What Is California Workers’ Compensation & Why Should I Care?

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California workers’ compensation is a no-fault system in accordance with any injuries suffered while conducting your job, regardless of the injury, disease, or disability. Prior to hiring, your employer is required to pay for a Workers’ Compensation Insurance policy that covers all employees. Workers’ compensation insurance is an agreement between an employer and its workers, binding the two if a work injury were to ever occur. This policy normally does not include injuries sustained on the way to or from work.

A workers’ compensation insurance agreement ensures the employer will cover any wage replacement and medical benefits for employees injured on the job in exchange for, “mandatory relinquishment of the employee’s right to sue their employer for the tort of negligence.” This compromise in which the worker has either limited medical coverage or zero recourse action is commonly referred to as “the compensation bargain.” This bargain helped put an end to employers being bankrupted by high damage awards and settlements.

Specific benefits available to those under California workers’ compensation law include medical and hospital benefits, temporary disability limited to two years, permanent disability, compensable consequences, vocational rehabilitation or training, a special “Return to Work Fund” set up by the state of California, and death benefits. All money received through a workers’ compensation claim is tax-exempt. But you must remember, benefits are not the same as damages. Damages are the outcome of a civil case, while benefits are the byproduct of a no-fault system. This means benefits tend to be less than damages, however when seeking damages you must provide a burden of proof. When it comes to workers’ compensation benefits, as long as your injury was sustained at work, no further evidence or proof of negligence is necessary.

While far from perfect, workers’ compensation is a necessary evil, or “compensation bargain” as discussed earlier — considering the potential liability for a small business, or the needed resources for an employee’s civil case, can both cost the two entities more than they have. In the end, a workers’ compensation insurance agreement allows both parties to walk away better off. Which in the practice of law, you call a win.

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Parham has been in the Tax Industry for almost his entire career. He graduated from Pepperdine University School of Law, with an emphasis in Tax and Conflict Resolution. Parham is certified to practice law in front of the California State Supreme Court, Federal District Court, and US Tax Court. He specializes in navigating through IRS practices to maximize solutions and get the best results for the firm’s clients.

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