(1) Existing law establishes a workers' compensation system, administered by the Administrative Director of the Division of Workers' Compensation with the Department of Industrial Relations, to compensate an employee for injuries sustained in the course of employment. Existing law provides that the administrative director shall be appointed by the Governor, with the advice and consent of the Senate. Existing law sets, among others, the director's annual salary at $81,635 and provides for general salary increases, as specified.
This bill would remove the director from the above-described compensation structure.
(2) The Public Employees' Retirement Law (PERL) creates the Public Employees' Retirement System (PERS) for the purpose of providing pensions and benefits to state employees and their beneficiaries and prescribes the rights and duties of employers participating in the system. Under PERL, benefits are funded by investment income and employer and employee contributions, which are deposited into the Public Employees' Retirement Fund, a continuously appropriated trust fund administered by the system's board of administration.
PERL prescribes methods for the calculation and payment of the state employer contribution for its employees who are PERS members. PERL provides for an annual adjustment of the state's contribution in the budget and quarterly appropriations to the Public Employees' Retirement Fund from the General Fund and other funds that are responsible for payment of the employer contribution.
Existing law makes additional General Fund appropriations to the Public Employees' Retirement Fund for the 2020–21, 2021–22, 2022–23, 2023–24, 2024–25, and 2025–26 fiscal years. Supplemental payments connected with appropriations for those fiscal years are to be apportioned to the state employee member categories generally, as directed by the Department of Finance, and to specified state employee member categories, including to the state miscellaneous member category, the industrial member category, the state safety member category, and the state peace officer/firefighter member category.
The California Constitution establishes the Budget Stabilization Account in the General Fund and requires the Controller, in each fiscal year, to transfer from the General Fund to the Budget Stabilization Account amounts that include a sum equal to 1.5% of the estimated amount of General Fund revenues for that fiscal year. These provisions further require, until the 2029–30 fiscal year, that the Legislature appropriate a percentage of these moneys, the amount of which is generated pursuant to specified calculations, for certain obligations and purposes, including addressing unfunded liabilities for state-level pension plans.
This bill would appropriate $3,018,000,000 from the General Fund for the purposes identified in the constitutional provisions described above, to supplement the state's appropriation to the Public Employees' Retirement Fund. The bill would specify that this appropriation represents a portion of the amount identified in a specific provision of the Budget Act of 2026. The bill would require the Department of Finance to provide the Controller with a schedule establishing the timing of specific transfers. The bill would require the supplemental payment to the Public Employees' Retirement Fund to be apportioned to specified state employee member categories, not to exceed $1,434,683,000 to the state miscellaneous member category, $83,555,000 to the state industrial member category, $174,232,000 to the state safety member category, and $1,325,530,000 to the state peace officer/firefighter member category. The bill would require the appropriation described above to be applied to the unfunded state liabilities for the state employee member categories that are in excess of the base amounts for the 2026–27 fiscal year.
(3) Existing law requires all employers, as defined, to secure payment of that compensation either by being insured against liability to pay compensation or by securing a certificate to self-insure from the Director of Industrial Relations. Existing law requires that separate assessments and surcharges be charged on all employers and deposited in specified funds for expenditure by the Department of Industrial Relations for purposes relating to workers' compensation, occupational safety and health, and enforcement activities. Existing law imposes various penalties and remedies against employers who fail to secure payment of compensation. Existing law authorizes the director to additionally order a civil penalty for specified violations, including failure to timely or completely pay an assessment, the lesser of the amount of the assessment or $2,500.
This bill would require that surcharges and assessments be paid by electronic funds transfer, as defined, and would impose a 10% penalty on untimely or unpaid amounts of the above-described surcharges and assessments and for failure to pay by electronic funds transfer. The bill would require that these penalties be deposited in the Workers' Compensation Administration Revolving Fund, as specified.
(4) Existing law imposes a 5-year statute of limitations by which to bring a workers' compensation proceeding. Existing law also establishes the Subsequent Injuries Benefits Trust Fund, a continuously appropriated fund. Under existing law, if a permanently, partially disabled employee receives a subsequent compensable injury resulting in additional permanent disability, that employee receives compensation from the Subsequent Injuries Benefits Trust Fund. Existing law requires, when applicable, the additional permanent disability resulting from the subsequent injury to be equal to 35% or more of total, when considered alone and without regard to, or adjustment for, the occupation or the age of the employee. Existing case law requires the prior injury to be "labor disabling" and describes that term to mean an injury that could support an award, if industrially caused, but has not required that disability be demonstrated in loss of earnings.
