MICHAEL SULLIVAN & ASSOCIATES BLOG

California employers have a compelling reason to review their employment practices before year-end: proactive compliance can help prevent violations and provide substantial protection if a PAGA claim arises.

Under California’s reformed Private Attorneys General Act (PAGA), qualifying employers that take all reasonable steps to comply with the law before receiving a PAGA notice, or certain employee records requests, can limit covered PAGA civil penalties to 15% of the amount otherwise sought—an 85% reduction.

The Subsequent Injuries Benefits Trust Fund (SIBTF) provides additional permanent disability compensation to employees whose combined pre-existing and subsequent industrial disabilities equal 70 percent or more. The SIBTF serves the dual purpose of protecting severely disabled workers from inadequate compensation, and encouraging employers to hire workers with pre-existing disabilities. The latter ensures that employer liability is limited to the disability caused by the most recent industrial injury. To qualify for SIBTF benefits under former LC 4751, an employee was required to demonstrate a pre-existing permanent partial disability that was "labor disabling" before the subsequent industrial injury — a standard that, following Ferguson v. IAC (1958) 23 CCC 108, was interpreted broadly to include conditions that were ratable even if they did not result in an actual loss of earnings or interfere with the employee's specific job duties.

From celebrating leadership in the legal community to sharing insights at CAJPA and connecting with HR professionals in Napa, September brought MS&A together with clients, colleagues, and industry partners across the communities we serve. Thank you to everyone who welcomed us and helped make these events so rewarding.

What Employers Need to Know for 2027

Gov. Gavin Newsom’s September 30 deadline to sign or veto legislation brought a new slate of employment laws governing artificial intelligence, discrimination, wages, leave and other workplace issues. Many take effect in 2027 and will require California employers to review existing policies, practices and workplace technology.

Insurance Code § 676.8 establishes the conditions under which an insurer may cancel a workers' compensation insurance policy. Among those conditions, IC 676.8(b)(2) permits cancellation based on a failure "to permit the insurer to audit payroll as required by the terms of the policy or of a previous policy issued by the insurer, or to pay any additional premium as a result of an audit of payroll as required by the terms of the policy or of a previous policy." When cancellation is based on that ground, IC 676.8(c) requires at least 10 days' advance written notice. A companion statute, IC 11760.1, permits collection of a premium penalty when an employer fails to provide access to payroll records after the insurer's third request during a period of at least 90 days.

August kept Team Rhino on the move! Our team had a fantastic time connecting with industry partners at CA-SIG’s Day at the Races, the Golden Gate RIMS Annual Golf Tournament, and other events throughout the state. We were also excited to host our San Diego Judges’ Panel, participate in educational programs, and enjoy the beautiful summer weather with clients!

SPECIAL REPORT

Labor Code § 5909 governs the time within which the WCAB must act on a petition for reconsideration. Under the former version of the statute, a petition for reconsideration "is deemed to have been denied by the appeals board unless it is acted upon within 60 days from the date of filing." Under this provision, if a petition for reconsideration is not acted on within the 60-day period, it is deemed denied by operation of law.

The Workers' Compensation Appeals Board (WCAB) is a creature of statute, and its subject matter jurisdiction is limited to the grants of authority conferred by the Legislature. Although it generally has jurisdiction over all injuries occurring within California, it has limited jurisdiction for injuries occurring outside of the state.

Subject matter jurisdiction over injuries occurring outside California is governed primarily by two statutes. Labor Code § 3600.5(a) extends jurisdiction to out-of-state injuries when the employee was hired or is regularly working in California. LC 5305 separately confers jurisdiction when the employee is a California resident at the time of injury and the contract of hire was made in California. The residency requirement of LC 5305 has long been recognized as unconstitutional, leaving the contract of hire as its operative element in practice. So, the Labor Code gives the appeals board jurisdiction over claims for out-of-state injuries when either (1) the contract for hire was made in California, or (2) the out-of-state injured worker is regularly employed in California.