Now that 2025 has faded to 2026, it’s time for a look at what stood out last year in the world of California workers’ compensation. If you had not been following the system carefully, what signal stood out amid the noise?

Julius Young

For the comp system, 2025 was not a blockbuster year. Still, there are always issues percolating to the forefront. Below, in no particular order, is a list of system developments and some comments on each.

1. No major system changes emerged from the 2025 California legislative session. Gov. Gavin Newsom vetoed two prominent bills, AB 1329 (would have tightened standards for an SIBTF claim) and AB 1336 (would have created an agricultural worker heat injury presumption).

A bill to require the DWC to develop QME report templates (AB 1293) did pass and was signed. But most bills that became law principally deal with specific situations (stone cutter safety standards, misclassification amnesty in the trucking industry, rebuttable heart injury presumption for certain state hospital workers, health benefits for dependents of safety officers who die in the line of duty, etc.)

Bills that failed to advance to legislative passage included bills sponsored by physicians, applicants' attorney and labor interests, including bills to require periodic adjustments of the Medical-Legal Fee Schedule, expand presumptions to hospital workers in acute care, require a COLA adjustment for calculating permanent partial disability, and to create a Central Valley MPN. 

2. Newsom’s veto of the SIBTF bill has teed up SIBTF as a hot-button issue for 2026. In his veto message on AB 1329, Newsom applauded reform efforts but insisted they did not go far enough and demanded more comprehensive reforms of the SIBTF be included in the January 2026 budget proposal, citing DIR estimates “that without comprehensive reform, the annual assessment paid by all employers will increase from $372 million in FY 2021-22 to $1.5 billion in FY 2029-30.”

As 2025 ended and 2026 began, key stakeholders were tight-lipped about negotiations around the issue. Worker advocates are rightfully concerned that the program not be totally gutted, as it benefits seriously disabled workers who have a significant overall disability due to a combination of industrial and preexisting components.

3. DIR/DWC rulemaking activity in 2025 was relatively meager. As always, there were periodic updates to the pharmacy and physician fee schedules and the MTUS (Medical Treatment Utilization Schedule).

DWC forums were held on EAMS (the WCAB electronic system), supplemental job displacement and return-to-work regulations and medical provider network regulations. But no rulemaking on any of those topics emerged in 2025.

The DWC did issue multiple versions of utilization review regulations, with a third 15-day comment period that ended Oct. 17, 2025. The effort to promulgate revised UR rules was fraught, with problems that included the California Office of Administrative Law rejecting one DWC effort.

However, on Dec. 30, 2025, the OAL did approve the amended UR rules. A proposal to merge the physician request for authorization form (the RFA) with the treating physician PR-2 progress report was dropped along the way.

Readers interested in comparing the versions can find the DWC regulations page, here.

4. 2025 case law developments that may have wide application for the California system include the following:

• DiFusco v. Hands On Spa (WCAB en banc). Addresses the requirement to disclose entities liable for payment, and insurance policies that affect liability for payment.
• Vazquez v. Renteria (WCAB en banc). Replacement of a QME who cannot schedule within the required time frames is discretionary with the WCAB rather than automatic.
• Illinois Midwest Insurance Agency v. WCAB (Rodriguez). In a case involving a challenge to previously authorized and awarded home health care, the 2nd DCA questions Patterson v. The Oaks Farm, ruling that employers can seek utilization review of subsequent requests for more of the same treatment.
• Padron v. Osoy. Residential employee exclusion is based on contracted duration, not actual hours.
• Department of Corrections v. WCAB (Ayala). A 50% increase in benefits due to a serious and willful finding is not applicable to IDL benefits, which are created under the Government Code.
• Zenith Insurance v. WCAB (Hernandez). The 3rd DCA rules that a farmworker injured in a trip home from work in a vanpool arranged by a co-worker did not come within exceptions to the going and coming coverage rule.
• Travelers Indemnity v. WCAB (Zeber). Determination of injury date in a cumulative trauma claim.

5. As of March 2025, the DWC adopted the CourtCall video platform for status, lien and settlement conferences.

6. After years of declining workers’ comp rates, advisory workers’ comp insurance rates paid by employers began to creep upward.

A December 2025 WCIRB report on experience through the third quarter of 2025 noted industry average charged rates for 2024 and 2025 at $1.56 per $100 of payroll (by comparison, they were $6.40 in 2003 and $3.18 in 2014).

But we may be seeing rising workers’ comp costs emerge.

In May 2025, the WCIRB submitted a rate filing recommending that the California insurance commissioner adopt a nonbinding advisory rate of $1.56 per $100 of payroll, an advisory rate increase of 11.2%. Reasons cited by the WCIRB included increased claim frequency, more cumulative trauma claims, increased medical losses and increased loss adjustment expenses.

A smaller advisory rate increase of 8.1% was recommended by Bickmore, consulting on behalf of the WCIRB Governing Committee's public members. Then, in July 2025, Insurance Commissioner Ricardo Lara approved an advisory rate of $1.52 per $100 of payroll (an 8.7% increase over the prior rate).

