.
  • How the WCAB and courts will define the employment relationship in the new gig economy.
  • How the workers’ compensation system will adapt to medical marijuana issues.
  • How treatment guidelines for chronic pain and opioid prescribing adopted in recent years will affect the care of workers.
  • How the COVID-19 pandemic and the shift to telecommuting affects workers’ compensation claim frequency, claim severity, claims handling costs, and workers’ compensation rates.

System Performance. A number of studies have evaluated how the California workers’ compensation system is performing, including:

For more information and the latest developments, see these resources:

As California struggles to cope with the full impacts of the COVID pandemic, the coming year promises to be challenging for the state’s already strained workers’ compensation system. Heffernan is here to help you stay up to date on the latest developments and get the most from your workers’ compensation program. Contact us to learn more.

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