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SB 863's Benefit Increases Have Done Much to Restore Compensation for Disabled Workers in California

• Permanently disabled workers injured after the beginning of the Great Recession experienced much more severe earnings losses than workers injured before, suggesting that the economic downturn disproportionately affected injured workers relative to uninjured workers.
• For the average worker who was injured between 2005 and 2012, the benefit increases enacted under SB 863 would have significantly increased replacement rates of lost income compared to what they were under a prior statute: The portion of after-tax earnings losses replaced by benefits would have risen by 21.4 percentage points, from 58.8 percent to 80.2 percent.
• While SB 863 will lead to higher benefits, much of this benefit increase is offset by the increases in earnings losses that followed the Great Recession.
• Both changes in ratings and increases in the maximum weekly wage led to substantial increases in benefit adequacy. The return-to-work benefit, a new benefit aimed at workers with severe earnings losses, had a more modest effect on average. However, the return-to-work benefit had the largest effect on wage replacement rates for the lowest-wage workers. Since other provisions of SB 863 led to larger benefit increases for middle-income and high-income workers, the return-to-work benefit has an important role to play in preserving the progressivity of PPD benefits.
• Alternative methods for rating disabilities that were explicitly authorized by SB 863 led to substantially higher impairment ratings. The implications of alternative ratings for benefits and system costs remain unclear, however, as it is unknown how often these ratings are upheld in court.