Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of employment. Existing law requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. Existing law establishes a Workers’ Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board.

Existing law authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employer’s obligations. Existing law relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorney’s fees, and the employer’s lien. Existing law requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. Existing law authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employer’s liability for compensation, as specified. Existing law authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments.

This bill would state that when the injured employee is a peace officer, as defined, or a firefighter, the employer will be entitled to receive no more than 1 3 of the third-party defendant’s liability insurance policy limit, if the employee establishes that their total damages exceed the net recovery after satisfaction of the employer’s claim and that the total liability insurance limits available are insufficient to fully compensate the employer and employee’s proven damages. The bill would limit an employer’s right to reimbursement, subrogation, or lien to the maximum recovery threshold, as specified. The bill would prohibit an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers’ compensation benefits and would require a settlement or release to limit an employer’s claim for reimbursement to the portion of the settlement not allocated to the employee pursuant to these provisions. The bill would limit these provisions to those peace officers and firefighters who are employed by certain local entities, such as a city or county, among others.