While many employers are self-insured — and for those that are insured — employer comp rates vary due to a number of factors (experience rating, insurer discounts, etc.), and thus average rates vary from the advisory rate, it is significant that rates are likely to climb for the first time since 2014.

The culprit? Not frequency (the number of claims). Frequency in 2025 has been flat. Not indemnity costs. California injured workers have not had a permanent partial disability rate increase in more than a decade. According to the December 2025 WCIRB report, recent growth in indemnity severity is generally driven by wage inflation impacting indemnity benefits.

Rather, the reasons cited by the CDI actuary were climbing medical loss expenses and increases in allocated expenses due to more cumulative trauma claims. The rate decision by Lara can be seen here. 

Following the July ratemaking decision by Lara, the December 2025 WCIRB report noted a sharp increase in average medical costs, an increase in medical-legal payments due to per-page record review costs, more medical-legal services per claim, a modest increase in indemnity claim frequency, and some increases in average indemnity and ALAE costs (allocated loss adjustment expenses of claim handling). The WCIRB claimed that one of the factors leading to the ALAE increase is “an increase in Los Angeles-based law firms representing workers in other regions."

A 2025 CWCI bulletin to members noted that California workers’ comp insurer returns on net worth over the decade from 2013 to 2023 was 10.6%, higher than the return for other types of insurance lines. But in December 2025, WCIRB claimed that for insurers, the projected accident year combined ratios are now at a high not seen since 2009.

7. After an initial January 2025 budget proposal that provided for significant DIR/DWC staffing increases, the May 2025 revised state budget cut several hundred vacant positions across various Department of Industrial Relations units, including the DWC and Cal/OSHA.

8. Cal/OSHA continued to be a troubled agency in 2025. Cal/OSHA’s job is to enforce safety regulations and protect California workers. In a sense, it has a mission to prevent injuries in the first place. But a July 2025 California State Auditor report noted delays and severe staffing problems at Cal/OSHA, verifying criticisms of some past agency officials who are concerned about the agency’s performance under multiple administrations. The report can be accessed here.

9. As usual, there were studies ... and more studies. Noteworthy studies included the following:

• The 2025 State of the System report (July 2025) from the WCIRB.
• The Dec. 30, 2025, WCIRB Quarterly Experience report (as of Sept. 30, 2025).
• From the Workers’ Compensation Insurance Rating Bureau (WCIRB), a new geo study of California regional differences in workers’ comp claims characteristics.
• WCIRB June 2025 report on 2024 California workers’ compensation losses and expenses.
• CWCI analysis of costs of long-COVID claims.
• In September, CWCI released a report to its members examining the costs of functional restoration programs, comparing those claims to other claims.
• In December 2025, CHSWC unveiled a draft report on the use of prepaid cards to pay indemnity benefits.
• From the DIR, a report on independent medical review stats in 2024.
• From the National Council on Compensation Insurance, the 2025 State of the Line Report, analyzing the national workers’ comp industry in relation to other property and casualty insurance lines.
• From the Workers Compensation Research Institute, an April 2025 study titled “Impact of Recreational Marijuana Laws on Workers’ Compensation Benefits.” 

As usual, most of these studies came from insurance and employer-side organizations, as labor and public interest groups have never set up research mechanisms to do ongoing deep dives into the California system.

10. California’s workers' comp system continued to operate quietly as debates about public policy under the Trump administration roiled Washington and the state, and workers and unions had other issues of more concern.

As usual, the California system was rarely in the news except for an occasional fraud arrest of a worker, a medical provider or an employer for premium fraud.

But for some California workers, there was a long list of worries, many generated by actions at the federal level. Though not strictly workers’ comp-related, we would be remiss not to note many of them: interior immigration enforcement and the effect on some workplaces; the dawn of an unregulated-AI era and worker concern about the future of their jobs; the continued increase in robotics; cuts to some federal health, safety and medical research programs; looming elimination of Obamacare subsidies; changes in vaccine policy; changes in federal health and safety rulemaking of various types that affect some workers; and litigation over immigration arrests at courthouses, all in addition to concerns about inflation and affordability that have been brewing for years under both political parties.

Happy 2026 to all readers and the California workers’ comp community.

Julius Young is of counsel with applicants' law firm Boxer & Gerson in Oakland. This column was reprinted with his permission from his Workers Comp Zone blog on the firm's website.

Young will participate in a Jan. 22 WorkCompCentral webinar discussing expectations for the workers' compensation industry in 2026 with Douglas Hayden, former acting CEO, executive director and chief legal officer for the New York State Insurance Fund; Clint Fedderson, attorney for the Office of the Commissioners in California; Robert Rassp, presiding judge at the Workers' Compensation Appeals Board Los Angeles District Office; and Bill Zachry, retired California State Compensation Insurance Fund board member. More information about the webinar is here.