A recent study by the Oregon Department of Business and Consumer Services discloses that California employers pay the highest workers’ compensation costs in the nation – by a wide margin.
The study revealed that California employers pay 188% more in workers’ compensation costs than the national median and 33% more than the second most expensive state (Connecticut).
Some of the reasons:
- California has among the highest medical costs per WC claim;
- California’s rate of work injury claims per 1,000 workers is 46% higher than the national median;
- California has a higher-than-average rate of “permanent disability” claims and an increase in claims involving cumulative trauma and those filed post-employment;
- California’s system generally is more expensive to run because of higher-than-average litigation rates and complex administrative features;
- …and more.
In 2012, the California Legislature “reformed” the workers compensation system by providing employers with new tools intended to reduce costs, decrease litigation, stem abuses, speed up the claims administration and make delivery of benefits more efficient. The projected “savings” from these measures were supposed to be applied toward reducing employer premium costs, but instead were misdirected to provide injured workers with nearly $1 billion in benefit increases.
It is clear that there is more work to be done in order to bring California’s workers’ compensation costs in line with what employers pay in other states. Until a wide variety of such changes are made, California is likely to prove to be a difficult state in which to “do business” in a cost-effective manner.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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