Existing law establishes a workers compensation system, administered by the Administrative Director of the Division of Workers Compensation, to compensate an employee for injuries sustained in the course of employment, which, in the case of the death of an employee, includes a death benefit. Existing law governs temporary and permanent disability indemnity payments and prohibits a payment made by a written instrument unless it is immediately negotiable and payable in cash, among other things. Existing law, until January 1, 2027, allows an employer to commence a program under which disability indemnity payments are deposited in a prepaid card account for employees.

This bill would extend the authorization to deposit indemnity payments in a prepaid card account indefinitely.

Existing law establishes a workers compensation system, administered by the Administrative Director of the Division of Workers Compensation, to compensate an employee for injuries sustained in the course of employment, which, in the case of the death of an employee, includes a death benefit. Existing law governs temporary and permanent disability indemnity payments and prohibits a payment made by a written instrument unless it is immediately negotiable and payable in cash, among other things. Existing law, until January 1, 2027, allows an employer to commence a program under which disability indemnity payments are deposited in a prepaid card account for employees.

This bill would extend the authorization to deposit indemnity payments in a prepaid card account indefinitely.

Existing law establishes a workers compensation system, administered by the Administrative Director of the Division of Workers Compensation, to compensate an employee for injuries sustained in the course of employment, which, in the case of the death of an employee, includes a death benefit. Existing law governs temporary and permanent disability indemnity payments and prohibits a payment made by a written instrument unless it is immediately negotiable and payable in cash, among other things. Existing law, until January 1, 2027, allows an employer to commence a program under which disability indemnity payments are deposited in a prepaid card account for employees.

This bill would extend the authorization to deposit indemnity payments in a prepaid card account indefinitely.

 CONSENT  

Bill No: AB 1683

Author: Committee on Insurance

Introduced: 2/2/26

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 6/10/26

AYES: Smallwood-Cuevas, Strickland, Cortese, Durazo, Laird

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 66-0, 5/7/26 (Consent) - See last page for vote

SUBJECT: Workers’ compensation: prepaid cards

SOURCE: Author

DIGEST:

This bill removes the January 1, 2027, sunset date for the pilot program authorizing employers to deposit workers’ compensation payments in a prepaid card account for employees, making the program permanent.

ANALYSIS:

Existing law:

1. Establishes a comprehensive system of workers’ compensation that provides a range of benefits for an employee who suffers from an injury or illness that arises out of and in the course of employment, regardless of fault. This system requires all employers to ensure payment of benefits by either securing the consent of the Department of Industrial Relations (DIR) to self-insure or by obtaining insurance from a company authorized by the state. (Labor Code §§3200-6002)
2. Establishes the Division of Workers’ Compensation and Workers’ Compensation Appeal Board within DIR and charges them with monitoring the administration of workers’ compensation claims and providing administrative and judicial services to assist in resolving disputes that arise in connection with claims for workers’ compensation benefits. (Labor Code §§110-139.6)
3. Establishes within DIR, the Commission on Health and Safety and Workers’ Compensation (CHSWC) to conduct a continuing examination of the workers’ compensation system, as defined, and of the state’s activities to prevent industrial injuries and occupational diseases. Allows CHSWC to conduct or contract for studies it deems necessary to carry out its responsibilities, as specified. (Labor Code §§75-78)
4. Establishes within the workers’ compensation system, temporary disability indemnity, permanent disability indemnity, and permanent partial disability indemnity, which offer wage replacement of a specified injured employee’s average weekly earnings while an employee is unable to work due to a workplace illness or injury. (Labor Code §§4650-4664)
5. Requires that, if an injury causes temporary disability, the first payment of temporary disability indemnity must be made no later than 14 days after knowledge of the injury and disability. Each additional payment of temporary disability indemnity benefits must be made as due every two weeks on the day designated with the first payment. (Labor Code §4650)
6. Prohibits any disability indemnity payment being made by any written instrument unless it is immediately negotiable and payable in cash, on demand, without discount at some established place of business in the state. (Labor Code §4651)
7. Allows, until January 1, 2027, an employer to commence a program under which disability indemnity payments are deposited in a prepaid card account for the employee. The employee must provide written consent to the employer to use a prepaid card account for the employee’s disability payments. (Labor Code §4651)
   1. Provides that the prepaid card account must meet the applicable requirements of Section 1339.1 of the Unemployment Insurance Code.
   2. Requires, for purposes of this section, a prepaid card to also meet all of the following requirements:
      1. Allow the employee to withdraw the entire balance on the card in one transaction without incurring fees.
      2. Allow the employee reasonable access to in-network automatic teller machines (ATMs).
      3. Allow the employee to make point-of-sale purchases without incurring fees from the financial institution.
      4. Prohibit a link to any form of credit, including a loan against future payments or a cash advance on future payments.
   3. Provides that the fees associated with the use of the prepaid card must be disclosed to the employee in writing. The only permissible fees associated with the use of a prepaid card are those for a replacement card provided through expedited delivery, out-of-network ATM fees on the third and subsequent withdrawal per deposit, and fees associated with foreign transactions.
   4. Provides that if an employee has consented to use the prepaid card payment system under this section, either the employer or the employee may opt to change the method of payment to another method, as specified, by providing 30 days’ written notice to the other party.
   5. Requires, on or before December 1, 2022, the CHSWC to issue a report to the Legislature on payments made to prepaid card accounts. Requires employers to provide all necessary aggregated data on their prepaid account programs to the commission upon request. The report must include, but is not limited to, the following:
      1. The number of employees who elected to receive their disability indemnity payments in a prepaid card account.
      2. The cash value of the disability benefits sent to prepaid card accounts.
      3. The number of employees who opted to change the method of payment from a prepaid card account to either a written instrument or electronic deposit.
   6. Provides that it is not a violation of this section if either of the following delays occurs in connection with a transaction authorized, as specified, and the delay is caused solely by the application of state or federal banking laws or regulations:
      1. A delay in the negotiation of a written instrument, including a delay in the deposit or electronic deposit of a check to a prepaid card account.
      2. A delay in the deposit of a disability indemnity payment to a prepaid card account.
8. Defines “prepaid card” or “prepaid card account” as a card, code, or other means of access to funds of a recipient that is usable at multiple, unaffiliated merchants for goods or services, or usable at ATMs. (Unemployment Insurance Code §1339.1)
9. Requires that a prepaid account used for receipt of unemployment benefits meets all of the following criteria: (Unemployment Insurance Code §1339.1)
   1. The account is held at an insured depository financial institution.
   2. The account is set up to meet the requirements for direct or passthrough deposit or share insurance payable to the person entitled to the receipt of public assistance payments by the Federal Deposit Insurance Corporation, as specified.
   3. The account is not attached to a credit or overdraft feature that is automatically repaid from the account unless the credit or overdraft feature has no fee, charge, or cost, whether direct, required, voluntary, or involuntary, or the credit or overdraft feature complies with the requirements for credit offered in connection with a prepaid account, as specified.
   4. The account complies with all of the requirements and provides the holder of the account with all of the consumer protections, that apply to an account under the rules implementing the Electronic Fund Transfer Act.

