• New Workers' Comp Bill
• New Reference Checking Requirements

Maximum workers' compensation benefits for temporarily and permanently disabled workers will go up 20 percent-from $490 to $602 per week beginning January 1, 2003. The benefit increase is included in a package of workers' comp benefit increases (AB 749) signed by Governor Gray Davis last Friday. Disabled benefits will increase to $728 per week in 2004 and $840 per week in 2005, and annually thereafter based on cost-of-living adjustments in the state's average weekly wage.

AB 749 also increases benefits for workers who are permanently partially disabled from the current rate of $170 per week to $230 by 2006 (the rate increases gradually each year in the interim).

The legislation allows disabled employees to choose a one-time payment of $10,000 instead of vocational rehabilitation; increases funding to investigate and prosecute employers who don't pay for workers' comp; and raises other penalties for workers' comp violations by employers.

The bill also:

• Expands the definition of first aid to allow employers to pay directly for a wider range of medical costs outside the workers' comp system.

• Allows employers to require that injured employees be treated for 180 days (instead of 90 days) by the company's physician or designated HMO.

• Offers grants for employers of up to $2500, to help sustain modified duty programs for injured employees who return to work. However, funds for the grants will not be appropriated until 2004.

What Should You Do?

Because of the impending benefit increases, it's more important than ever for employers to:

• Shop for the best policy. Review your current policy when it expires to compare the coverage offered by several different companies. This year's best insurance carrier may not be the one with the best rates for next year.

• Identify a company doctor or facility for injured workers. Designating a company doctor helps control who treats your employees and how much they are paid.

• Make sure you have a first aid program. This allows you to pay directly for first aid care, which keeps these costs from affecting workers' comp.

• Maintain an effective Injury and Illness Prevention Program (IIPP), required by California law, to reduce employee injuries.

• Require employees to report all injuries and illnesses immediately. Promptly investigate any accidents and correct any workplace hazards.

• Make sure supervisors understand the importance of controlling workers' comp costs. Direct supervisors to tell you about injuries immediately, send injured workers to the company doctor, and encourage injured employees to get well and return to work as soon as possible, even with modified duty.

• Display the mandatory workers' compensation poster (Injuries on the Job). Be sure to write in the name of the company person to whom injuries should be reported as well as the name, address, and phone number of the company doctor.

For further assistance controlling your workers' comp costs, the California Chamber offers two valuable resources:

• California Chamber Comp, a special insurance program offering savings to Chamber members on workers' comp premiums. For more information, call Byerly Insurance Services at (888) 851-3909 or email insurance@calchamber.com.

• The Chamber's new kit, Workers' Comp Cost Control: What to do When There's an Injury. The Kit takes you step-by-step through what to do if an employee becomes injured or ill on the job, and includes all of the required forms with filled-in examples and detailed instructions. Workers' Comp Cost Control can be pre-ordered at the online store or by calling (800) 331-8877.

Legislation passed last year and effective January 1, 2002, changes what employers must do when conducting background checks on applicants for employment or current employees (AB 655). The law amends and broadens existing background checking requirements, and was enacted in part out of concern for identity theft issues.

The key issue for employers concerns the as yet uncertain boundary between what the law considers a "reference check," and what it considers a "background check." Reference checks involve the prospective employer verifying with a previous employer the applicant's employment dates, job title, and last salary. Background checks go further - evaluating an individual's character, general reputation, personal characteristics, and mode of living.

Employers who use third party agencies, or others in lieu of an agency, to perform background checks now must:

• Notify the applicant or employee in writing within three days after requesting the background check that an "investigative consumer report" about the person's character, general reputation, personal characteristics, and mode of living will be made;

• Give the applicant or employee a copy of the report and information on the agency that issued it, as well as how to contact them. The employer must give the information either during the meeting with the applicant or employee, or within seven days of receiving the report, whichever is earlier.

• Include the name and address of the agency conducting the investigation and the nature and scope of the investigation requested. The notification also must contain information about how the applicant or employee can obtain the report from the agency (CA. Civil Code section 1786.22);

Employers also must certify to the agency that they have made the required disclosures to the applicant or employee and that the employer will comply with the requirement to provide a copy of the report to him or her. If there is suspicion of wrongdoing or a good faith belief of criminal wrongdoing by the subject of the investigation that could result in a loss to the employer, employers do not have to give notice.

Since it is unclear whether this legislation also applies to reference checks for employment, employers should proceed very cautiously.

What Should You Do?

• Review current reference checking policies and practices;

• Evaluate whether you must notify applicants or employees when conducting a reference or background check. Consult with legal counsel if you have any questions.

• Comply with all notification requirements.

The 2002 California Labor Law Digest is also available to purchase at the Chamber's online store.