Do Not Be A Victim

Workers' compensation laws are designed to ensure that employees who are injured or disabled on the job are provided with fixed monetary awards, eliminating the need for litigation. These laws also provide benefits for dependents of those workers who are killed because of work-related accidents or illnesses. Some laws also protect employers and fellow workers by limiting the amount an injured employee can recover from an employer and by eliminating the liability of co-workers in most accidents. State Workers Compensation statutes establish this framework for most employment. Federal statutes are limited to federal employees or those workers employed in some significant aspect of interstate commerce.

There are three basic parts to the workers' compensation system:

  1. The benefit structure
  2. The benefit delivery system
  3. The benefit financing system

Benefit Structure

The benefit structure defines what injured workers are entitled to receive when they sustain an injury "arising out of and in the course of" their employment. There are five basic types of workers compensation benefits available, depending on the nature and severity of the worker's injury:

  1. Medical care
  2. Temporary disability benefit
  3. Permanent disability benefits
  4. Vocational Rehabilitation Services
  5. Death Benefits

Benefit Delivery System

When an employer becomes aware of an on-the-job injury, the employer is expected to begin the process of providing the injured worker the benefits to which he or she is entitled under the law. The benefits are paid by either the employer (if the employer is authorized to self-insure) or the employer's insurer.

The state's role in benefit delivery is to oversee the provision of workers' compensation benefits, provide information and assistance to employees, employers, and others involved in the system, and to resolve disputes that arise in the process.

Benefit Financing System

The benefit financing system is the process by which employers finance their liability for workers' compensation benefits. Employers may finance their liability for workers' compensation benefits by one of three methods:

  1. Self-Insurance
  2. Private Insurance
  3. State Insurance


Most large, stable employers and most government agencies are self-insured for workers' compensation. To become self-insured, employers must obtain a certificate from the Department of Industrial Relations. Private employers must post security as a condition of receiving a certificate of consent to self-insure.

Private Insurance

Employers may purchase insurance from any of the insurance companies which are licensed by the Department of Insurance to transact workers' compensation insurance in California. Insurance companies are free to price this insurance at a level they deem appropriate for the insurance and services provided.

State Insurance

Employers may also purchase insurance from the State Compensation Insurance Fund, a state operated entity that exists solely to transact workers' compensation insurance on a non-profit basis. It actively competes with private insurers for business, and it also effectively operates as the assigned risk pool for workers' compensation insurance.

Special Funds

In addition, there are two special funds that pay benefits to injured workers under some circumstances:

Uninsured Employers Fund

When an employee is injured while working for an employer who is unlawfully uninsured, and the employer fails to pay or post a bond to pay the compensation due the employee, the employee's compensation is paid from the Uninsured Employers Fund. An attempt is made to recover the amount paid from the uninsured employer.

Subsequent Injuries Fund

When an employee has a previous permanent disability or impairment and sustains a subsequent injury, the employer is not liable for the combined disability, but only for that caused by the later injury. However, when the combined permanent disability is at least 70% and certain other criteria are met, the employee may receive additional compensation from the Subsequent Injuries Fund.