Workers Compensation Reform & Return To

Permanently disabled workers in California's workers' compensation system have historically displayed poor rates of return to work and high levels of lost earnings attributed to their disability. This monograph provides a comprehensive analysis of the effects of several large changes to the workers' compensation system on return-to-work rates for California's injured workers. In particular, the authors study how public policies within and outside the workers' compensation system that influence return to work have changed in California over the past ten years. They then estimate the average return-to-work rates of injured and disabled workers over this time period and compare the trends with the policy changes. Overall, the authors find that return to work has improved, though it is unclear how much of this improvement can truly be attributed to changes in workers' compensation policy. Finally, the authors examine the impact that recent reforms to the workers' compensation system have had on the adequacy of benefits for injured and disabled workers. Disability benefits have fallen sharply as a result of changes to the system for evaluating the severity of workplace injuries. The authors find that these benefit cuts have reduced the adequacy of workers' compensation benefits, despite the gains in return to work over this time period. They estimate that the replacement of lost income from workers' compensation benefits fell by about one-quarter after the reforms took effect in 2005. Had return to work not improved, replacement rates would have fallen by about 40 percent. In the monograph, the authors discuss the implications of these findings for future reform efforts.