How Workers' Compensation Works
All California employers must provide workers' compensation benefits to their employees under California Labor Code Section 3700. There are five basic types of workers' compensation benefits - medical care, temporary disability benefits, permanent disability benefits, vocational rehabilitation services, and death benefits.
How Is Coverage Structured in a Workers' Compensation Policy?
Workers' compensation coverage is offered under Part One of a workers' compensation insurance policy. In Part One, the insurance company agrees to promptly pay all benefits and compensation due to an injured worker. Employers Liability insurance can provide important coverage in addition to workers' compensation insurance. Employers Liability is offered under Part Two of a workers' compensation and Employers Liability Insurance policy. Employers Liability Part Two protects the employer against instances where an employee's injury or disease is not considered work related.
How Is Workers' Compensation Insurance Purchased?
Employers must purchase workers' compensation insurance from either a licensed insurance company or through the State Compensation Insurance Fund (SCIF). SCIF is a state-operated entity that exists in order to transact workers' compensation on a non-profit basis. SCIF competes with private workers' compensation insurance companies for business and also operates as the insurer of last resort if private companies are not willing to offer workers' compensation insurance.
What Happens to an Employer Who Does Not Purchase Workers' Compensation Insurance?
Employers who fail to purchase workers' compensation insurance are in violation of the California Labor Code. The Director of the Department of Industrial Relations has the authority to issue a stop order against any company who is discovered to be unlawfully uninsured for workers' compensation. A stop order closes down business operations until workers' compensation insurance is secured.
How Are Workers' Compensation Premiums Calculated?
Classification
Workers' compensation premium calculation is based upon how employees are classified according to their specific work duties and the rate assigned to each corresponding employee classification. Classifications are developed and assigned by the workers' compensation Insurance Rating Bureau (WCIRB) in most cases.
Rating
Workers' compensation insurers assign a specific rate to each occupational classification code. Currently, California workers' compensation insurers operate under an "open" rating system. This means that individual companies set rates based on their ability to adequately cover losses and expenses in each classification (occupational business class). Open rating requires that all workers' compensation insurers file their rates and all applicable supplementary rate information with the California Dept. of Insurance. Rates must be adequate to maintain the solvency of an insurance company. The Insurance Commissioner will not approve rates if they are inadequate to cover an insurer's losses and expenses, unfairly discriminatory, or create a monopoly in the marketplace. The rate itself is expressed in dollars and cents and is multiplied by each $100 of payroll per classification.
Insurance Claims
The California Dept. of Industrial Relations, Division of Workers' Compensation assists employers and employees with workers' compensation claims. When disputes arise regarding a workers' compensation claim, the Information and Assistance Unit attempts to resolve the dispute. If they are unable to resolve the dispute, then a formal application for adjudication can be filed with the Workers' Compensation Appeals Board. The Workers' Compensation Appeals Board has exclusive jurisdiction over dispute resolution.
Issues That Complicate the Workers' Compensation System in California
Despite what appears to be a straightforward and well orchestrated system, there are many issues that complicate the efficient and cost-effective implementation of workers' compensation in California, among those issues are:
• the cost to employers of insurance premiums;
• type and scope of coverage; determination of injury or illness;
• benefit amounts;
• cost of vocational rehabilitation; fraud on the part of doctors, workers and employers;
. timeliness of benefit payments; uncovered workers; attorneys' fees.
Related Articles
All Employers are Required to Have an Iipp
By: Haig Artan | 22/05/2007 | Insurance
A well developed and used IIPP is a way for employers to fulfill their responsibility to provide a safe and healthful workplace for their employees. Employers who don’t follow the law expose themselves to penalties and a Cal/OSHA violation could lead to criminal prosecution, if an employee is injured or becomes ill from a known but concealed danger on the job.
Site Inspections = Worker Protection
By: Haig Artan | 15/05/2007 | Small Business
Workplace safety inspections using site specific checklists help keep workers safe by identifying and correcting potential injury causing hazards. Although the frequency of inspections may vary each shift, daily, quarterly or annually depending on the type or degree of workplace hazards, all observations, identified hazards, and corrective actions must be documented.
