Origin and Purpose of Workers’ Compensation

The majority of employers take many measures to help make sure their employees are as safe as possible at work.  Employers may decide to provide extra safety training, purchase and install safety technology, or form safety committees, just to name a few examples.  Unfortunately, despite the most diligent efforts, it is likely that at some point, an employee will sustain a work-related injury.  When that happens, the employee may file for workers’ compensation.

The modern workers’ compensation system can trace its origin to the Workers’ Accident Insurance system that was put into place by Otto von Bismark in 1881.  The motivation behind enacting this system was what was referenced as the “unholy trinity” of tort defenses that were available at that time, including contributory negligence, assumption of risk, and the fellow servant rule.  In other words, it was much more difficult for injured employees to be compensated if they were injured on the job.

Different states here in the United States started implementing workers’ compensation systems before the turn of the century, with the first state-wide system being instituted by Maryland in 1902.  Workers’ compensation provided a much needed outlet for injured employees to seek compensation for industrial injuries.  The workers’ compensation system is designed to protect both the employer and the injured employee.  Workers’ compensation in California is a “no fault” system.  This means that the injured employee does not have to prove the injury was a result of negligence or intentional acts on behalf of the employer.  Similarly, the employer is protected from law suits from the employee, with only a few exceptions.

It is no secret that at the turn of the century, industrial working conditions for most Americans were quite dangerous, with few regulations in place to require employers make sure their workers were safe.  Especially in factories or manual labor fields, it was common for employees to sustain truly horrific injuries.  By instituting worker’s compensation, employers were motivated to make sure their businesses were as safe as possible for their employees.  In addition, employers could feel at ease knowing that their employees could not sue for negligence if the employee sustained an injury because the employer overlooked some safety measure.

We have extensive experience helping our clients understand the workers’ compensation system.  Call us today to talk about what we can do to help you.

Handymen, Nannies, Small Businesses, and Workers’ Compensation

Millions of Americans run their own small business.  Whether that business is the primary source of income for the family or just a side job to help provide supplemental income, business owners are all well aware that there are many regulations surrounding formation and running a business.  In addition, many people choose to employ other individuals for help around the house, including nannies and handymen.  Whether you have a small business or you employ others to help you around the house, it is important that you understand your rights and responsibilities regarding workers’ compensation.

California labor code provides that employers are obligated to carry workers’ compensation insurance.  This is true even if the business has only one employee.  This is also true of businesses which are located outside the state of California but still do business in this state.  In other words, if your business is located in Oregon but you sometimes do business in California, you are stills subject to the California requirement that you carry workers’ compensation insurance.  For a sole proprietorship, the law does not usually require workers; compensation if the business has no employees.  The important exception to this is for roofing contractors.  All C-39 roofing contractors in California are required to carry workers’ compensation insurance and file a valid certification with the state.

It is also important to understand your obligation regarding workers’ compensation insurance if you use the services of a nanny or a handyman.  Under California labor code 3352(h), “any person employed by the owner or occupant of a residential dwelling whose duties are incidental to the ownership, maintenance, or use of the dwelling, including the care and supervision of children, or whose duties are personal and not in the course of the trade, business, profession, or occupation of the owner or occupant” is classified as an employee.  This means that you may be required to carry workers’ compensation insurance for your nanny or handyman.  California law goes on to state that if the person has worked less than 52 hours in the 90 days before the injury was sustained or earned less than $100 in wages during that time, the person is not an employee for worker’s compensation purposes.

We have extensive experience helping our clients understand the rights and responsibilities concerning workers’ compensation insurance.  Contact us today to talk about your options.

Corporations and Workers’ Compensation

Small businesses form the backbone of the American economy.  Millions of people very year start their own business.  When forming a business, a founder has a wide variety of choices concerning the type of business organization.  A business can be a sole proprietorship, a limited liability corporation, a limited partnership, or even a hybrid of more than one of these types.  There are benefits and drawbacks to each type of business structure.  If you are thinking of choosing a corporation as the structure for your business, you need to understand how workers’ compensation interacts with the rules for corporation formation.

One thing that business owners in California need to understand is that almost all employers are required to carry workers’ compensation insurance pursuant to California labor code 3700.  Failure to carry the required insurance can result in severe civil and even criminal penalties for the business owners.  Corporations are not exempt from this requirement.  Forming a business as a corporation can provide important shelters from liability as well as tax advantages, but these advantages do not include de facto exclusion from the requirement to carry workers’ compensation insurance.

