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. Existing law requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. Existing law establishes a Workers Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board.

Existing law authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employers obligations. Existing law relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorneys fees, and the employers lien. Existing law requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. Existing law authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employers liability for compensation, as specified. Existing law authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments.

This bill would state that when the injured employee is a peace officer, as defined, or a firefighter, the employer will be entitled to receive no more than ¹/₃ of the third-party defendants liability insurance policy limit, if the employee establishes that their total damages exceed the net recovery after satisfaction of the employers claim and that the total liability insurance limits available are insufficient to fully compensate the employer and employees proven damages. The bill would limit an employers right to reimbursement, subrogation, or lien to the maximum recovery threshold, as specified. The bill would prohibit an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers compensation benefits and would require a settlement or release to limit an employers claim for reimbursement to the portion of the settlement not allocated to the employee pursuant to these provisions. The bill would limit these provisions to those peace officers and firefighters who are employed by certain local entities, such as a city or county, among others.

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. Existing law requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. Existing law establishes a Workers Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board.

Existing law authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employers obligations. Existing law relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorneys fees, and the employers lien. Existing law requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. Existing law authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employers liability for compensation, as specified. Existing law authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments.

This bill would state that when the injured employee is a peace officer, as defined, or a firefighter, the employer will be entitled to receive no more than ¹/₃ of the third-party defendants liability insurance policy limit, if the employee establishes that their total damages exceed the net recovery after satisfaction of the employers claim and that the total liability insurance limits available are insufficient to fully compensate the employer and employees proven damages. The bill would limit an employers right to reimbursement, subrogation, or lien to the maximum recovery threshold, as specified. The bill would prohibit an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers compensation benefits and would require a settlement or release to limit an employers claim for reimbursement to the portion of the settlement not allocated to the employee pursuant to these provisions. The bill would limit these provisions to those peace officers and firefighters who are employed by certain local entities, such as a city or county, among others.

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. Existing law requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. Existing law establishes a Workers Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board.

Existing law authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employers obligations. Existing law relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorneys fees, and the employers lien. Existing law requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. Existing law authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employers liability for compensation, as specified. Existing law authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments.

This bill would state that when the injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than ²/₃ firefighter, the employer will be entitled to receive no more than ¹/₃ of the third-party defendants liability insurance policy limit, if the employee establishes that their total damages exceed the net recovery after satisfaction of the employers claim and that the total liability insurance limits available are insufficient to fully compensate the employer and employees proven damages. The bill would limit an employers right to reimbursement, subrogation, or lien to the minimum maximum recovery threshold, as specified. The bill would prohibit an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers compensation benefits and would require a settlement or release to limit an employers claim for reimbursement to the portion of the settlement not allocated to the employee pursuant to these provisions. The bill would limit these provisions to those peace officers and firefighters who are employed by certain local entities, such as a city or county, among others.

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. Existing law requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. Existing law establishes a Workers Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board.

Existing law authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employers obligations. Existing law relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorneys fees, and the employers lien. Existing law requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. Existing law authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employers liability for compensation, as specified. Existing law authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments.

This bill would state that when the injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than ²/₃ of the third-party defendants liability insurance policy limit, if the employee establishes that their total damages exceed the net recovery after satisfaction of the employers claim and that the total liability insurance limits available are insufficient to fully compensate the employer and employees proven damages. The bill would limit an employers right to reimbursement, subrogation, or lien to the minimum recovery threshold, as specified. The bill would prohibit an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers compensation benefits and would require a settlement or release to limit an employers claim for reimbursement to the portion of the settlement not allocated to the employee pursuant to these provisions.

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. Existing law requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. Existing law establishes a Workers Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board.

Existing law authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employers obligations. Existing law relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorneys fees, and the employers lien. Existing law requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. Existing law authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employers liability for compensation, as specified. Existing law authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments.

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. Existing law requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. Existing law establishes a Workers Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board.

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.

This bill would make technical, nonsubstantive changes to these provisions.

 UNFINISHED BUSINESS 

Bill No: SB 487

Author: Grayson (D), et al.

Amended: 9/2/25

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/30/25

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

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/23/25

AYES: Caballero, Seyarto, Cabaldon, Grayson, Richardson, Wahab

NO VOTE RECORDED: Dahle

SENATE FLOOR: 37-0, 5/28/25

AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

NO VOTE RECORDED: Cervantes, Limón, Reyes

ASSEMBLY FLOOR: 72-0, 9/12/25 - See last page for vote

SUBJECT: Workers’ compensation

SOURCE: California Fraternal Order of Police

DIGEST:

This bill specifies that when the injured employee is a peace officer, as defined, or a firefighter who is employed by a city, county, a city and county, or a fire protection district, the employer is entitled to receive no more than one-third of a third-party defendant’s applicable liability insurance policy limits, under specified circumstances.