Ladder Safety
By: Haig Artan | 22/05/2007 | Insurance
Many ladder accidents occur because of slipping or skidding. You can prevent these accidents by equipping the ladder with non-slip safety feet, blocking its base and tying it to a sound, permanent structure.
Maneuvering Forklift Safety
By: Haig Artan | 22/05/2007 | Insurance
Forklift training is so important that once is not enough. Employers must make an initial performance evaluation of their industrial truck operators, with periodic evaluations (at least once every three years) to ensure that their skills remain at a high level. And, whenever there is a demonstrated need for it, refresher training must be conducted.
Pesticide Safety
By: Haig Artan | 22/05/2007 | Insurance
The most important factor in the safe handling of pesticides is to read, understand, and follow the pesticide label directions exactly. The label describes how to safely handle , transport, store, mix, and apply the pesticide. It also describes appropriate first aid procedures. Special attention should be paid to labels with signal words such as DANGER, WARNING or CAUTION.
Prevent Strains and Sprains
By: Haig Artan | 22/05/2007 | Insurance
A lot of times you are not going to have direct influence over your environment. But one thing you can do is take the time to do simple stretches and postural adjustments to allow your body to recover from some of the work that you’re doing and keep you from getting tired. This can go a long way toward keeping your body fresh and being able to use your body effectively.
Protect Against West Nile Virus
By: Haig Artan | 22/05/2007 | Insurance
People can protect against mosquito bites by wearing long sleeved shirts, long pants, and socks prayed with mosquito repellant (as mosquitoes may bite through thin clothing). Exposed skin should be sprayed with repellants containing DEET. There is an equine vaccine for the virus, but no vaccine, specific for the treatment or cure for humans.
Uv Radiation
By: Haig Artan | 22/05/2007 | Insurance
Even on cloudy days, outdoor workers are at risk of overexposure from the sun’s ultraviolet rays. Clouds, wind or other weather conditions, and shiny or reflective surfaces like water or metal intensify the sun’s ability to burn the skin. By paying attention to the day’s sun forecast and taking the appropriate precautions, you can stay safe while working under the sun.
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
What is the employee (team member) discount at ...
By: Happytime | 13-07-2008
What is the employee (team member) discount at Menards stores?
Lawyer never tells me anything
By: ynfatuatyon | 16-06-2008
I've been going through a workers comp claim for about 21/2 yrs now, the lawyer representing me has sent me letters stating how much monthly income i will receive..etc. thing is, as of this date, i havent received anything, but im being treated for my work injury. people tell me constantly that if im being treated, im suppose to be receiving my workers comp as well, the lawyer says he faxes the insurance company, but they dont repond..my question is..Do that sound right? everyone talk to says that my lwyer might be getting my payments but not telling me, can you tell me what i can do to find out what going on, without my lawyer knowing im checking up on him? Thank you
Q&A Powered by:
Latest Insurance Articles
You Can Find the Most Affordable Car Auto Insurance
By: Bryan Burbank | 25/07/2008
With out budgets getting smaller every day it is more important than ever to find affordable auto car insurance. It is not that hard to find discount car insurance but you want to make sure that you get the right amount of coverage for the amount that you are paying. Discount auto insurance can be a great thing as long as it covers you if you get into a situation when you really need it.
Learn How to Find the Best Low Cost Affordable Dental Plan
By: Bryan Burbank | 25/07/2008
When searching for the best Dental Plan it is important to know what kind of coverage you are seeking. There are many different types of plans to fit your needs but you should know if you need a lot of dental work or just a maintenance plan before you sign up for dental coverage.
Get Cheap Discount Car Insurance for Teens - Get the Best Cheap Rate for Your 18 Year Old
By: Bryan Burbank | 25/07/2008
When your teenager becomes of age and they want to start driving it is important that they get the proper automotive car insurance so that they are covered in case they get into an accident. If you add your teenage age son or daughter to your insurance it is going to make your premium go up but there are things that can help you keep cost down.