Moreover, some relatively recent changes to the California labor code provides that executive officers and directors of corporations must be included in the workers’ compensation insurance coverage.  The exception to this is if the corporation is fully owned by the directors and officers.  If that is the case, the directors and officers may elect to be excluded from workers’ compensation coverage and benefits.  For this to apply the person must be a sole shareholder who is an officer or director of a private corporation.  In that case, that person is excluded from the legal definition of “employee.” Any director or officer wishing to opt out will have to fill out specific paperwork to accomplish this.  The document is executed under the penalty of perjury, and states that he or she meets the qualifications under the California labor code for being exempt from the insurance requirements.  For officers or members of the board of directors of a cooperative corporation and for owners of a professional corporation, there are additional waiver requirements that must be met.

.We have extensive experience helping our clients understand their rights and responsibilities with regard to California’s workers’ compensation insurance requirements.  Call us today for a consultation.

When Is Self-Insurance Allowed

Workers’ compensation is an important part of our legal system.  It provides support and financial assistance for injured employees.  It also provides immunity from additional tort law suits to the employer, except in limited circumstances.  California has the largest workers’ compensation system in the United States.  Under California law, employers are required to carry workers’ compensation insurance.  There are severe civil and criminal consequences for employers who fail to fulfill this responsibility.  There are a few narrow exceptions to this rule, including self-insurance.

Self-insurance means that the employer has assumed the financial risk associated with providing workers’ compensation benefits to their employees who sustain work-related injuries.  Workers’ compensation benefits can include not only the cost of medical treatment for the worker, but also other monthly benefits.  Clearly, this can represent a significant financial burden, especially for smaller businesses.

California law provides that there are strict requirements before a business can qualify to self-insure instead of purchasing a workers’ compensation insurance policy.  A business wanting to qualify for self-insurance must apply to the California Office of Self-Insurance Plans.  The business will have to provide particular information and evidence to support the application. First, the business must have been a legally authorized business form for at least three years.  Next, the business will have to provide three years of certified, independently audited financial statements with the application.  The business will also have to demonstrate it has an acceptable credit rating for three years preceding applying for self-insurance. If the company has subsidiaries, each subsidiary must file its own application.  The application may be filed separately or together with the parent company’s application.  If a current existing company that already has been approved for self-insurance creates a new subsidiary or affiliate, a new application can be filed.  If the parent company can demonstrate solvency, the subsidiary is automatically self-insured for 180 days.  The parent company must file an application for a permanent certificate during that time.

Once an employer is approved by the state to be self-insured, the employer is still subject to state audits.  The audits check for the accuracy of claims reserving practices as well as the correctness of the reported workers’ compensation liabilities.

If you have questions about workers’ compensation and your rights and responsibilities as a business owner, contact us today.  We can talk to you about your business and the workers’ compensation process.

Structured Settlements and Workers’ Compensation

The legal system is often thought of by lay people as being complicated, and legal cases may take months or even years to resolve a case.  Unfortunately, workers’ compensation is not always an exception to this, as the nature of the cases often include injuries that take time to heal before it can be determined whether a worker is permanently or temporarily disabled, the type of accommodation the worker requires, or whether the worker can even return to work at all.  Both sides are often looking for ways to shorten the process and come to a settlement.  With a settlement, the parties can avoid the time and expense of a court case that drags out and costs both sides dearly.  One way to complete this in a workers’ compensation case is a structured settlement.

A structured settlement is a settlement agreement wherein the employer or its insurance provider agrees to make a series of periodic payments to the injured worker (or the surviving family) over a period of time.  Some structured settlements provide that each payment amount will be exactly the same, but other settlements can provide additional flexibility.  In some cases, the settlement may provide for a lump sum to be paid up front before the regular payments start.  This lump sum may be to assist with housing, transportation, or medical needs.  In addition, the settlement can take future cost of living expenses increase or inflation rates into account, and provide for future increases at specific times.  It should be noted that a separate account is often set up to handle the injured workers’ future medical expenses, and that the periodic payments are meant to represent the lost wages.

One advantage for the employee in accepting a structured settlement is that the periodic payments are not subject to federal income taxes.  An employer will often benefit from a structured settlement in cases where there has been a catastrophic injury that is likely to result in a finding of permanent partial or total disability, especially where the injury is so severe that the worker is unlikely to be able to return to meaningful employment.

We have extensive experience helping our clients understand what types of settleemnts may be best for their business.  Call us today to talk about what we can do to help you.