Assembly Amendments

(1) limit the provisions to peace officers and firefighters who are employed by a city, a county, a city and county, and a fire protection district, and (2) specify the specified employers are entitled to receive no more than one-third of the third-party defendant’s liability insurance policy.

ANALYSIS:

Existing law:

1. Establishes a comprehensive system of workers' compensation, administered by the Administrative Director of the Division 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 insure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by obtaining insurance from a company authorized by the state. (Labor Code §§3200-6002)
2. Requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. (Labor Code §§4600-4615)
3. Establishes a Workers’ Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board (Labor Code §§3200-3219)
4. Authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employer’s obligations. (Labor Code §3852)
5. Relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorney’s fees, and the employer’s lien. (Labor Code §3858)
6. Requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. (Labor Code §§3859-3860)
7. Authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employer’s liability for compensation, as specified. (Labor Code §3861)
8. Authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments. (Labor Code §3862)

This bill:

1. Specifies, that when the injured employee is a peace officer, as defined, or a firefighter who is employed by a city, county, a city and county, or a fire protection district, the employer is entitled to receive no more than one-third of a third-party defendant’s applicable liability insurance policy limits if:
   1. The employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim and,
   2. The total liability insurance limits available are insufficient to full compensate the employer and employee’s proven damages.
2. Limits an employer’s right to reimbursement, subrogation, or lien to the minimum recovery threshold, as specified.
3. Prohibits an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers’ compensation benefits, as specified.
4. Requires a settlement or release to limit an employer’s claim for reimbursement to the portion of the settlement not allocated to the employee, pursuant to these provisions.

Background

Workers’ Compensation. Workers’ compensation temporary disability (TD) 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. Injured employees are entitled to TD benefits equal to two-thirds of their average weekly wages. Certain public safety classifications, such as peace officers and firefighters, receive workers’ compensation benefits that other employees do not receive, including “4850 leave,” which grants up to one year of full salary instead of the regular method for calculating temporary disability benefits. Once 4850 leave benefits are exhausted, if the employee is still temporarily disabled, they are eligible to receive workers’ compensation TD. In most cases, TD will not be paid beyond 104 weeks.

If an on-duty peace officer or firefighter is injured on the job due to a third party, for instance, a traffic accident, assault, or shooting, they may be entitled to 4850 leave for up to one year, and after that period of time, can file a workers’ compensation claim at two-thirds their salary.

Civil Claims Against Third Parties. In addition to a workers’ compensation claim, an injured peace officer or firefighter may pursue a civil claim against the third party at fault, such as a negligent driver, to recover additional losses. While workers’ compensation covers medical treatment and wage replacement, it does not cover additional losses, such as compensation for pain and suffering or loss of opportunities (promotions, overtime, etc.).

Under a third-party claim, an employer’s workers’ compensation insurance provider may seek reimbursement for the benefits it paid. This process is called subrogation, which means the employer’s workers compensation insurance company can seek reimbursement from the worker for the disability payments, or other benefits, received if the worker also receives financial recovery from a third party (the party at fault).

Public agencies may file subrogation claims on the civil settlements an injured peace officer or firefighter pursues. Currently, the law prioritizes public agencies to recover the costs from any third-party settlement or judgment awarded to an injured peace officer or firefighter. This means that the public agencies’ claims may significantly reduce the civil settlement recovery costs awarded to an injured officer or firefighter from the third party. This bill, SB 487, would limit the permissible recovery by such a public agency to one-third of the third-party defendant's liability insurance policy to ensure that peace officers and specified firefighters injured in the line of duty retain a larger portion of the damages recovered from the third party under the specified circumstances.

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

According to the Assembly Appropriations Committee:

• No costs to the Division of Workers’ Compensation (DWC). DWC notes that this bill affects matters negotiated, settled, and adjudicated outside its jurisdiction through a civil action.
• Costs of an unknown amount, likely in the low millions of dollars annually, to the state as an employer of peace officers and firefighters, as the state would be limited to recovering only one-third of its workers’ compensation costs from a liable third-party (General Fund or special fund). State Compensation Insurance Fund data shows approximately 112 subrogation recoveries specific to peace officers or firefighters between March 2024 and March 2025, through which approximately $11.1 million was recovered - $2.1 million in cash and $9 million in credit. Under the ratio set by this bill, the state could have incurred costs of $7.4 million if the state was entitled to only $3.7 million, or one-third of recovery amounts, with actual costs ultimately dependent on the fact pattern of each case.
• Costs of an unknown, but definitely significant, amount to local public employers of safety officers for the same reason for costs to the state. However, such local costs are likely non-reimbursable by the state because requiring a local agency to provide increased employee pay or benefits does not generally constitute a higher level of service to the public under the constitutional definition of a mandate.

