Are you tired of hearing more and more about new legislation coming out of Sacramento, dear readers?  I didn’t think so.

Your humble blogger has one for you that isn’t directly a workers’ compensation bill, but that you should be aware of.  Senate Bill 1162 was signed into law by Governor Newsome on September 27, 2022.  Aside from imposing various reporting requirements on employers regarding the race and sex of their employees, to also post a salary range with any job advertisement and create penalties for failure to do so.

How does this apply to workers’ compensation matters?  Well, imagine if you will an injured worker on TD benefits who happens to notice that his employer is hiring for the same position.  It doesn’t have to be a replacement, but perhaps the employer is looking for an additional professional for the same job – another plumber, another waiter, another janitor.

Well, as we know, TTD benefits are calculated based on the earning capacity of the injured worker at the time of injury.  What happens when the employer posts a pay scale in accordance with the new Labor Code section 432.3 and the scale provides for a higher rate of pay than the employee was receiving at the time of injury?

Suddenly, the employer is subject to depositions regarding how it arrived at the pay scale and why applicant is not receiving more on the pay scale than he is.  The adjuster is faced with demands to pay higher on the pay scale or be exposed to penalties.

SB 1162 goes further still – not only are new job posts to include the pay scale, but current employees can demand disclosure of a pay scale for their respective positions under LC 432.3(c)(2).  Your humble blogger anticipates that applicant attorneys will exploit this by having their clients, employees presently on TTD, demand the pay scale for their respective positions and then use workers’ compensation discovery procedures to develop the record on why the “earning capacity” should be higher on the pay scale.

Claims for higher TD rates and related penalties would certainly follow.

So, how do we address this newest burden imposed on employers and insurers in California?  Well, for starters, employers need to invest some serious time into considering a pay scale and having competent HR or supervisor employees explain the basis of the scale.  Employers should have a decision maker who can testify competently, under oath at a deposition or at an expedited hearing, how a particular pay rate was reached. 

From the side of litigation and claims, we need a strong channel of communication with the employer and HR to provide us with those competent witnesses, but also to update us as to the current pay scale for any given position, as those pay scales will certainly change with time and circumstances, and where applicant falls on the pay scale and why.

Time after time, Sacramento has made very clear to the employers and insurers of California that it is open season on anyone providing employment in California.  Given this climate, it only makes sense that the defense community become more proactive and more cooperative with the tools available to defend these claims and keep the lights on.

See you next week, dear readers!