This bill would define "labor disabling" to mean specified impairments that resulted in loss of earnings, interfered with an employee's work in the occupation in which they were employed, or otherwise had a demonstrable impact on the employee's ability to perform work. The bill would clarify that an employee has 5 years from the date of the subsequent compensable injury or 6 months from the resolution of the issue of permanent disability in the subsequent injury claim, whichever is later, to file a claim for benefits from the Subsequent Injuries Benefits Trust Fund. The bill would additionally exclude any adjustment for future earning capacity or a specified adjustment factor when determining whether an employee qualifies for these additional benefits. The bill would also codify existing standards for determining eligibility for compensation from the Subsequent Injuries Benefits Trust Fund and for calculating the amount of that compensation. To the extent this bill would change the eligibility requirements and calculation for payments made from the Subsequent Injuries Benefits Trust Fund, the bill would make an appropriation.
This bill would require, for purposes of determining eligibility for and the amount of an award of benefits from the Subsequent Injuries Benefit Trust Fund, the existence of the preexisting disability at the time of the subsequent compensable injury to be determined by substantial evidence based on prior medical records, prior testimony, and other prior evidence in existence prior to the subsequent compensable injury. The bill would make conforming changes.
This bill would exempt claims with a certain procedural status on or before June 1, 2026, or filed on or before July 1, 2020, from the above-described changes.This bill would make these provisions inoperative on July 1, 2031, and would repeal it as of January 1, 2032.
(5) Existing law requires the Workers' Compensation Appeals Board to fix and award the amounts of special additional compensation to be paid and to direct the State Compensation Insurance Fund to pay the additional compensation awarded. Existing law authorizes the additional compensation to be paid only from funds appropriated for these purposes. Existing law authorizes the State Compensation Insurance Fund to reimburse itself for specified costs from this appropriation.
This bill would replace the State Compensation Insurance Fund with the Director of Industrial Relations, as trustee of the Subsequent Injuries Benefits Trust Fund, as the entity to pay the additional compensation awarded by the Workers' Compensation Appeals Board. The bill would delete the State Compensation Insurance Fund's authorization to reimburse itself for specified costs.
(6) Existing law requires certain workers' compensation proceedings to be instituted before the appeals board and vests the appeals board with sole power, authority, and jurisdiction to finally determined specified matters before it. Existing law authorizes a petitioner, under specified circumstances, to petition the appeals board for reconsideration of any matters determined by the final order, decision, or award. Existing law, until July 1, 2026, provides that a petition for reconsideration is deemed denied by the board unless it is acted upon 60 days from the date the petition is transmitted to the board. Existing law, commencing July 1, 2026, provides that a petition is deemed denied unless it is acted upon within 60 days from the date of filing.
This bill would extend the above-described petition provisions indefinitely and would repeal the provisions effective July 1, 2026.
(7) Existing law establishes the California Workforce Development Board as the body responsible for assisting the Governor in the development, oversight, and continuous improvement of California's workforce investment system and the alignment of the education and workforce investment systems to the needs of the 21st century economy and workforce. Existing law, as part of its responsibilities, requires the board to administer several grant programs through various initiatives, including funding preapprenticeship programs through the Road Maintenance and Rehabilitation Account, the Breaking Barriers to Employment Initiative, and the Prison to Employment program. Existing law requires the board to submit reports to the Legislature relating to each of the grant programs they administer.
This bill would align the reporting requirement timelines relating to the above-referenced grant programs, including requiring the California Workforce Development Board to produce and submit a report to the Legislature evaluating those grant programs by October 1 of every odd-numbered year, as provided. The bill would also establish new reporting requirements for the Breaking Barriers to Employment Initiative and the Prison to Employment program if additional grant funds are appropriated for the purpose of those programs, as provided.
(8) This bill would appropriate $1,000,000 from the General Fund to the Department of Finance for administrative costs, as specified, thereby making an appropriation.
(9) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Statutes affected:
06/26/26 - Amended Assembly: 11553 GOV, 11553 GOV, 62.5 LAB, 62.5 LAB, 138.1 LAB, 138.1 LAB, 3702.9 LAB, 3702.9 LAB, 4706.5 LAB, 4706.5 LAB, 4751 LAB, 4751 LAB, 4753 LAB, 4753 LAB, 4753.5 LAB, 4753.5 LAB, 4754 LAB, 4754 LAB, 4755 LAB, 4755 LAB, 4756 LAB, 4756 LAB, 2038 SHC, 2038 SHC, 14013 UIC, 14013 UIC, 14014 UIC, 14014 UIC, 14033 UIC, 14033 UIC, 14042 UIC, 14042 UIC