SUPPORT: (Verified 9/11/25)

California Fraternal Order of Police (Source)
Arcadia Police Officers' Association
Association for Los Angeles Deputy Sheriffs
Association of Orange County Deputy Sheriffs
Brea Police Association
Burbank Police Officers' Association
California Association of Highway Patrolmen
California Association of School Police Chiefs
California Coalition of School Safety Professionals
California Narcotic Officers' Association
California Professional Firefighters
California Reserve Peace Officers Association
California Statewide Law Enforcement Association
Claremont Police Officers Association
Corona Police Officers Association
Culver City Police Officers' Association
Fullerton Police Officers' Association
Long Beach Police Officers Association
Los Angeles School Police Management Association
Los Angeles School Police Officers Association
Murrieta Police Officers' Association
Newport Beach Police Association
Palos Verdes Police Officers Association
Peace Officers Research Association of California
Placer County Deputy Sheriffs' Association
Pomona Police Officers' Association
Riverside Police Officers Association
Riverside Sheriffs' Association
Sacramento County Deputy Sheriffs Association
Sheriff's Employee Benefits Association

OPPOSITION: (Verified 9/11/25)

California Association of Joint Powers Authorities
California Joint Powers Insurance Authority
California Special Districts Association
California State Association of Counties
City of Bell
City of Chula Vista
City of Corona
City of LA Verne
City of Santa Barbara
County of Butte
County of Fresno
County of Humboldt
County of Kings
County of Los Angeles Board of Supervisors
County of Placer
Golden State Risk Management Authority
League of California Cities
Local Agency Workers’ Compensation Excess JPA
Los Angeles City Attorney
Northern California Special Districts Insurance Authority
Public Risk Innovation, Solutions, and Management
Rural County Representatives of California
Schools Insurance Authority
Urban Counties of California

ARGUMENTS IN SUPPORT: According to the sponsor, the Fraternal Order of the Police:

“This important measure recognizes the sacrifices made by our public safety personnel and protects their right to retain a percentage of their award granted through civil judgments or settlements.

Currently, when peace officers or firefighters are injured by a negligent third party, whether in a traffic collision, assault, or shooting, they may pursue civil claims to recover damages not covered by workers’ compensation, including lost overtime, special pay, missed promotion opportunities, pension losses, and pain and suffering. Existing law allows public agencies to place liens on these civil settlements or judgments to recover the costs of workers’ compensation benefits they have already provided. In many cases, this practice leaves injured officers and firefighters with little to no compensation for the devastating personal and financial losses they have endured.

SB 487 addresses this inequity by allowing injured officers and firefighters to recover a percentage of their losses from civil judgement or settlements, while still allowing the public agency to recover for their losses as well. It ensures that these brave men and women, who have risked their lives to protect our communities, retain a portion of the financial settlements they have rightfully earned through civil proceedings.”

ARGUMENTS IN OPPOSITION: According to a coalition of opponents, including cities, counties, special districts, and the California Association of Joint Powers authority and California Coalition on Worker’ Compensation:

“The legislature has a strong history of closely examining proposed workers’ compensation policy changes through the joint labor-management Commission on Health and Safety and Workers’ Compensation (CHSWC). According to the CHSWC website, it was created in 1993 to examine health and safety and workers’ compensation systems and recommend administrative or legislative modifications to improve their operation. In recent years, the legislature has often turned to CHSWC for answers when, much like with SB 487, they are confronted with proposed workers’ compensation legislation that is based largely on anecdote instead of data. When an employee is injured by a third party during the course and scope of their employment, the employer, regardless of who is at fault, must provide full workers’ compensation benefits. This includes all forms of disability, both temporary and permanent, any associated expenses and vocational rehabilitation if applicable. In addition, the employer is bound to provide medical treatment for the duration of that employee’s life for the injured body parts or conditions. An example of an injury sustained at the fault of a third party is when a motor vehicle accident occurs outside of the employer’s premises and outside of the employer’s control. Regardless, the employer is still obligated to provide all statutory workers’ compensation benefits to the employee. As such, the employer’s only remedy for reimbursement of the costs incurred because of another party is via subrogation recovery. The public sector entities affected by SB 487 have limited resources available to provide services to the public. If the legislature is going to upend well-established public policy related to third party subrogation, it should do so only after being fully informed. Proponents of SB 487 have not provided any objective evidence suggesting law enforcement and firefighters are frequently facing bad outcomes in third party litigation related to workplace injuries.”

