In workers' compensation law news, the California State Legislature passed a law earlier this week that is designed to introduce greater fairness and an element of transparency to all future work comp policies.

Specifically, lawmakers passed Senate Bill 684 (SB 684), a measure that would grant California employers the following protections when it comes to the execution of work comp policies:

  • All employers must receive written notification and be permitted to negotiate when a work comp carrier plans to use arbitration as the primary dispute resolution forum
  • All employers must have the right to determine whether they wish to negotiate/resolve arbitration disputes in a California venue and in accordance with California law

"This bill will create an important protection for California's employers by no longer allowing insurers to force businesses, small and large, to arbitrate out of state without their foreknowledge and consent," said Insurance Commissioner Dave Jones in a released statement. "SB 684 will ensure that both employers and insurers both freely and mutually agree to terms of the workers' compensation policy."

In many situations, California employers are presented with an altogether lower - and therefore desirable - quote for a work comp policy by an insurance carrier. However, these California employers may not know that in order to lower the quotes, the insurance carrier included a clause mandating that arbitration take place out of state and in accordance with that state's law, creating a potential legal disadvantage further down the road.

SB 684 - which passed with bipartisan support and was originally sponsored by Senate Majority Leader Ellen Corbett (D-San Leandro) - would eliminate this problem by requiring insurance carriers to inform California employers of their ability to negotiate arbitration provisions in writing at the outset of discussions.

"This disclosure will help to make the negotiation process more transparent from the beginning for everyone involved, including the insurer," said Commissioner Jones.

Employers who ultimately decide to accept the quote will have to sign a disclosure indicating that they understand and accept the terms.

If signed by Governor Jerry Brown, SB 684 would apply to all work comp policies issued/renewed on or after July 1, 2012.

Stay tuned for further updates in the area of workers' compensation law from our San Diego firm ...

If you have questions or would like to learn more about workers' compensation benefits, contact an experienced legal professional.

This post was for informational purposes only and is not to be construed as legal advice.

Related Resources:

Central Valley Business Times "Workers' comp bill clears Legislature" Sept. 6, 2011