This bill:

1. Removes the January 1, 2027, sunset date for the pilot program authorizing employers to deposit workers’ compensation payments in a prepaid card account for employees, making it permanent.
2. Removes language requiring CHSWC to publish a report assessing the pilot program, as specified.

Background

Workers’ compensation. Under the California workers’ compensation system, if a worker is injured on a job, the employer must pay for the worker’s medical treatment and provide monetary benefits if the injury is permanent or temporarily results in lost wages. In return for receiving free medical treatment, the worker surrenders the right to sue the employer for monetary damages in civil court. In California, all employers are required to either purchase a workers' compensation insurance policy from a licensed insurer authorized to write policies in California or become self-insured.

Workers’ compensation disability indemnity benefits are payments injured employees get if they lose wages due to a work-related injury that prevents them from doing their usual job while recovering. If a workplace injury causes temporary partial disability, meaning the injured worker can return to work but cannot perform their full professional duties due to their disability, the worker is entitled to monetary compensation equal to two-thirds of the weekly loss in wages during the period of disability. If a workplace injury causes temporary total disability, meaning the injured worker cannot work at all, the worker is entitled to two-thirds of their average weekly earnings during the period of the disability. If the disability is permanent, the worker is entitled to disability indemnity benefits depending on their average weekly earnings at the time of the injury, with the number of weeks depending on the extent of their disability.

Disability indemnity payments must be made every two weeks, beginning 14 days after knowledge of the injury and disability is established. As the Assembly Committee on Insurance points out, “prior to 2018, disability indemnity benefits could only be transmitted to the injured worker by paper check or direct deposit. These methods of payment pose unique challenges for households without a bank account. For unbanked workers, direct deposit is not available, and without a relationship with a financial institution, cashing a check generally incurs considerable fees that would materially reduce the value of the payment.”

Workers’ compensation prepaid card pilot program. In 2018, Senate Bill 880 (Pan, Chapter 730, Statutes of 2018) was signed into law, which allowed employers to conduct a pilot program (until January 1, 2023) to deposit workers’ compensation disability indemnity benefits via prepaid cards, rather than a paper check or electronic deposit. This program was modeled after the Employment Development Department (EDD)’s program that utilizes prepaid cards to issue unemployment insurance and disability insurance payments.

SB 880 created this pilot program that is voluntary and completely optional for the employer and for the employee. Under this pilot program, the employee must consent in writing, and either the employer or the employee may opt to change the method of payment to back to paper check or direct deposit with a 30 days written notice.

The pilot program also required the workers’ compensation prepaid card account to meet all the requirements applicable to EDD’s prepaid card accounts, in addition to all the following requirements:

1. Allow the employee to withdraw the entire balance on the card in one transaction without incurring fees.
2. Allow the employee reasonable access to in-network ATMs.
3. Allow the employee to make point-of-sale purchases without incurring fees from the financial institution.
4. Prohibit a link to any form of credit, including a loan against future payments or a cash advance on future payments.

SB 880 required that all fees associated with the use of the prepaid card be disclosed to the employee in writing and limited permissible fees to fees for replacement of the card via expedited delivery, out-of-network ATM fees on the third and subsequent withdrawal per deposit, and fees associated with foreign transactions. SB 880 had a sunset date of January 1, 2023, and the pilot program would be repealed without further legislative action.

CHSWC report. In addition to the pilot program, SB 880 also required Commission on Health and Safety and Workers’ Compensation (CHSWC) to compile a report on the program to the Legislature by December 1, 2022, with the following information:

1. The number of employees who elected to receive their benefits via prepaid card,
2. The cash value of benefits sent via prepaid card, and
3. The number of employees who opted to change their method of payment from prepaid card to either a written instrument or electronic deposit.

Due to insufficient data, the CHSWC report was not completed on time. As a result, the Legislature passed three separate bills extending the sunset date of the pilot program to allow time to produce and review the report:

1. AB 2148 (Calderon, Chapter 120, Statutes of 2022) extended the program until January 1, 2024.
2. AB 489 (Calderon, Chapter 63, Statutes of 2023) extended the program until January 1, 2025.
3. AB 1239 (Calderon, Chapter 806, Statutes of 2024) extended the program until January 1, 2027.