ASSEMBLY FLOOR: 72-0, 9/12/25

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, Dixon, Elhawary, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Haney, Harabedian, Hoover, Irwin, Jackson, Johnson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO VOTE RECORDED: DeMaio, Ellis, Flora, Hadwick, Hart, Lackey, Macedo, Tangipa

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

10/14/26 16:26:37

**** END ****

 UNFINISHED BUSINESS  

Bill No: SB 487

Author: Grayson (D), et al.

Amended: 9/2/25 in Assembly

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/30/25

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

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/23/25

AYES: Caballero, Seyarto, Cabaldon, Grayson, Richardson, Wahab

NO VOTE RECORDED: Dahle

SENATE FLOOR: 37-0, 5/28/25

AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

NO VOTE RECORDED: Cervantes, Limón, Reyes

ASSEMBLY FLOOR: 53-0, 9/12/25 – Roll call not available

SUBJECT: Workers’ compensation

SOURCE: California Fraternal Order of Police

DIGEST:

This bill specifies that when the injured employee is a peace officer, as defined, or a firefighter who is employed by a city, county, a city and county, or a fire protection district, the employer is entitled to receive no more than one-third of a third-party defendant’s applicable liability insurance policy limits, under specified circumstances.

Assembly Amendments

(1) limit the provisions to peace officers and firefighters who are employed by a city, a county, a city and county, and a fire protection district, and (2) specify the specified employers are entitled to receive no more than one-third of the third-party defendant’s liability insurance policy.

ANALYSIS:

Existing law:

1. Establishes a comprehensive system of workers' compensation, administered by the Administrative Director of the Division 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 insure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by obtaining insurance from a company authorized by the state. (Labor Code §§3200-6002)
2. Requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. (Labor Code §§4600-4615)
3. Establishes a Workers’ Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board (Labor Code §§3200-3219)
4. Authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employer’s obligations. (Labor Code §3852)
5. Relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorney’s fees, and the employer’s lien. (Labor Code §3858)
6. Requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. (Labor Code §§3859-3860)
7. Authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employer’s liability for compensation, as specified. (Labor Code §3861)
8. Authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments. (Labor Code §3862)

This bill:

1. Specifies, that when the injured employee is a peace officer, as defined, or a firefighter who is employed by a city, county, a city and county, or a fire protection district, the employer is entitled to receive no more than one-third of a third-party defendant’s applicable liability insurance policy limits if:
   1. The employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim and,
   2. The total liability insurance limits available are insufficient to full compensate the employer and employee’s proven damages.
2. Limits an employer’s right to reimbursement, subrogation, or lien to the minimum recovery threshold, as specified.
3. Prohibits an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers’ compensation benefits, as specified.
4. Requires a settlement or release to limit an employer’s claim for reimbursement to the portion of the settlement not allocated to the employee, pursuant to these provisions.

Background

Workers’ Compensation. Workers’ compensation temporary disability (TD) 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. Injured employees are entitled to TD benefits equal to two-thirds of their average weekly wages. Certain public safety classifications, such as peace officers and firefighters, receive workers’ compensation benefits that other employees do not receive, including “4850 leave,” which grants up to one year of full salary instead of the regular method for calculating temporary disability benefits. Once 4850 leave benefits are exhausted, if the employee is still temporarily disabled, they are eligible to receive workers’ compensation TD. In most cases, TD will not be paid beyond 104 weeks.

If an on-duty peace officer or firefighter is injured on the job due to a third party, for instance, a traffic accident, assault, or shooting, they may be entitled to 4850 leave for up to one year, and after that period of time, can file a workers’ compensation claim at two-thirds their salary.

Civil Claims Against Third Parties. In addition to a workers’ compensation claim, an injured peace officer or firefighter may pursue a civil claim against the third party at fault, such as a negligent driver, to recover additional losses. While workers’ compensation covers medical treatment and wage replacement, it does not cover additional losses, such as compensation for pain and suffering or loss of opportunities (promotions, overtime, etc.).

Under a third-party claim, an employer’s workers’ compensation insurance provider may seek reimbursement for the benefits it paid. This process is called subrogation, which means the employer’s workers compensation insurance company can seek reimbursement from the worker for the disability payments, or other benefits, received if the worker also receives financial recovery from a third party (the party at fault).

Public agencies may file subrogation claims on the civil settlements an injured peace officer or firefighter pursues. Currently, the law prioritizes public agencies to recover the costs from any third-party settlement or judgment awarded to an injured peace officer or firefighter. This means that the public agencies’ claims may significantly reduce the civil settlement recovery costs awarded to an injured officer or firefighter from the third party. This bill, SB 487, would limit the permissible recovery by such a public agency to one-third of the third-party defendant's liability insurance policy to ensure that peace officers and specified firefighters injured in the line of duty retain a larger portion of the damages recovered from the third party under the specified circumstances.

