California Workers Compensation Benefit Increases For 2016

California’s State Average Weekly Wage (SAWW) rose just under 2.3 percent in the 12 months ending March 31, 2015, which will require increases in several types of workers’ compensation benefits beginning next January.  

Labor Code §4453(a)(10) ties minimum and maximum temporary total disability (TTD) and permanent total disability (PTD) rates to changes in the SAWW, which is the average weekly wage paid to employees covered by unemployment insurance as reported by the U.S. Department of Labor for California for the 12 months ending March 31 in the year preceding the injury.  The SAWW for the 12 months ending March 31, 2014, was $1,095.70, while the SAWW for the 12 months ending March 31, 2015 was $1,120.67 – an increase of 2.2789 percent. As a result, claims administrators will need to increase TTD and PTD rates for 2016 injury claims by that percentage.

In addition to the new rates for 2016 injury claims, the SAWW increase will also affect some existing claims:

• LC §4661.5 requires any TTD payment made 2 or more years after the injury date to be based on the TTD rate in effect on the date of the payment, unless that would reduce the amount paid, so claims administrators will need to adjust payments on existing claims that are eligible for more than 104 weeks of TD [e.g., those involving any of the 9 long-term injuries noted in LC §4656(c)(3)].
• LC §4659(c) provides a cost of living adjustment (COLA) for workers injured o/a January 1, 2003 who have either a PTD or a life pension, so as of January 1, 2016 claims administrators will need to increase these workers’ PTD and life pension payments to reflect the latest increase in the SAWW.
• LC §4702(b) requires that unless the WCAB has ordered otherwise, death benefits “shall be paid in installments in the same manner and amounts as TTD indemnity would have to be made to the employee,” so as of January 1, 2016, the weekly maximum rate for death benefit installment payments will increase to the new TTD maximum for 2016., though under LC §4703(b) the minimum weekly rate for death benefit installment payments is $224, so the 2016 TTD minimum of $169.26 should not be used to calculate minimum weekly rates for these death claims.

CWCI encourages claims administrators to review all changes in benefit rates and payments with counsel to assure that adjustments are accurate. As a reference, the SAWW for the 12 months ending 3/31/14 is posted at http://workforcesecurity.doleta.gov/unemploy/content/data_stats/datasum14/DataSum_2014_1.pdf and the SAWW for the 12 months ending 3/31/15 is at http://workforcesecurity.doleta.gov/unemploy/content/data_stats/datasum15/DataSum_2015_1.pdf.

Institute members also may view a CWCI Bulletin and news release on the recent change in the SAWW at www.cwci.org.

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