CHSWC published the required report on February 18, 2026.^[1] According to the report, “CHSWC found that only one insurer, the State Compensation Insurance Fund (State Fund) of California, offers the prepaid card under the definition of the pilot and California Labor Code § 4651. The State Fund reported that since July 2020 when their program began, 10,348 employees have enrolled in the prepaid card program and of those, 325 employees have opted out in favor of receiving paper checks (3.14%). The cash value of indemnity payments to prepaid accounts totaled $214,168,506 as reported through December 31, 2024. […]

It is worth noting that the legislation itself was designed to expire, if not renewed or made permanent. Adoption rates by payers may also have been low because there was no assurance that a significant investment in a new payment method would not go away or sunset by law. Further, it is possible that some payers may have been delaying consideration of adopting or implementing a prepaid card program until a report by CHSWC became available for review. […] The future of a prepaid card program will depend on possible legislative amendments, prior to the sunset date of January 1, 2027.

Based on the report’s findings, CHSWC recommends amending the legislation to make the prepaid card pilot program permanent while still remaining at the discretion of the payer.”

This bill seeks to implement CHSWC’s recommendation that the prepaid card program for disability indemnity payments be made permanent. The bill removes the statutory sunset date but retains all substantive requirements of the existing pilot program, including that the program be optional and voluntary for the employer and the employee.

Related/Prior Legislation

AB 1239 (Calderon, Chapter 806, Statutes of 2024) extended the sunset on the program to allow for collection of sufficient data for publication of the CHSWC report until January 1, 2027.

AB 489 (Calderon, Chapter 63, Statutes of 2023) extended the sunset on the program to allow for collection of sufficient data for publication of the CHSWC report until January 1, 2025.

AB 2148 (Calderon, Chapter 120, Statutes of 2022) extended the sunset on the program to allow for collection of sufficient data for publication of the CHSWC report until January 1, 2024.

SB 880 (Pan, Chapter 730, Statutes of 2018) established the pilot program authorizing the payment of disability indemnity using prepaid cards, as specified, with a sunset data of January 1, 2023, and required the CHSWC to produce a report on the program by December 1, 2022.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 6/22/26)

American Property Casualty Insurance Association

California Association of Joint Powers Authorities (CAJPA)

California Chamber of Commerce

California Coalition on Workers Compensation

Public Risk Innovation, Solutions, and Management (PRISM)

OPPOSITION: (Verified 6/22/26)

None received

ARGUMENTS IN SUPPORT: According to the American Property Casualty Insurance Association (APICA), and a coalition of supporters: “In 2018, Senate Bill 880 established Labor Code Section 4651, authorizing an employee, with the employee’s written consent, to deposit disability indemnity payments into a prepaid card account that meets specified requirements, including providing reasonable access to in-network ATMs. This reform addressed challenges faced by injured workers who previously could only receive temporary disability payments by paper check or direct deposit, an issue that disproportionately affected “unbanked” households. Without a bank account, direct deposit is not an option, and cashing a paper check often requires paying significant fees. The prepaid card framework was intended to provide these workers with a more accessible, low-cost method of receiving benefits, consistent with existing practices for unemployment insurance payments. AB 1683 simply extends the current authorization allowing employers to deposit workers’ compensation disability indemnity payments into prepaid card accounts by eliminating the January 1, 2027, sunset date. The bill preserves all existing safeguards, including employee consent and compliance with prepaid card account standards. By making this option permanent, AB 1683 modernizes benefit delivery and ensures continued access to convenient, secure payment options for injured workers.”

ASSEMBLY FLOOR: 66-0, 5/7/26

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bryan, Calderon, Caloza, Carrillo, Castillo, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Patel, Patterson, Pellerin, Quirk-Silva, Ramos, Ransom, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Ward, Wilson, Zbur, Rivas

NO VOTE RECORDED: Arambula, Bonta, Chen, Flora, Gallagher, Hart, Hoover, Irwin, Papan, Petrie-Norris, Celeste Rodriguez, Valencia, Wallis, Wicks

Prepared by: Jazmin Marroquin / L., P.E. & R. / (916) 651-1556

6/24/26 16:30:31

**** END ****

1. California Commission on Health and Safety and Workers’ Compensation. Report on Employer Use of Prepaid Card Account Programs for Workers’ Compensation Disability Indemnity Payments in California: California Senate Bill 880 (2018) and California Labor Code §4651 (Feb. 18, 2026). https://www.dir.ca.gov/chswc/Reports/2026/PrepaidCardProgram.pdf ↑

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Lola Smallwood-Cuevas, Chair

2025 - 2026 Regular

Bill No: AB 1683 Hearing Date: June 10, 2026

SUBJECT: Workers’ compensation: prepaid cards

KEY ISSUE

This bill removes the January 1, 2027, sunset date for the pilot program authorizing employers to deposit workers’ compensation payments in a prepaid card account for employees, making the program permanent.

ANALYSIS

Existing law:

1. Establishes a comprehensive system of workers’ compensation that provides a range of benefits for an employee who suffers from an injury or illness that arises out of and in the course of employment, regardless of fault. This system requires all employers to ensure payment of benefits by either securing the consent of the Department of Industrial Relations (DIR) to self-insure or by obtaining insurance from a company authorized by the state. (Labor Code §§3200-6002)
2. Establishes the Division of Workers’ Compensation (DWC) and Workers’ Compensation Appeal Board (WCAB) within DIR and charges them with monitoring the administration of workers’ compensation claims and providing administrative and judicial services to assist in resolving disputes that arise in connection with claims for workers’ compensation benefits. (Labor Code §§110-139.6)
3. Establishes within DIR, the Commission on Health and Safety and Workers’ Compensation (CHSWC) to conduct a continuing examination of the workers’ compensation system, as defined, and of the state’s activities to prevent industrial injuries and occupational diseases. Allows CHSWC to conduct or contract for studies it deems necessary to carry out its responsibilities, as specified. (Labor Code §§75-78)
4. Establishes within the workers’ compensation system, temporary disability (TD) indemnity, permanent disability (PD) indemnity, and permanent partial disability (PPD) indemnity, which offer wage replacement of a specified injured employee’s average weekly earnings while an employee is unable to work due to a workplace illness or injury. (Labor Code §§4650-4664)
5. Requires that, if an injury causes temporary disability, the first payment of temporary disability indemnity must be made no later than 14 days after knowledge of the injury and disability. Each additional payment of temporary disability indemnity benefits must be made as due every two weeks on the day designated with the first payment. (Labor Code §4650)
6. Prohibits any disability indemnity payment being made by any written instrument unless it is immediately negotiable and payable in cash, on demand, without discount at some established place of business in the state. (Labor Code §4651)
7. Allows, until January 1, 2027, an employer to commence a program under which disability indemnity payments are deposited in a prepaid card account for the employee. The employee must provide written consent to the employer to use a prepaid card account for the employee’s disability payments. (Labor Code §4651)
   1. Provides that the prepaid card account must meet the applicable requirements of Section 1339.1 of the Unemployment Insurance Code.
   2. Requires, for purposes of this section, a prepaid card to also meet all of the following requirements:
      1. Allow the employee to withdraw the entire balance on the card in one transaction without incurring fees.
      2. Allow the employee reasonable access to in-network automatic teller machines (ATMs).
      3. Allow the employee to make point-of-sale purchases without incurring fees from the financial institution.
      4. Prohibit a link to any form of credit, including a loan against future payments or a cash advance on future payments.
   3. Provides that the fees associated with the use of the prepaid card must be disclosed to the employee in writing. The only permissible fees associated with the use of a prepaid card are those for a replacement card provided through expedited delivery, out-of-network ATM fees on the third and subsequent withdrawal per deposit, and fees associated with foreign transactions.
   4. Provides that if an employee has consented to use the prepaid card payment system under this section, either the employer or the employee may opt to change the method of payment to another method, as specified, by providing 30 days’ written notice to the other party.
   5. Requires, on or before December 1, 2022, the Commission on Health and Safety and Workers’ Compensation (CHSWC) to issue a report to the Legislature on payments made to prepaid card accounts. Requires employers to provide all necessary aggregated data on their prepaid account programs to the commission upon request. The report must include, but is not limited to, the following:
      1. The number of employees who elected to receive their disability indemnity payments in a prepaid card account.
      2. The cash value of the disability benefits sent to prepaid card accounts.
      3. The number of employees who opted to change the method of payment from a prepaid card account to either a written instrument or electronic deposit.
   6. Provides that it is not a violation of this section if either of the following delays occurs in connection with a transaction authorized, as specified, and the delay is caused solely by the application of state or federal banking laws or regulations:
      1. A delay in the negotiation of a written instrument, including a delay in the deposit or electronic deposit of a check to a prepaid card account.
      2. A delay in the deposit of a disability indemnity payment to a prepaid card account.
8. Defines “prepaid card” or “prepaid card account” as a card, code, or other means of access to funds of a recipient that is usable at multiple, unaffiliated merchants for goods or services, or usable at ATMs. (Unemployment Insurance Code §1339.1)
9. Requires that a prepaid account used for receipt of unemployment benefits meets all of the following criteria: (Unemployment Insurance Code §1339.1)
   1. The account is held at an insured depository financial institution.
   2. The account is set up to meet the requirements for direct or passthrough deposit or share insurance payable to the person entitled to the receipt of public assistance payments by the Federal Deposit Insurance Corporation, as specified.
   3. The account is not attached to a credit or overdraft feature that is automatically repaid from the account unless the credit or overdraft feature has no fee, charge, or cost, whether direct, required, voluntary, or involuntary, or the credit or overdraft feature complies with the requirements for credit offered in connection with a prepaid account, as specified.
   4. The account complies with all of the requirements and provides the holder of the account with all of the consumer protections, that apply to an account under the rules implementing the Electronic Fund Transfer Act.

This bill:

1. Removes the January 1, 2027, sunset date for the pilot program authorizing employers to deposit workers’ compensation payments in a prepaid card account for employees, making it permanent.
2. Removes language requiring CHSWC to publish a report assessing the pilot program, as specified.

COMMENTS

1. Background:

Workers’ compensation

Under the California workers’ compensation system, if a worker is injured on a job, the employer must pay for the worker’s medical treatment and provide monetary benefits if the injury is permanent or temporarily results in lost wages. In return for receiving free medical treatment, the worker surrenders the right to sue the employer for monetary damages in civil court. In California, all employers are required to either purchase a workers' compensation insurance policy from a licensed insurer authorized to write policies in California or become self-insured.

Workers’ compensation disability indemnity benefits are payments injured employees get if they lose wages due to a work-related injury that prevents them from doing their usual job while recovering. If a workplace injury causes temporary partial disability, meaning the injured worker can return to work but cannot perform their full professional duties due to their disability, the worker is entitled to monetary compensation equal to two-thirds of the weekly loss in wages during the period of disability. If a workplace injury causes temporary total disability, meaning the injured worker cannot work at all, the worker is entitled to two-thirds of their average weekly earnings during the period of the disability. If the disability is permanent, the worker is entitled to disability indemnity benefits depending on their average weekly earnings at the time of the injury, with the number of weeks depending on the extent of their disability.

Disability indemnity payments must be made every two weeks, beginning 14 days after knowledge of the injury and disability is established. As the Assembly Committee on Insurance points out, “prior to 2018, disability indemnity benefits could only be transmitted to the injured worker by paper check or direct deposit. These methods of payment pose unique challenges for households without a bank account. For unbanked workers, direct deposit is not available, and without a relationship with a financial institution, cashing a check generally incurs considerable fees that would materially reduce the value of the payment.”

