The third in a series, WorkCompCentral's latest special report on benefit adequacy, specifically temporary disability indemnity, takes a look at California.

This is, of course, of particular interest to me. I'm from California and as much as the state is denigrated by the rest of the workers' compensation community, it's temporary disability benefit is one of the most generous - perhaps because the cost of living in the Golden State is one of the highest.

It didn't use to be that way. For many years the TTD rate was stuck at abysmally low, static levels. The statute (LC 4453) was changed so that, beginning in 2004, the TTD rate would be tied to inflation as represented by the State Average Weekly Wage as determined by the Federal Department of Labor. Since then the SAWW has inflated 69%...

Still, even tied to inflation, what really happens when someone has a work injury and is off work for a protracted period? The statute, like many states, limits TTD to 2/3rds the employee's wages, subject to a ceiling, and with a maximum duration.

But California is a bit more liberal in terms of waiting periods - only 3 days of total disability before the benefit kicks in, and then retroactive to the first day of disability if more than 14 days pass. Most states have a 7 day waiting period and retroactivity doesn't occur unless more than 30 days pass without employment.

Our study examines two workers diametrically opposed in the employment sector - a farm worker who gets injured on the job, and the physical therapist assigned his case; a low wage earner and a high wage earner. As you will note from the report, neither are adequately protected by California's TTD law, and both suffer long term financial consequences far beyond the direct injury sequelae.

While you should read the report, and draw your own conclusions, here are the basics:

Jose, the farm worker, sustained an actual net loss in take home pay of 16% - nearly a fifth of his normal net pay. To a person living paycheck to paycheck, i.e. essentially on the edge, 16% is a big number, particularly if your average pay is only $21,900 per year...

Jose had to forgo savings, had to forgo support to his family in Mexico, and ends up having to rely on the generosity of his roommate to overcompensate for his financial detriment.

Worse, Jose no longer contributes to the economy, and comes out of workers' compensation a public benefit dependent.

One might think things would be different for Mike, Jose's physical therapist.

Mike's average annual wages are decidedly upper middle class at around $100,000. But kids to put through school, a mortgage, car payments, and the basics of a middle income lifestyle doen't leave a whole lot of room for a dark day, even with savings.

Mike's budget was $5,769 per month. The adjuster couldn't figure out the TTD rate because she was confused how to calculate wages when pay is based on case load (to me that's shocking and, frankly, completely unacceptable - it's a very easy calculation...) so she just didn't pay (again, completely shocking and unacceptable) and then when she did pay the amount was wrong.

But even after Mike got an attorney who was able to "school" the adjuster on how to calculate the TTD rate, that rate is capped far below Mike's needs. Indeed, because of the adjuster's error Mike had to tap his 401K and, if not repaid timely, will suffer additional economic harm.

These Special Reports are not intended to advocate for reform one way or the other, or to cast aspersion on the workers' compensation system - rather they are intended to highlight issues that we, as a society, need to take a serious look at.

I observed yesterday that perhaps the workers' compensation insurance industry's steadfast battle for work safety may, in the end, foster the irrelevancy of such insurance for the vast majority of industries and employers.

There's a palpable tension in workers' compensation that's more acute than it has been in some time.

The WorkCompCentral reports on benefit adequacy compel, I think, reviewing the basic social policies that created workers' compensation in the first place.

It comes down to value. If employers are paying too much for too little, will the industry survive? If enough people suffer financial harm from a privatized social benefit system that is inadequate, is there reason to keep it in place?

We, as an industry responsible to society, have some soul searching to do.

The Uncompensated Worker series, along with all other WorkCompCentral special reports, can be downloaded at https://www.workcompcentral.com/news/special-reports/. The reports are free, though you will need to register to retrieve the reports, unless you are already logged in as a member.