The Department of Industrial Relations’ annual assessments on California employers is now over $1.5 billion – a $191 million or 13.9% increase from the assessments for 2022.
The assessments, together, amount to a tax of nearly 5.9% insured employers will pay on top of workers’ comp premium next year.
Insured employers are paying 72.37% of the total assessment for 2023 compared to 74.07% in 2022. Self-insured employers now account for a higher relative percentage of California’s payroll. Labor Code sections 62.5 and 62.6 require DIR to allocate the assessments between insured and self-insured employers in proportion to payroll.
The agency says it needs $1,568,378,400 to manage the state’s workers’ comp system, oversee workplace safety and health, enforce California’s wage and hour laws and fight fraud in the system. The total includes increases of $58.8 million for the Subsequent Injuries Benefits Trust Fund (SIBTF), which now tops $430 million, and a $54 million increase for the Workers’ Compensation Administration Revolving Fund (WCARF) that covers administrative expenses for the Department.
Self-insured employers are assessed based on the amount of indemnity benefits paid to injured workers, which will be 11.8% under the assessment formula. Insured employers are paying 72.37% of the total assessment compared to 74.07% this year, as self-insured employers now account for a higher percentage of the state’s payroll. Labor Code sections 62.5 and 62.6 require DIR to allocate the assessments between insured and self-insured employers in proportion to payroll.
Insured employers are again spared what used to be a standard 2% surcharge to fund the California Insurance Guarantee Association (CIGA). The association has enough money and investments to cover the workers’ comp claims left behind by failed insurance companies.
More details and analysis will be coming in the next Premium edition of Workers’ Comp Executive.