Workers’ compensation prepaid card pilot program

In 2018, Senate Bill 880 (Pan, Chapter 730, Statutes of 2018) was signed into law, which allowed employers to conduct a pilot program (until January 1, 2023) to deposit workers’ compensation disability indemnity benefits via prepaid cards, rather than a paper check or electronic deposit. This program was modeled after the Employment Development Department (EDD)’s program that utilizes prepaid cards to issue unemployment insurance and disability insurance payments.

SB 880 created this pilot program that is voluntary and completely optional for the employer and for the employee. Under this pilot program, the employee must consent in writing, and either the employer or the employee may opt to change the method of payment to back to paper check or direct deposit with a 30 days written notice.

The pilot program also required the workers’ compensation prepaid card account to meet all the requirements applicable to EDD’s prepaid card accounts, in addition to all the following requirements:

• Allow the employee to withdraw the entire balance on the card in one transaction without incurring fees.
• Allow the employee reasonable access to in-network ATMs.
• Allow the employee to make point-of-sale purchases without incurring fees from the financial institution.
• Prohibit a link to any form of credit, including a loan against future payments or a cash advance on future payments.

SB 880 required that all fees associated with the use of the prepaid card be disclosed to the employee in writing and limited permissible fees to fees for replacement of the card via expedited delivery, out-of-network ATM fees on the third and subsequent withdrawal per deposit, and fees associated with foreign transactions. SB 880 had a sunset date of January 1, 2023, and the pilot program would be repealed without further legislative action.

CHSWC report

The Commission on Health and Safety and Workers’ Compensation (CHSWC) is a joint labor-management body created by the workers' compensation reform legislation of 1993. CHSWC is charged with examining the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. CHSWC was established to conduct a continuing examination of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational illnesses and to examine those programs in other states.

In addition to the pilot program, SB 880 also required CHSWC to compile a report on the program to the Legislature by December 1, 2022, with the following information:

• The number of employees who elected to receive their benefits via prepaid card,
• The cash value of benefits sent via prepaid card, and
• The number of employees who opted to change their method of payment from prepaid card to either a written instrument or electronic deposit.

Due to insufficient data, the CHSWC report was not completed on time. As a result, the Legislature passed three separate bills extending the sunset date of the pilot program to allow time to produce and review the report:

• AB 2148 (Calderon, Chapter 120, Statutes of 2022) extended the program until January 1, 2024.
• AB 489 (Calderon, Chapter 63, Statutes of 2023) extended the program until January 1, 2025.
• AB 1239 (Calderon, Chapter 806, Statutes of 2024) extended the program until January 1, 2027.

CHSWC published the required report on February 18, 2026.^[1] According to the report:

CHSWC found that only one insurer, the State Compensation Insurance Fund (State Fund) of California, offers the prepaid card under the definition of the pilot and California Labor Code § 4651. The State Fund reported that since July 2020 when their program began, 10,348 employees have enrolled in the prepaid card program and of those, 325 employees have opted out in favor of receiving paper checks (3.14%). The cash value of indemnity payments to prepaid accounts totaled $214,168,506 as reported through December 31, 2024. […]

It is worth noting that the legislation itself was designed to expire, if not renewed or made permanent. Adoption rates by payers may also have been low because there was no assurance that a significant investment in a new payment method would not go away or sunset by law. Further, it is possible that some payers may have been delaying consideration of adopting or implementing a prepaid card program until a report by CHSWC became available for review. […]

The future of a prepaid card program will depend on possible legislative amendments, prior to the sunset date of January 1, 2027.

Based on the report’s findings, CHSWC recommends amending the legislation to make the prepaid card pilot program permanent while still remaining at the discretion of the payer.

According to the Assembly Committee on Insurance, even though the report indicates that only one payer adopted the prepaid card program, it is worth noting that State Fund is California’s largest provider of workers’ compensation insurance, with tens of thousands of policyholders and nearly $21 billion in assets.

This bill seeks to implement CHSWC’s recommendation that the prepaid card program for disability indemnity payments be made permanent. The bill removes the statutory sunset date but retains all substantive requirements of the existing pilot program, including that the program be optional and voluntary for the employer and the employee.

2. Need for this bill?

According to the author, “In order to improve accessibility of workers’ compensation disability indemnity payments for injured workers, particularly among communities that lack consistent access to traditional banking, AB 1683 would make permanent an existing pilot program allowing disability indemnity payments to be made via prepaid card, rather than solely by paper check or direct deposit.”

3. Proponent Arguments:

According to the American Property Casualty Insurance Association (APICA), and the additional coalition of business and insurer supporters:

“In 2018, Senate Bill 880 established Labor Code Section 4651, authorizing an employee, with the employee’s written consent, to deposit disability indemnity payments into a prepaid card account that meets specified requirements, including providing reasonable access to in-network ATMs. This reform addressed challenges faced by injured workers who previously could only receive temporary disability payments by paper check or direct deposit, an issue that disproportionately affected “unbanked” households. Without a bank account, direct deposit is not an option, and cashing a paper check often requires paying significant fees. The prepaid card framework was intended to provide these workers with a more accessible, low-cost method of receiving benefits, consistent with existing practices for unemployment insurance payments. AB 1683 simply extends the current authorization allowing employers to deposit workers’ compensation disability indemnity payments into prepaid card accounts by eliminating the January 1, 2027, sunset date. The bill preserves all existing safeguards, including employee consent and compliance with prepaid card account standards. By making this option permanent, AB 1683 modernizes benefit delivery and ensures continued access to convenient, secure payment options for injured workers.”

4. Opponent Arguments:

None received.

