Assembly extends workers’ compensation protections, removes labor-attachment requirement for certain claimants

The Assembly on Wednesday approved legislation that eliminates the requirement that some injured workers must show continued attachment to the labor market in order to continue receiving certain types of workers' compensation benefits.

Sponsor Assemblymember Cruz said the 2017 reforms limited the “attachment to the labor market” defense for permanent disability categories, but that insurers continued to use the doctrine to deny wage-replacement benefits to workers with temporary disabilities. The bill would extend the rule so that temporary total and temporary partial disabilities are treated the same as the permanent categories — insurers could still investigate alleged fraud but could not withhold benefits on the mere basis that a claimant did not demonstrate job-market attachment.

Lawmakers pressed the sponsor on potential employer and insurer impacts, and whether the change would increase costs for local governments, school districts and small businesses; the sponsor and supporters argued prospective savings would accrue because litigation would decline and insurers would have fewer technical defenses to assert. Opponents said the change could reduce incentives for reemployment and might increase costs. The sponsor said audit and fraud referral pathways (to the IG or Workers' Compensation Board) remain available.

After extended debate and several members explaining their votes, the Assembly passed the bill (Ayes 128, Nays 7). Sponsor remarks said the bill is prospective only and will not apply retroactively to existing claims.

Supporters framed the change as restoring fairness to injured workers who cannot demonstrate labor-market attachment for reasons unrelated to malingering, while opponents warned of cost and behavioral incentives.