Based upon Labor Code §4658(2), for injuries occurring after 01/01/2005, an applicant’s Permanent Disability (PD) can be increased by 15%. If after 60 days following a permanent and stationary (P&S) status the employer does not offer the applicant, regular work, modified work or alternate work for a period of at least 12 months, the PD payments will increase 15% after the 60th day. This section shall not apply to employers with less than fifty (50) employees.
So what does this mean? If your employer has less than 50 employees, you can forget the rest of this article. Likewise, you do not have to worry about this if your injury is prior to 01/01/05. However, for those of those of us who do not qualify for these exemptions, we need to read on.
First of all, has the applicant reached P&S status or Maximum Medical Improvement (MMI)? Secondly, has the employer determined that there is no regular, modified or alternate work, lasting at least 12 months, within the applicant’s work restrictions? If the answer to both is yes, then the applicant is entitled to the 15% increase in PD.
A BIG mistake is to assume that the 15% is taken on the whole amount of PD. Not so! For the first 60 days, you pay the regular PD rate (for that year). Then you pay the 15% enhancement on the remainder.
For example: 60 days divided by 7 days per week equal 8.57 pay periods. Assuming 18 % rating for 2006, ($15,050.00 before enhancement), 8.57 weeks @ $230.00 week equals. $1,971.10. The remaining 56.93 weeks (65.5 – 8.57 =56.93 weeks) is then paid out at $264.50 per week ($230.00 per week + 15%). This will equal $15,057.96 for the remaining PD. Combined with the initial $1,971.10, the total PD equals $17,029.06. However, this is less than if 15% was calculated against the original PD amount ($15,050.00 + 15% = $17,307.50).
The other side of the coin to Labor Code §4658(2) is subsection (3) which decreases PD by 15%. for injuries occurring after 01/01/2005. The applicant’s Permanent Disability (PD) can be decreased by 15% following a determination of a permanent and stationary (P&S) status when the employer offers the applicant regular work, modified work or alternate work for a period of at least 12 months. The employer can reduce PD payments by 15% immediately after a written offer is made. This section applies to all employers regardless of the size of the employer.
So what does this mean? Compared to Labor Code §4658(2), any employer, regardless of size, can take advantage of 15% reduction in Labor Code §4658(3). Remember, you cannot apply this section if the date of injury is before 01/01/05.
As in subsection (2) the must applicant have reached P&S status or Maximum Medical Improvement (MMI) The employer must offer regular, modified or alternate work, lasting at least 12 months, within the applicant’s work restrictions and within 60 days of employer’s knowledge of the P&S status.
Subsection 3(A) states once an offer of work is made, each disability payment remaining shall be reduced by 15% immediately. Please note the formal Notice of regular, modified or alternative work needs to be sent. The WCAB has ruled that the employer has an extra five days for service, but it is best to be sent early if at all possible.
For example, assume that applicant is determined to be P&S with 18% PD for a 2006 injury. Standard PD for that injury equals $15,050.00. A 15% reduction of that PD is $12,792.50.
Please note that WCAB case law states that PD monies paid out prior to the written offer of work are not subject to the 15% reduction. The reduction only applies to the PD owed after the written offer of work. The WCAB also held that if the applicant lost no time from his injury, LC 4658(d) is not applicable and neither a decrease or increase in PD is warranted.
Finally, if the regular, alternate or modified work is terminated within 12 months by the employer, the remaining PD, if any, will be increased by 15%. This aspect does not apply to employers with under 50 employees or if the applicant voluntarily terminates his employment.