5. Prior Legislation:

AB 1239 (Calderon, Chapter 806, Statutes of 2024) extended the sunset on the program to allow for collection of sufficient data for publication of the CHSWC report until January 1, 2027.

AB 489 (Calderon, Chapter 63, Statutes of 2023) extended the sunset on the program to allow for collection of sufficient data for publication of the CHSWC report until January 1, 2025.

AB 2148 (Calderon, Chapter 120, Statutes of 2022) extended the sunset on the program to allow for collection of sufficient data for publication of the CHSWC report until January 1, 2024.

SB 880 (Pan, Chapter 730, Statutes of 2018) established the pilot program authorizing the payment of disability indemnity using prepaid cards, as specified, with a sunset data of January 1, 2023, and required the CHSWC to produce a report on the program by December 1, 2022.

SUPPORT

American Property Casualty Insurance Association

California Association of Joint Powers Authorities (CAJPA)

California Chamber of Commerce

California Coalition on Workers Compensation

Public Risk Innovation, Solutions, and Management (PRISM)

OPPOSITION

None received.

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1. California Commission on Health and Safety and Workers’ Compensation. Report on Employer Use of Prepaid Card Account Programs for Workers’ Compensation Disability Indemnity Payments in California: California Senate Bill 880 (2018) and California Labor Code §4651 (Feb. 18, 2026). https://www.dir.ca.gov/chswc/Reports/2026/PrepaidCardProgram.pdf ↑

Date of Hearing: April 29, 2026

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 1683

Author:(Committee on Insurance) – As Introduced Ver:February 2, 2026

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill strikes the January 1, 2027, repeal date of the pilot program allowing an employer to deposit disability indemnity (workers’ compensation) payments in a prepaid card account for employees, thus making the program permanent.

FISCAL EFFECT:

Likely minor and absorbable costs to the Division of Workers’ Compensation. The outcome of the pilot program does not suggest significant education or enforcement costs, even if all employers eventually offer a prepaid card account for employees.

COMMENTS:

1. Purpose. According to the author, making permanent an existing pilot program allowing workers’ compensation payments be made via prepaid card, rather than paper check or direct deposit, improves accessibility of payments, particularly among communities that lack consistent access to traditional banking. This bill is supported by business and insurer associations.
2. Prepaid Card Pilot Program. Modeled after the Employment Development Department’s program utilizing prepaid card accounts to issue unemployment insurance and disability insurance payments, SB 880 (Pan), Chapter 730, Statutes of 2018, created a pilot program, through January 1, 2023, to allow employers to transmit workers’ compensation benefits via a prepaid card, instead of a paper check or direct deposit. Employees must provide written consent to the employer to use a prepaid card account that includes specified consumer protections. At the time, the author of SB 880 argued paper checks present challenges for “unbanked” households lacking access to financial services and utilizing prepaid cards would make it cheaper and easier for all people to receive benefits.

SB 880 also required the Commission on Health and Safety and Workers Compensation (CHSWC) to report the following data to the Legislature by December 1, 2022: (a) the number of employees who elected to receive their benefits via prepaid card; (b) the cash value of benefits sent via prepaid card; and (c) the number of employees who opted to change their method of payment from prepaid card to either a written instrument or electronic deposit. Due to insufficient data, the CHSWC report was not completed on time, necessitating the passage of three bills to extend the sunset date of the pilot program to allow time to finish and publicize the report. Most recently AB 1239 (Calderon), Chapter 806, Statutes of 2024, extended the sunset date to January 1, 2027.

CHSWC published the report on February 18, 2026, finding that one insurer, the State Compensation Insurance Fund, utilized the pilot authorization, with over 10,000 employees enrolling in the prepaid card program. According to CHSWC:

It is worth noting that the legislation itself was designed to expire, if not renewed or made permanent. Adoption rates by payers may also have been low because there was no assurance that a significant investment in a new payment method would not go away or sunset by law. Further, it is possible that some payers may have been delaying consideration of adopting or implementing a prepaid card program until a report by CHSWC became available for review…Based on the report’s findings, CHSWC recommends amending the legislation to make the prepaid card pilot program permanent while still remaining at the discretion of the payer.

As noted in the Assembly Insurance Committee’s analysis of this bill, although only one payer adopted the program, the State Compensation Insurance Fund is “California’s largest provider of workers’ compensation insurance, with tens of thousands of policyholders and nearly $21 billion in assets.” This bill implements the CHSWC recommendation and makes the program permanent.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 15, 2026

ASSEMBLY COMMITTEE ON INSURANCE

Lisa Calderon, Chair

ABPCA Bill Id:AB 1683 (

Author:Committee on Insurance) – As Introduced Ver:February 2, 2026

SUBJECT: Workers’ compensation: prepaid cards

SUMMARY: Makes permanent an existing, optional pilot program allowing employers to transmit workers’ compensation indemnity payments via prepaid card, rather than paper check. Specifically, this bill:

1. Removes the January 1, 2027 sunset date for the pilot program authorizing workers’ compensation indemnity payments to be made via prepaid card, making it permanent.
2. Removes vestigial language requiring the publication of a report by the Commission on Health and Safety and Workers’ Compensation (CHSWC) assessing the utility of the pilot program specified in 1), above.

