Workers Comp Zone


A bill to reform the $120 Million Return to Work Fund is dead for this year.

The bill, AB 553 (carried by Tom Daly of Anaheim), will become a “two year bill”, meaning it may resurface next year. This week’s scheduled Senate Appropriations hearing on the bill was canceled.

The bill was designed to address the fact that the $120 Million Fund has been underutilized. This fund, one of the components of the 2012 SB 863 reforms, was established as a sweetener to get some unions off the fence and on board with the reform package. The RTW fund is meant to give extra aid to workers with disproportionately large earnings losses.

Implementation of the program took a long time, and the DWC relied on a RAND study of various methodologies to distribute the funds garnered from employer assessments. Publicity and outreach to launch the program was anemic.

While participation rates have been rising, the fund is distributing $5,000 RTW payments to workers who apply and have received a SJDB voucher. But the RTW fund is still distributing far less than $120 Million per year.

This was the subject of an inquiry by State Senator Tony Mendoza, and a study was done by DIR staff for presentation at the March 24, 2017 CHSWC meeting. More information about the status of the RTW Fund can be found in the minutes of that meeting (see link at the end of this post).

In March 2017 CHSWC did vote to approve the draft report on the RTW fund and also voted to approve a plan for CHSWC to develop a contracted study of the RTW Fund.

Proponents of AB 553 see no reason why whatever balance  of the $120 million is left in the fund each year could not be parceled out to those who qualified.

But obviously the bill is not supported by the powers that be at the DIR/DWC.

What better way to kill a bill than through an unfriendly cost analysis? The Department of Finance estimates large extra staffing costs that would appear to be questionable.

The analysis by the Department of Finance also notes that:

“In addition, the allocation of additional benefits on a pro-rata basis would bear no relationship to a worker’s actual loss of earnings, which is inconsistent with the purpose of the program.”

This statement makes no sense, since the methodology of the current program (as recommended by RAND) is already on an arbitrary, fixed $5,000 per worker basis. Apparently RAND and the DWC settled on this amount rather than establishing a distribution methodology which would be more complicated. So if the current methodology is not tied to individualized wage loss, what is the problem with distributing any unutilized portion of the $120 million fund in the same fashion?

This is an issue that will linger on until more of the RTW Fund is utilized or until another administration decides to fulfill the original spirit of the RTW Fund. Keep in mind that those eligible for the fund tend to be more the more severely injured in the system and must be unable to return to their former work.

Here is the Department of Finance analysis of the projected cost of AB 553:


Here is the text of AB 553:

And here is the July 2017 Senate Analysis of AB 553:


Here is the DIR research unit’s response to the inquiry by Senator Mendoza:


The minutes of the March 24, 2017 CHWSC meeting can be found here (note the discussion of the RTW Fund starts on page 12 of those minutes):

Stay tuned.

Julius Young