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

According to the Assembly Appropriations Committee:

• No costs to the Division of Workers’ Compensation (DWC). DWC notes that this bill affects matters negotiated, settled, and adjudicated outside its jurisdiction through a civil action.
• Costs of an unknown amount, likely in the low millions of dollars annually, to the state as an employer of peace officers and firefighters, as the state would be limited to recovering only one-third of its workers’ compensation costs from a liable third-party (General Fund or special fund). State Compensation Insurance Fund data shows approximately 112 subrogation recoveries specific to peace officers or firefighters between March 2024 and March 2025, through which approximately $11.1 million was recovered - $2.1 million in cash and $9 million in credit. Under the ratio set by this bill, the state could have incurred costs of $7.4 million if the state was entitled to only $3.7 million, or one-third of recovery amounts, with actual costs ultimately dependent on the fact pattern of each case.
• Costs of an unknown, but definitely significant, amount to local public employers of safety officers for the same reason for costs to the state. However, such local costs are likely non-reimbursable by the state because requiring a local agency to provide increased employee pay or benefits does not generally constitute a higher level of service to the public under the constitutional definition of a mandate.

SUPPORT: (Verified 9/11/25)

California Fraternal Order of Police (Source)
Arcadia Police Officers' Association
Association for Los Angeles Deputy Sheriffs
Association of Orange County Deputy Sheriffs
Brea Police Association
Burbank Police Officers' Association
California Association of Highway Patrolmen
California Association of School Police Chiefs
California Coalition of School Safety Professionals
California Narcotic Officers' Association
California Professional Firefighters
California Reserve Peace Officers Association
California Statewide Law Enforcement Association
Claremont Police Officers Association
Corona Police Officers Association
Culver City Police Officers' Association
Fullerton Police Officers' Association
Long Beach Police Officers Association
Los Angeles School Police Management Association
Los Angeles School Police Officers Association
Murrieta Police Officers' Association
Newport Beach Police Association
Palos Verdes Police Officers Association
Peace Officers Research Association of California
Placer County Deputy Sheriffs' Association
Pomona Police Officers' Association
Riverside Police Officers Association
Riverside Sheriffs' Association
Sacramento County Deputy Sheriffs Association
Sheriff's Employee Benefits Association

OPPOSITION: (Verified 9/11/25)

California Association of Joint Powers Authorities
California Joint Powers Insurance Authority
California Special Districts Association
California State Association of Counties
City of Bell
City of Chula Vista
City of Corona
City of LA Verne
City of Santa Barbara
County of Butte
County of Fresno
County of Humboldt
County of Kings
County of Los Angeles Board of Supervisors
County of Placer
Golden State Risk Management Authority
League of California Cities
Local Agency Workers’ Compensation Excess JPA
Los Angeles City Attorney
Northern California Special Districts Insurance Authority
Public Risk Innovation, Solutions, and Management
Rural County Representatives of California
Schools Insurance Authority
Urban Counties of California

ARGUMENTS IN SUPPORT:

According to the sponsor, the Fraternal Order of the Police:

“This important measure recognizes the sacrifices made by our public safety personnel and protects their right to retain a percentage of their award granted through civil judgments or settlements.

Currently, when peace officers or firefighters are injured by a negligent third party, whether in a traffic collision, assault, or shooting, they may pursue civil claims to recover damages not covered by workers’ compensation, including lost overtime, special pay, missed promotion opportunities, pension losses, and pain and suffering. Existing law allows public agencies to place liens on these civil settlements or judgments to recover the costs of workers’ compensation benefits they have already provided. In many cases, this practice leaves injured officers and firefighters with little to no compensation for the devastating personal and financial losses they have endured.

SB 487 addresses this inequity by allowing injured officers and firefighters to recover a percentage of their losses from civil judgement or settlements, while still allowing the public agency to recover for their losses as well. It ensures that these brave men and women, who have risked their lives to protect our communities, retain a portion of the financial settlements they have rightfully earned through civil proceedings.”

