Most California business owners have read the headlines heralding the workers’ compensation package approved by the Legislature and signed into law by Governor Arnold Schwarzenegger on April 19, 2004 (SB 899, Poochigian). This reform package reduces the skyrocketing workers’ compensation costs that have hit businesses in recent years. The reform’s main points streamline disability determinations in the following ways: (1) ensuring that disability reports be objective and based on the standards from American Medical Association’s 5th Edition of Impairment Standards; (2) ensuring that employers are only responsible for disability costs associated with the injured employee’s current job; (3) preventing an injured worker from collecting multiple disability awards in excess of 100% of disability; (4) creating a medical network through which employers can realize savings; (5) ensuring medical treatments are consistent with national standards; and (6) aiming to decrease excessive litigation by making medical decisions the prerogative of doctors. The next headlines, however, are likely to be the battle over the burgeoning insolvency of the Unemployment Insurance trust fund. California’s unemployment program provides benefits to qualifying persons unemployed through no fault of their own. The future insolvency of the program was overlooked in 2001 when changes were made to increase benefit payments. The Legislature must now implement cost savings reforms to get the fund out of the red. To restore solvency, legislators must pass bills that align the state unemployment insurance eligibility criteria with those of most other states, specifically, bills that lengthen the amount of time a worker must be on the job or that increase the amount of earnings necessary to qualify for benefits. Legislators should be wary of bills that expand benefits. Greater focus on these bills is expected with the passage of the budget bill. For more information contact Rex Berry or Stacy Gillespie at Livingston & Mattesich.
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