Changes to California Comp Law Could Cost Employers Billions

The passage of new legislation, A.B. 749, has made injured California workers happy but is creating a panic among some employers.

The bill, which was sponsored by State Assemblyman Ronald S. Calderon, a Democrat, increases workers' compensation benefits for injured workers through 2006. Construction contractors fear their already high workers' compensation costs will increase with the passage of the bill.

The maximum temporary disability benefit will increase from the current $490 per week to $602 per week for injuries occurring after Jan. 1, 2003. Workers injured after Jan. 1, 2004 can expect to receive $728 per week as a maximum temporary disability benefit. In 2005, that benefit will climb to $804.

Employers in California could see an increase in workers' compensation costs of as much as $3.5 billion, and the bill could increase the premiums paid by construction contractors an average of 26 percent, says Dave Bellusci, senior vice president of the Workers' Compensation Insurance Rating Bureau.

Some California contractors are already smarting from increases in workers' compensation premiums last year, which jumped as much as 50 percent to 100 percent for some employers.

Jim Castle, vice president of construction services for Driver Alliant Insurance Services, noted the number of workers' compensation claims has increased, and he predicts it will continue to rise as benefits for injured workers increase.

Experts say that the increase workers' compensation costs will eventually be passed along to the companies hiring the construction contractors, but for now, many contractors will have to eat the costs themselves because they are in the middle of projects that have already been bid.

George Hawkins, executive vice president of the San Diego Chapter of the Associated Builders and Contractors Inc., notes, "Contractors are going to be left paying a huge increase that there was no way to plan for."

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