You Can Find Cheap Discount Health Insurance Even With a Pre-existing Conditions
By: Bryan Burbank | 25/07/2008
Health Insurance can be one of the most expensive things we have every month and now with more and more companies cutting out retirees from there insurance plans it can cost more for health insurance than our rent or mortgage payment. It is important to understand that there is some options for you if you are struggling with making payments for health insurance and you can not afford them.
Cheap Car Insurance - Best Tips For Insuring Teen Or Student Drivers
By: Helen Hecker | 25/07/2008
If you have a new teen driver in your family, here are some of the best tips for insuring a teen or student driver.
Annuity Help: How to Get Good Help?
By: Tony Bahu | 25/07/2008
Good help with annuities is hard to find. This document really tells what is important to do to get good help with an annuity.
The Benefits of Getting Term Insurance
By: Clint Jhonson | 25/07/2008
Insurance policies are meant to offer financial protection to their beneficiaries if certain events occur. The insurance company will pay the beneficiary a pre-established sum while the beneficiary makes monthly contributions to his or her insurance fund. Life insurance policies are a common type of insurance which provide the insured’s family with the financial support he cannot offer following death.
Low Cost Life Insurance
By: vincent yeong | 25/07/2008
Life insurance not only provides you and your loved ones security but also provides you with interest and savings, and so saves and gets security
More from Haig Artan
Don’t Under Estimate Overexertion
By: Haig Artan | 22/05/2007 | Insurance
Overexertion can result in physical fatigue, a reduction in work efficiency and a decrease in the speed and quality of work. Preventing overexertion injuries is a lot easier than correcting them. Teach workers to take care of themselves both on and off the job and train them in proper work practices.
Uv Radiation
By: Haig Artan | 22/05/2007 | Insurance
Even on cloudy days, outdoor workers are at risk of overexposure from the sun’s ultraviolet rays. Clouds, wind or other weather conditions, and shiny or reflective surfaces like water or metal intensify the sun’s ability to burn the skin. By paying attention to the day’s sun forecast and taking the appropriate precautions, you can stay safe while working under the sun.
Protect Against West Nile Virus
By: Haig Artan | 22/05/2007 | Insurance
People can protect against mosquito bites by wearing long sleeved shirts, long pants, and socks prayed with mosquito repellant (as mosquitoes may bite through thin clothing). Exposed skin should be sprayed with repellants containing DEET. There is an equine vaccine for the virus, but no vaccine, specific for the treatment or cure for humans.
Prevent Strains and Sprains
By: Haig Artan | 22/05/2007 | Insurance
A lot of times you are not going to have direct influence over your environment. But one thing you can do is take the time to do simple stretches and postural adjustments to allow your body to recover from some of the work that you’re doing and keep you from getting tired. This can go a long way toward keeping your body fresh and being able to use your body effectively.
Pesticide Safety
By: Haig Artan | 22/05/2007 | Insurance
The most important factor in the safe handling of pesticides is to read, understand, and follow the pesticide label directions exactly. The label describes how to safely handle , transport, store, mix, and apply the pesticide. It also describes appropriate first aid procedures. Special attention should be paid to labels with signal words such as DANGER, WARNING or CAUTION.
Maneuvering Forklift Safety
By: Haig Artan | 22/05/2007 | Insurance
Forklift training is so important that once is not enough. Employers must make an initial performance evaluation of their industrial truck operators, with periodic evaluations (at least once every three years) to ensure that their skills remain at a high level. And, whenever there is a demonstrated need for it, refresher training must be conducted.
Ladder Safety
By: Haig Artan | 22/05/2007 | Insurance
Many ladder accidents occur because of slipping or skidding. You can prevent these accidents by equipping the ladder with non-slip safety feet, blocking its base and tying it to a sound, permanent structure.
All Employers are Required to Have an Iipp
By: Haig Artan | 22/05/2007 | Insurance
A well developed and used IIPP is a way for employers to fulfill their responsibility to provide a safe and healthful workplace for their employees. Employers who don’t follow the law expose themselves to penalties and a Cal/OSHA violation could lead to criminal prosecution, if an employee is injured or becomes ill from a known but concealed danger on the job.
Finance 
