In the state of California, employers are required to maintain workers’ compensation insurance in order to reimburse employees who have been injured on the job. Just like how you pay monthly payments to your car insurance provider, employers pay monthly premiums to workers’ compensation insurance agencies. In exchange, the insurance company acts as a claim administrator for any injuries that occur at work. This includes receiving claims, reviewing claims, accepting or denying claims, overseeing medical treatment, and making payments to injured employees.
Employers are often times not very involved in the claims process aside from reporting the claim to the insurance company. However, numerous costly workers’ compensation claims affect the premiums employers must pay to the insurance provider. The more successful claims are, the higher the premiums become. In order to decrease premiums and avoid payouts, employers sometimes skirt the law and terminate employees who were injured at work. This is illegal and can result in a variety of civil penalties.