Global Assessment of Function Score

The workers’ compensation system is designed to help workers get medical treatment and get back to work as soon as possible after they sustain a work-related injury.  The system also provides protection for employers, as the workers’ compensation system provides that the worker is typically required to seek compensation through this system and cannot sue the employer in civil court.  A worker can seek recovery for a large variety of injuries, including psychiatric injuries.  As with a physical injury, workers who have sustained work-related psychiatric injuries will need to undergo examination by a medical professional.  Part of the examination will result in a Global Assessment Function Score.

A Global Assessment Function (GAF) score must be obtained by any injured worker who is seeking to obtain permanent disability benefits through workers’ compensation.  In the workers’ compensation system, only psychiatrists or psychologists can evaluate an injured worker and make this evaluation.  The GAF score will be based on whether there is a permanent psychiatric disability and the degree or amount of that disability.  The GAF score is a numeric scale used by appropriate mental health practitioners.  The practitioner will provide a subjective rating for the social, occupational, and psychological functioning of the injured worker.  For this rating, the lower the number, the greater the degree of permanent disability.  For example, someone with a GAF score of 1 would be considered not disabled at all, and fully functioning, whereas someone with a score of 1 would be highly impaired.

There are a variety of issues used to evaluate psychiatric functioning.  These include:

–          Participating in activities including keeping a job, completing hygiene related tasks, and socializing with friends;

–          Social effectiveness, including whether the worker can make and keep friendships and other community contacts;

–          Family interactions, such as whether the injured worker neglects family relationships, has issues with domestic violence or frequent arguments;

–          School performance, including grades and truancy; and

–          Performance at work, including whether the worker can interact effectively with clients and coworkers, regularly attend work, and complete appropriate tasks.

The mental health professional will also look at different issues when evaluating symptom severity.  These include anxiety, insomnia, suicidal ideations, or depression, just to name a few.

We have experience assisting our clients understand the role of GAF scores in workers’ compensation cases.  Call us today to talk about your business.

Communications Between an Injured Worker and Their Physician

The confidentiality between a patient and doctor is well established in the United States, and California is no exception.  Confidentiality is strict to make sure that the patients can fully disclose all symptoms and potential sources of illness or injury without fear that embarrassing conditions will be on display for others to read.  Although employees can typically be secure in the knowledge that their medical conditions are private and protected from their employers, this can change in the case of a workers’ compensation case.

During a workers’ compensation case, the injured employee will need to seek medical attention.  Even after urgent conditions have been addressed, the worker may require ongoing treatment or physical therapy.  The worker will definitely need to be evaluated by a physician or medical professional to determine whether he or she is temporarily or permanently disabled, the degree of the disability, and whether he or she requires limitations or work restrictions upon returning to work.  Clearly, these will be medical conditions that are assessed by a medical professional.  Employers and employees alike should have an understanding of what types of communications remain privileged between the injured employee and his or her treating physician.

The Confidentiality of Medical Information Act contains strict rules and prohibitions on when a health care provider can release information.  There are exceptions, however in the workers’ compensation system.  Communications between the patient and the physician concerning the work related injury will be turned into reports that will be submitted by the physician to insurance adjusters, attorneys, and even the employer.  The employer, attorneys, or an insurance adjuster may also request copies of the actual medical records.  When the treating physician has been the worker’s treating physician for other conditions in addition to the work related injury, however, these medical records will contain information that is completely irrelevant to the work related injury.  In that situation, the physician is restricted from releasing more information than is necessary.  In other words, an employer or insurance adjuster is not entitled to receive a complete copy of the employee’s entire medical record.  The physician is required only to release the information relevant to the injury and whether the employee is able to return to work.

We have extensive experience with the workers’ compensation system and all types of associated litigation.  Contact us today for a consultation.

Ways to Protect your Business In Workers’ Compensation

Small business owners are the backbone of the American economy.  Over half a million new businesses are started every month, and there are almost 28 million small businesses in the United States.  Small business owners all take great pride in building their venture and growing their business.  Any business owner, regardless of the size of the company, wants to protect the business from threats and risks.  Business owners need to be especially aware of how to protect their business during a workers’ compensation case.

One important way to protect your business is to properly investigate every claim.  Business owners should take immediate steps to gather evidence about how the injury happened.  Clearly you will want to make sure to interview witnesses and collect written statements.  However, you should also consult another, neutral employee about the facts surrounding how the injury happened.  Another employee may be able to provide insight that will show how to keep employees safe in the future or even can show that the injury could not have happened in the way the injured employee reported.

Another essential step to protect your business is to make sure that the managers of each department are trained in the proper and immediate steps to take in the event of a work place accident.  Managers need to understand the proper notices and forms that must be provided to the employee, that they cannot refuse to accept a claim, and that it is essential to make sure an injured employee gets medical attention as soon as possible.  Failure to ensure that your staff is properly trained can result in inadvertent violations of important workers’ compensation regulations.

