The Labor Code authorizes an employer to make a claim or bring an action against a third-party who caused the injury or death of an employee that gave rise to the employer’s obligations under California’s Workers’ Compensation system. The Labor Code also relieves the employer from an obligation to pay further compensation to or on behalf of the employee under certain circumstances, establishes certain requirements for a release or settlement agreement to be valid, authorizes certain credits to the employer, and authorizes the employer to enforce payment of a lien against a third-party or against the employee under certain circumstances.
Under SB 487, an employer of a peace officer or firefighter, as defined, may receive no more than one-third (1/3) of a third-party defendant’s applicable liability insurance policy limits if the peace officer or firefighter establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim and the total liability insurance limits available are insufficient to fully compensate the employer and peace officer or firefighter’s proven damages.
SB 487 also limits the employer’s right to reimbursement, subrogation, or lien to the one-third (1/3) recovery threshold, and the employer may not assert any credit or offset against future workers’ compensation benefits owed to the employee.
The one-third (1/3) recovery allocated to an employer may not affect or diminish the employer’s existing obligation to provide any compensation under existing law. In addition, a release or settlement is not valid or binding unless it provides that the employer may not receive more than one-third (1/3) of the third-party insurance limits, and the employer has no right to assert any credit or offset against future workers’ compensation benefits.
(SB 487 amends Sections 3852, 3858, 3859, 3860, 3861, and 3862 of the Labor Code.)