EXISTING LAW:

1. Establishes a workers’ compensation system that provides benefits to an employee who suffers fromm an injury or illness that arises out of, and in the course of, employment, irrespective of fault. (California Constitution Article XIV, Section 4)
2. Requires that, if an injury causes temporary disability, the first payment of temporary disability indemnity be made not later than 14 days after knowledge of the injury and disability, and every two weeks thereafter. (Labor (Lab.) Code Section 4650 (a) & (c))
3. Provides that, if the injury causes temporary partial disability, the disability payment is two-thirds of the weekly loss in wages during the period of disability, reduced by the sum of unemployment compensation benefits and extended duration benefits received by the employee during the period of temporary partial disability. (Lab. Code Section 4654)
4. Provides that, if the injury causes temporary total disability, the disability payment is two-thirds of the average weekly earnings during the period of such disability, consideration being given to the ability of the injured employee to compete in an open labor market. (Lab. Code Section 4653)
5. Specifies that a disability indemnity payment shall not be made by any written instrument unless it is immediately negotiable and payable in cash, on demand, without discount, at some established place of business in the state. (Lab. Code Section 4651(a)(1))
6. Clarifies that the prohibition in 5), above, does not prohibit an employer from depositing the payment directly into an account at a bank, savings and loan association, or credit union of the employee’s choice, provided the employee has voluntarily authorized the deposit, nor does it prohibit an employer from electronically depositing the payment into an account that the employee has previously authorized to receive electronic deposits of payroll, unless the employee has requested, in writing, that disability indemnity benefits not be electronically deposited in the account. (Lab. Code Section 4651(a)(2))
7. Authorizes an employer to commence a program under which disability indemnity payments are deposited in a prepaid card account for the employee; specifies that the employee must provide written consent for the employer to make indemnity payments in this manner, and that either the employer or the employee may opt to change the method of payment from prepaid card account by providing 30 days’ written notice. (Lab. Code Section 4651(a)(3)(A) & (C))
8. Requires that a prepaid card account, for purposes of a program established pursuant to 7), above, must meet the applicable requirements established for the payment of unemployment benefits via prepaid card account, as well as all of the following requirements:
   • Allow the employee to withdraw the entire balance on the card in one transaction without incurring fees.
   • Allow the employee reasonable access to in-network ATMs.
   • Allow the employee to make point-of-sale purchase without incurring fees from the financial institution.
   • Prohibit a link to any form of credit, including a loan against future payments or a cash advance on future payments.
9. Requires that any fees associated with the use of the prepaid card be disclosed to the employee in writing, and limits permissible fees to fees for card replacement through expedited delivery, out-of-network ATM fees on the third and subsequent withdrawal per deposit, and fees associated with foreign transactions. (Lab. Code Section 4651(a)(3)(B))
10. Sunsets the authorization for a prepaid card account program for the payment of temporary disability indemnity on January 1, 2027. (Lab. Code Section 4651(c))
11. Defines “prepaid card” or “prepaid card account” to mean a card, code, or other means to allow a recipient access to funds, which is usable at multiple, unaffiliated merchants for goods or services, or useable at ATMs. (Unemployment Insurance (UI) Code Section 1339.1; 15 USC Section 1693/-1(a)(2)(A))
12. Requires that a prepaid card account used for receipt of unemployment benefits meet all of the following criteria:
    • The account is held at an insured depository financial institution.
    • The account is set up to meet the requirements for direct or passthrough deposit or share insurance payable to the person entitled to the receipt of public assistance payments by the Federal Deposit Insurance Corporation (FDIC) pursuant to specified federal law.
    • The account is not attached to a credit or overdraft feature that is automatically repaid from the account unless the credit or overdraft feature has no fee, charge, or cost, or the credit or overdraft feature complies with the requirements for credit offered in connection with a prepaid account under federal law.
    • The account complies with all of the requirements, and provides the holder of the account with all of the consumer protections, that apply to an account under the rules implementing the federal Electronic Fund Transfer Act. (UI Code Section 1339.1(a)(2)(B))

FISCAL EFFECT: Unknown.

COMMENTS:

1. Purpose: In order to improve accessibility of workers’ compensation disability indemnity payments for injured workers, particularly among communities that lack consistent access to traditional banking, AB 1683 seeks to make permanent an existing pilot program allowing disability indemnity payments to be made via prepaid card, rather than solely by paper check or direct deposit.
2. Access to Banking in California: According to the 2023 FDIC National Survey of Unbanked and Underbanked Households, 4.3% of California households are unbanked, roughly in line with the national average. An additional 13.3% of California households are considered “underbanked,” meaning they have a bank account, but must turn to nonbank products such as payday loans, tax refund anticipation loans, nonbank money orders, and check cashing services, to meet their financial needs.

42% of unbanked households cited “don’t have enough money to meet minimum balance requirements” as a reason for not having a bank account. One-third of unbanked households cited reasons relating to fees or minimum balance requirements as their main reason for not having an account, including “bank account fees are too high,” “bank account fees are too unpredictable,” and “don’t have enough money to meet minimum balance requirements.”

Unbanked rates are higher among lower-income households, less-educated households, Black, Hispanic, and American Indian or Alaska Native households, single-parent households, and particularly among working-age households with a disability.

In California, households aged 25 to 64 with a disability were more than four times as likely to be unbanked than those without a disability in the same age bracket (14.6% vs. 3.5%).^[1]

1. Disability Indemnity Payments: At its core, the workers’ compensation system relies on a so-called “grand bargain.” If a worker is injured on the job, the employer must pay for the worker’s medical treatment, including monetary benefits if the disability is permanent or temporarily results in lost wages. In exchange for receiving the guarantee of such treatment, the worker surrenders the right to sue the employer for monetary damages in civil court.

Under California law, if a workplace injury causes temporary partial disability, meaning the injured worker can return to work but cannot perform their full professional duties due to the disability, the worker is entitled to monetary compensation equal to two-thirds of the weekly loss in wages during the period of disability. (Lab. Code Section 4654) If a workplace injury causes temporary total disability, meaning the injured worker cannot work at all, the worker is entitled to two-thirds of their average weekly earnings during the period of the disability. (Lab. Code Section 4653) If the disability is permanent, the worker is entitled to anywhere from $160-$290 per week depending on their average weekly earnings at the time of the injury, with the number of weeks depending on the extent of their disability. (Lab. Code Section 4658) These payments are known as disability indemnity benefits.