ARGUMENTS IN OPPOSITION:

According to a coalition of opponents, including cities, counties, special districts, and the California Association of Joint Powers authority and California Coalition on Worker’ Compensation:

“The legislature has a strong history of closely examining proposed workers’ compensation policy changes through the joint labor-management Commission on Health and Safety and Workers’ Compensation (CHSWC). According to the CHSWC website, it was created in 1993 to examine health and safety and workers’ compensation systems and recommend administrative or legislative modifications to improve their operation. In recent years, the legislature has often turned to CHSWC for answers when, much like with SB 487, they are confronted with proposed workers’ compensation legislation that is based largely on anecdote instead of data. When an employee is injured by a third party during the course and scope of their employment, the employer, regardless of who is at fault, must provide full workers’ compensation benefits. This includes all forms of disability, both temporary and permanent, any associated expenses and vocational rehabilitation if applicable. In addition, the employer is bound to provide medical treatment for the duration of that employee’s life for the injured body parts or conditions. An example of an injury sustained at the fault of a third party is when a motor vehicle accident occurs outside of the employer’s premises and outside of the employer’s control. Regardless, the employer is still obligated to provide all statutory workers’ compensation benefits to the employee. As such, the employer’s only remedy for reimbursement of the costs incurred because of another party is via subrogation recovery. The public sector entities affected by SB 487 have limited resources available to provide services to the public. If the legislature is going to upend well-established public policy related to third party subrogation, it should do so only after being fully informed. Proponents of SB 487 have not provided any objective evidence suggesting law enforcement and firefighters are frequently facing bad outcomes in third party litigation related to workplace injuries.”

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

9/12/25 16:52:20

**** END ****

SENATE THIRD READING

STR Bill Id:SB 487

Author:(Grayson)

As Amended Ver:September 2, 2025

Majority vote

SUMMARY

Provides injured public safety workers priority in recovering damages in third-party civil suits.

Major Provisions

1. Specifies that, when the injured employee is a peace officer, as defined, or a firefighter who is employed by a city, county, city and county, or fire protection district, their employer is entitled to receive no more than one-third of the third-party defendant's liability insurance policy if both of the following are true:
   1. The employee establishes that their total damages exceed the net recovery available after satisfaction of the employer's claim.
   2. The total liability insurance limits available are insufficient to fully compensate the employer's and employee's proven damages.
2. Limits an employer's right to reimbursement, subrogation, and lien to the specified maximum allocation pursuant to 1), above.
3. Prohibits an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers' compensation benefits.
4. Requires a settlement or release to limit an employer's claim for reimbursement to the portion of the settlement allocated to the employer, pursuant to these provisions.

COMMENTS

In addition to a workers' compensation claim, an injured peace officer or firefighter may pursue a civil claim against the third party at fault, such as a negligent driver, to recover additional losses. While workers' compensation covers medical treatment and wage replacement, it does not cover additional losses, such as compensation for pain and suffering or loss of opportunities (promotions, overtime, etc.). However, an employer (either directly or through their workers' compensation insurer) may seek reimbursement for the benefits provided to the injured worker from the proceeds of a civil claim against the third party. This process, called subrogation, is not limited to workers' compensation claims. Insurers pursue subrogation in many settings to recover the costs of benefits paid for losses caused by a third party.

Public agencies may file subrogation claims on the civil settlements an injured peace officer or firefighter pursues. Currently, the law prioritizes public agencies to recover the costs from any third-party settlement or judgment awarded to an injured peace officer or firefighter. This means that the public agencies' claims may significantly reduce the civil settlement recovery costs awarded to an injured officer or firefighter from the third party. By limiting the permissible recovery by such a public agency to one-third of the third-party defendant's liability insurance policy, this bill, SB 487, seeks to ensure that peace officers and specified firefighters injured in the line of duty retain a larger portion of the damages recovered from the third party under the specified circumstances.

According to the Author

"Current law gives public agencies priority to recover workers' compensation costs from any third-party settlement or judgment awarded to injured officers and firefighters. Even though these individuals may be entitled to substantial damages for additional losses, the agencies' claims can significantly reduce or completely absorb those funds. As a result, injured officers and firefighters often receive insufficient compensation for their broader losses, including lost overtime, missed promotions, and pain and suffering. Additionally, any settlement received may result in a credit against future workers' comp benefits, reducing coverage for medical treatment, disability, salary, and other benefits.

To address this issue, SB 487 would guarantee that peace officers injured in the line of duty would be entitled to the compensation they obtain from a settlement after being injured by a third party. Specifically, this bill would prohibit public agencies from unfairly collecting on the settlement, leaving injured officers without the financial compensation they earned in the line of duty. Further, the bill ensures that an injured employee is entitled to at least two-thirds of the third-party defendant's liability insurance limits when the employee proves total damages exceed the net amount available after the employer's claim, and available insurance limits are insufficient to fully cover both the employer's and the employee's damages."

Arguments in Support

A coalition representing various peace officer associations, including the California Fraternal Order of Police, who sponsor the bill, argues:

Currently, when peace officers or firefighters are injured by a negligent third party—whether in a traffic collision, assault, or shooting—they may pursue civil claims to recover damages not covered by workers' compensation, including lost overtime, special pay, missed promotion opportunities, pension losses, and pain and suffering. Despite this, existing law allows public agencies to place liens on these civil settlements or judgments to recover the costs of workers' compensation benefits they have already provided. In many cases, this practice leaves injured officers and firefighters with little to no compensation for the devastating personal and financial losses they have endured.

