The California workers’ compensation system has significant issues. But over the past few years, problems at the California Division of Workers’ Compensation have been dwarfed by problems at other Department of Industrial Relations units.

Julius Young

Let’s review some of those problems and consider their impact on California workers.

Cal/OSHA has a leadership and staffing crisis. Despite efforts to fill vacancies, inspector positions and other staffing continue to lag and the agency appears to be drifting. Cal/OSHA chief Jeff Killip recently resigned. A coalition of unions and worker advocacy groups joined in a February letter to Gov. Gavin Newsom outlining the perilous state of Cal/OSHA.

A January blog post from former Cal/OSHA staffer Garrett Brown details the extent of Cal/OSHA’s vacancies in many of its offices.

Why should California workers’ comp community stakeholders care? Ensuring safe workplaces is the best way to keep injuries from occurring in the first place. 

During the pandemic, the Employment Development Department paid as much as $20 billion (or more) in fraudulent unemployment claims. Although pandemic aid fraud was not unique to California, and the volume of claims by scammers and fraudsters was astounding, the EDD clearly fell way short in managing aid programs and verifying entitled beneficiaries.

One can only imagine the uproar that would occur if there was such fraud and waste in the California workers’ comp system.

In 2022 EDD, froze more than 300,000 disability insurance claims it deemed suspicious. 

Over the last few years, applicants' attorneys have heard from injured workers who faced delays in getting EDD benefits started.

Why should California workers’ comp stakeholders care? EDD benefits are a safety net for workers whose comp claims are delayed or denied. Severely injured workers who exhaust two years of workers’ comp temporary disability can draw a year of EDD benefits. Having a system that is solvent, stable and efficient is critical to them.

But wait: There’s more.

California’s Unemployment Insurance Fund continues to have a gargantuan debt to the federal government.

Dan Walters, writing for CalMatters, details the history of California’s borrowing to keep UI afloat.

EDD’s own January report on the UI fund notes:

The fund ended 2022 with a deficit of $19.1 billion and is expected to continue running a deficit of $20 billion by the end of 2023, $20.8 billion by the end of 2024 and $21 billion by the end of 2025. While regular UI benefit amounts are declining from the peak of the COVID-19 pandemic, which increased benefit payments to levels not previously experienced in the UI program, the current financing system cannot self-correct during better economic times due to the significant deficit created. Despite a decrease in the expected unemployment rate, the projected deficit has increased from the May 2023 forecast primarily due to increases in benefits paid and decreases in contributions.

Cal/OSHA staffing problems. Problems rejecting fraudulent claims and paying valid ones. A UI system that is unsustainable as structured.

These are problems that the California workers’ comp community should keep in focus.

Julius Young is an applicants' attorney and a partner for the Boxer & Gerson law firm in Oakland. This column was reprinted with his permission from his Workers Comp Zone blog on the firm's website.