Disability indemnity payments must be made every two weeks, beginning 14 days after knowledge of the injury and disability is established. Prior to 2018, disability indemnity benefits could only be transmitted to the injured worker by paper check or direct deposit. These methods of payment pose unique challenges for households without a bank account. For unbanked workers, direct deposit is not available, and without a relationship with a financial institution, cashing a check generally incurs considerable fees that would materially reduce the value of the payment.

1. SB 880 Prepaid Card Pilot Program: In 2018, the Legislature passed SB 880 (Pan, Ch. 730, Stats. 2018), which created a pilot program to allow employers to transmit disability indemnity payments via prepaid card, rather than limiting payment to paper check or direct deposit. The program was modeled after an Employment Development Department (EDD) program that uses prepaid cards to transmit unemployment and state disability insurance, which was in turn modeled after an existing electronic benefits transfer (EBT) program for individuals to receive CalFresh, CalWORKs, and other food and cash aid benefits.

SB 880 specified that for an employer to provide disability indemnity payments via prepaid card, the employee must consent in writing, and provided that either the employer or the employee may opt to change the method of payment to back to paper check or direct deposit with 30 days written notice. In other words, the program is entirely voluntary for both the employer and the employee.

Pursuant to the pilot program, a prepaid card account used for payment of disability indemnity must meet all requirements applicable to prepaid card accounts used in the EDD program, in addition to all of the following requirements:

• • Allow the employee to withdraw the entire balance on the card in one transaction without incurring fees.
  • Allow the employee reasonable access to in-network ATMs.
  • Allow the employee to make point-of-sale purchase without incurring fees from the financial institution.
  • Prohibit a link to any form of credit, including a loan against future payments or a cash advance on future payments.

SB 880 further required that all fees associated with the use of the prepaid card be disclosed to the employee in writing, and limited permissible fees to fees for replacement of the card via expedited delivery, out-of-network ATM fees on the third and subsequent withdrawal per deposit, and fees associated with foreign transactions.

SB 880 had a sunset date of January 1, 2023, at which point the pilot program would be repealed without further legislative action.

1. The CHSWC Report and Statutory Sunset: In addition to creating the pilot program, SB 880 required CHSWC to issue a report to the Legislature on payments made to prepaid card accounts pursuant to the pilot program by December 1, 2022. The mandatory report was to include information on the number of employees who elected to receive their disability indemnity payments in a prepaid card account, the cash value of the disability benefits sent to prepaid card accounts, and the number of employees who opted to change the method of payment from a prepaid card account to either a written instrument or direct deposit.

Due to insufficient data, this report was not completed on time, and, as a result, the Legislature passed three bills extending the sunset date of the pilot program to allow time to produce and review the report (AB 2148 (Calderon, Ch. 120, Stats. 2022), AB 489 (Calderon, Ch. 63, Stats. 2023), AB 1239 (Calderon, Ch. 806, Stats. 2024)). The latter of these bills, AB 1239, extended the sunset to January 1, 2027.

CHSWC published the required report on February 18, 2026.^[2] According to the report:

CHSWC found that only one insurer, the State Compensation Insurance Fund (State Fund) of California, offers the prepaid card under the definition of the pilot and California Labor Code § 4651. The State Fund reported that since July 2020 when their program began, 10,348 employees have enrolled in the prepaid card program and of those, 325 employees have opted out in favor of receiving paper checks (3.14%). The cash value of indemnity payments to prepaid accounts totaled $214,168,506 as reported through December 31, 2024. […]

It is worth noting that the legislation itself was designed to expire, if not renewed or made permanent. Adoption rates by payers may also have been low because there was no assurance that a significant investment in a new payment method would not go away or sunset by law. Further, it is possible that some payers may have been delaying consideration of adopting or implementing a prepaid card program until a report by CHSWC became available for review. […]

The future of a prepaid card program will depend on possible legislative amendments, prior to the sunset date of January 1, 2027.

Based on the report’s findings, CHSWC recommends amending the legislation to make the prepaid card pilot program permanent while still remaining at the discretion of the payer. [Emphasis added]

Though the report indicates that only one payer adopted the prepaid card program, it is worth noting that State Fund is California’s largest provider of workers’ compensation insurance, with tens of thousands of policyholders and nearly $21 billion in assets.

This bill seeks to implement CHSWC’s recommendation that the prepaid card program for disability indemnity payments be made permanent. The bill removes the statutory sunset date, but retains all substantive requirements of the existing pilot program, including that the program be discretionary both on the part of the payer and on the part of the employee.

1. Prior legislation:

AB 1239 (Calderon, Ch. 806, Stats. 2024) See Comment 5.

AB 489 (Calderon, Ch. 63, Stats. 2023) See Comment 5.

AB 2148 (Calderon, Ch. 120, Stats. 2022) See Comment 5.

SB 880 (Pan, Ch. 730, Stats. 2018) See Comment 4.

REGISTERED SUPPORT / OPPOSITION:

Support

American Property Casualty Insurance Association

Opposition

None on file.

Analysis Prepared by: Landon Klein / INS. / (916) 319-2086

1. Federal Deposit Insurance Corporation (FDIC). 2023 FDIC National Survey of Unbanked and Underbanked Households (Nov. 2024). https://www.fdic.gov/household-survey (accessed April 7, 2026). ↑

2. California Commission on Health and Safety and Workers’ Compensation (CHSWC). Report on Employer Use of Prepaid Card Account Programs for Workers’ Compensation Disability Indemnity Payments in California: California Senate Bill 880 (2018) and California Labor Code §4651 (Feb. 18, 2026). https://www.dir.ca.gov/chswc/Reports/2026/PrepaidCardProgram.pdf (accessed April 7, 2026). ↑