SB 487 addresses this inequity by allowing injured officers and firefighters to recover a percentage of their losses from civil judgement or settlements, while still allowing the public agency to recover for their losses as well. It ensures that these brave men and women—who have risked their lives to protect our communities—retain a portion of the financial settlements they have rightfully earned through civil proceedings.

Arguments in Opposition

A coalition representing various local governments argues:

Public safety officers enjoy generous salary continuation benefits, presumptions for several types of injuries and illnesses, and Industrial Disability Retirement (IDR) benefits that aren't available to any other type of worker in the state. As a result, state and local governments have a higher cost of providing workers' compensation benefits to police officers and firefighters, and recovering costs from responsible third parties is vitally important to protect public resources and taxpayers. […]

The public sector entities affected by SB 487 have limited resources available to provide services to the public. If the legislature is going to upend well-established public policy related to third party subrogation, it should do so only after being fully informed. Proponents of SB 487 have not provided any objective evidence suggesting law enforcement and firefighters are frequently facing bad outcomes in third party litigation related to workplace injuries.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, "No costs to the Division of Workers' Compensation (DWC). […] Costs of an unknown, but definitely significant, amount to local public employers of safety officers, as such employers would be limited to recovering only one-third of its workers' compensation costs from a liable third party. However, such local costs are likely non-reimbursable by the state because requiring a local agency to provide increased employee pay or benefits does not generally constitute a higher level of service to the public under the constitutional definition of a mandate."

VOTES

SENATE FLOOR: 37-0-3

YES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

ABS, ABST OR NV: Cervantes, Limón, Reyes

ASM INSURANCE: 16-0-1

YES: Calderon, Wallis, Addis, Alvarez, Ávila Farías, Berman, Chen, Ellis, Gipson, Harabedian, Krell, Nguyen, Ortega, Petrie-Norris, Michelle Rodriguez, Valencia

ABS, ABST OR NV: Hadwick

ASM APPROPRIATIONS: 11-0-4

YES: Wicks, Arambula, Calderon, Caloza, Elhawary, Fong, Mark González, Ahrens, Pacheco, Pellerin, Solache

ABS, ABST OR NV: Sanchez, Dixon, Ta, Tangipa

UPDATED

VERSION: September 2, 2025

CONSULTANT: Landon Klein / INS. / (916) 319-2086 FN: 0001362

Date of Hearing: August 20, 2025

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 487

Author:(Grayson) – As Amended Ver:July 8, 2025

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

SUMMARY:

This bill entitles an injured peace officer or firefighter to at least two-thirds of a third-party defendant’s liability insurance policy limit under certain workers’ compensation subrogation claims.

Specifically, this bill:

1. Provides that an injured peace officer or firefighter is entitled to receive no less than two-thirds of a third-party defendant’s liability insurance policy limit if: (a) the employee establishes that their total damages exceed the net recovery after satisfaction of the employer’s workers’ compensation subrogation claim, and (b) the total policy limit is insufficient to fully compensate the employer and the employee’s proven damages. An employer’s right to reimbursement is subordinate to the employee’s minimum recovery threshold, and written consent of the employer is no longer needed to validate a settlement.
2. Prohibits an employer from asserting an injured peace officer’s or firefighter’s recovery as a credit or offset against future workers’ compensation benefits.

FISCAL EFFECT:

1. No costs to the Division of Workers’ Compensation (DWC). DWC notes that this bill affects matters negotiated, settled, and adjudicated outside its jurisdiction through a civil action.
2. Costs of an unknown amount, likely in the low millions of dollars annually, to the state as an employer of peace officers and firefighters, as the state would be limited to recovering only one-third of its workers’ compensation costs from a liable third-party (General Fund or special fund). State Compensation Insurance Fund data shows approximately 112 subrogation recoveries specific to peace officers or firefighters between March 2024 and March 2025, through which approximately $11.1 million was recovered - $2.1 million in cash and $9 million in credit. Under the ratio set by this bill, the state could have incurred costs of $7.4 million if the state was entitled to only $3.7 million, or one-third of recovery amounts, with actual costs ultimately dependent on the fact pattern of each case.
3. Costs of an unknown, but definitely significant, amount to local public employers of safety officers for the same reason for costs to the state. However, such local costs are likely non-reimbursable by the state because requiring a local agency to provide increased employee pay or benefits does not generally constitute a higher level of service to the public under the constitutional definition of a mandate.