Third, you should be familiar with some common signs of fraud and be on the lookout for red flags.  One common red flag is when there are no witnesses to the incident, or the only witness is a close friend of the injured employee.  Another sign that the claim could be fraudulent is if the employee is inconsistent about the details of the incident that led to the injury.  If the employee refuses medical treatment or tests to confirm the injury, this could also be a sign the employee’s injury is not legitimate.

Finally, small businesses need to make sure to carry workers’’ compensation insurance in accordance with state law.  They also need to report any injuries immediately to their carrier and be truthful at all times.

We are well versed in the workers’ compensation laws in California.  Call us today to talk about how we can help you protect your business

First Steps After your Worker is Injured

It is essential for employers to take all reasonable steps to reduce the risk for injury to their employees.  Keeping your employees safe is not only the right thing to do, it will keep your business running smoothly and make sure your business does not run afoul of state and federal safety regulations.  Almost all employers with very few exceptions are required to carry workers’ compensation insurance.  Although employers have taken the precautions to prevent injuries and purchased insurance in case these measures fail, injuries will inevitably happen eventually.  It is important for business owners to know the first steps to take after a worker is injured.

A workers’ compensation claim starts when an employee notifies the employer of a work-related injury.  The employer is then required to provide the employee with a Workers’ Compensation Form, also known as DWC-1.  The employee will need to fill out the form and return it to the employer.  An employee providing verbal notice is not sufficient to trigger the employer’s obligation to start paying benefits.

After the employer receives the completed claim form from the employee, the employer has fourteen days to accept, reject, or delay a decision concerning the claim.  If the employer delays a decision, it has ninety days to make a final determination.  During those ninety days, the employer must provide up to ten thousand dollars of medical care for the employee.  However, the employer does not have to pay temporary benefits during this time.

The injured employee will need to be assessed by a medical professional.  The employer has the right to select the first doctor.  However, the employee does not have to keep seeing that physician.  The employer is obligated to provide the employee with notification of the Medical Provider Network, which is a list of medical providers that the employee may choose from.  If the employer does not have a MPN, the employee can switch medical providers after thirty days, and can choose any doctor who accepts workers’ compensation insurance.

It is essential that the employer notify his or her workers’ compensation insurance provider as soon as the injury occurs.  If the employer does not have insurance, the employer needs to seek assistance from an experienced attorney, as there can be severe penalties for failure to carry the required insurance.

We have extensive experience with all types of workers’ compensation litigation.  Call us today for an appointment so we can discuss your business and what we can do to help you at the beginning of a workers’ compensation case.

Do I HAVE to Buy Workers’ Compensation Insurance?

There are a variety of expenses associated with running your own business.  From inventory to lease payments to taxes, there are many expenditures included in your total overhead.  In California, workers’ compensation needs to figure into this computation.  Especially in the case of small businesses, many business owners wonder if it is necessary to purchase workers’ compensation insurance, as the cost can be extensive.  It is very important for business owners to understand the different permissible options under California law, as well as the consequences of not acting pursuant to the relevant regulations.

The option that is most common is purchasing a workers’ compensation insurance policy.  Pursuant to California Labor Code § 3700, a business must provide workers’ compensation benefits to its employees if it employs one or more employees.  Recent changes to the law provide that executive officers and directors of corporations are no longer exempt from the requirement that all employees must be covered, with some limited exceptions.  California Labor Code § 3351 defines “employee,” and it should be noted that “every person in the service of an employer under any appointment or contract of hire or apprenticeship, oral or written, whether lawfully or unlawfully employed” is included under the definition.  Moreover, other people such as minors, handymen, aliens, nannies, and several others are also included.

Self-Insurance can also be an option for some businesses.  Businesses or employers who want to be self-insured must fulfill very particular financial requirements.  In addition, the business must apply to the Office of Self-Insurance Plans for Approval.  The business or employer must provide 1) three calendar years in business in a legally authorized business form; 2) three years of a certified, independently audited financial statements; and 3) acceptable credit rating for three full calendar years leading up to the application.  Employers should note that subsidiaries must apply separately.

If you choose not to provide workers’ compensation insurance, the consequences could be severe.  Not only could you and your business face stiff fines, there is a possibility you could even face criminal prosecution.  The first offense could result in a fine of $10,000 and a year and jail, and subsequent offenses carry even stiffer penalties.

If you have questions about whether you are required to carry workers’ compensation insurance for your business, contact us today.  We can discuss your business and what we can do to protect its future.

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