COMMENTS:

1. Purpose. According to the author:

Current law gives public agencies priority to recover workers’ compensation costs from any third-party settlement or judgment awarded to injured officers and firefighters. Even though these individuals may be entitled to substantial damages for additional losses, the agencies’ claims can significantly reduce or completely absorb those funds. As a result, injured officers and firefighters often receive insufficient compensation for their broader losses, including lost overtime, missed promotions, and pain and suffering…To address this issue, SB 487 would guarantee that peace officers injured in the line of duty would be entitled to the compensation they obtain from a settlement after being injured by a third party.

1. Background. Subrogation. The workers’ compensation system covers medical treatment and wage replacement for an injured worker, but does not cover additional losses, such as compensation for pain and suffering or loss of overtime pay or a promotion. An employee injured on the job by a third-party, such as a negligent driver, may file a workers’ compensation claim with their employer and also pursue a civil claim against the third-party to recover such additional losses. However, through a process called subrogation, an employer (either directly or through the employer’s workers’ compensation insurer) may seek reimbursement for the workers’ compensation benefits provided to the injured worker from the proceeds of the civil claim against the third party. Thus, a public agency may file a subrogation claim on a civil settlement received by an injured peace officer or firefighter to recover the agency’s costs. This bill requires an injured peace officer or firefighter retain at least two-thirds of a third-party defendant’s liability insurance limit under certain conditions.

Credit. A “credit” in the context of the workers’ compensation system refers to an employer’s right to be fully or partially relieved from the obligation to provide workers’ compensation benefits after the injured employee has received compensation from a third party. Once the amount of future workers’ compensation benefits exceeds the amount of the “credit,” the employer must resume payments. This bill prohibits an employer from asserting an injured peace officer’s or firefighter’s recovery as a credit or offset against future workers’ compensation benefits.

1. Support and Opposition. This bill is sponsored by the California Fraternal Order of Police, which argues this bill “ensures that these brave men and women – who have risked their lives to protect our communities – retain a portion of the financial settlements they have rightfully earned through civil proceedings.” This bill is also supported by various public safety officer associations.

This bill is opposed by a coalition of public employers, led by the California Coalition on Workers’ Compensation, which argues:

Public safety officers enjoy generous salary continuation benefits, presumptions for several types of injuries and illnesses, and Industrial Disability Retirement (IDR) benefits that aren’t available to any other type of worker in the state. As a result, state and local governments have a higher cost of providing workers’ compensation benefits to police officers and firefighters, and recovering costs from responsible third parties is vitally important to protect public resources and the taxpayers.

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

Date of Hearing: July 16, 2025

ASSEMBLY COMMITTEE ON INSURANCE

Lisa Calderon, Chair

SBPCA Bill Id:SB 487

Author:(Grayson) – As Amended Ver:July 8, 2025

SENATE VOTE: 37-0

SUBJECT: Workers’ compensation

SUMMARY: Provides injured public safety workers priority in recovering damages in third party civil suits. Specifically, this bill:

1. Specifies, that when the injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than two-thirds of the third-party defendant’s liability insurance policy if:
   1. The employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim and,
   2. The total liability insurance limits available are insufficient to full compensate the employer and employee’s proven damages.
2. Limits an employer’s right to reimbursement, subrogation, or lien to the minimum recovery threshold.
3. Prohibits an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers’ compensation benefits.
4. Requires a settlement or release to limit an employer’s claim for reimbursement to the portion of the settlement not allocated to the employee, pursuant to these provisions.

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. This system requires all employers to insure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by obtaining insurance from a company authorized by the state. (Labor Code §§3200-6002)
2. Requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. (Labor Code §§4600-4615)
3. Establishes a Workers’ Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board (Labor Code §§3200-3219)
4. Authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employer’s obligations. (Labor Code §3852)
5. Relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorney’s fees, and the employer’s lien. (Labor Code §3858)
6. Requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. (Labor Code §§3859-3860)
7. Authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employer’s liability for compensation, as specified. (Labor Code §3861)
8. Authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments. (Labor Code §3862)

FISCAL EFFECT: Unknown.

COMMENTS:

1. Purpose: According to the author, “Current law gives public agencies priority to recover workers’ compensation costs from any third-party settlement or judgment awarded to injured officers and firefighters. Even though these individuals may be entitled to substantial damages for additional losses, the agencies’ claims can significantly reduce or completely absorb those funds. As a result, injured officers and firefighters often receive insufficient compensation for their broader losses, including lost overtime, missed promotions, and pain and suffering. Additionally, any settlement received may result in a credit against future workers’ comp benefits, reducing coverage for medical treatment, disability, salary, and other benefits.

To address this issue, SB 487 would guarantee that peace officers injured in the line of duty would be entitled to the compensation they obtain from a settlement after being injured by a third party. Specifically, this bill would prohibit public agencies from unfairly collecting on the settlement, leaving injured officers without the financial compensation they earned in the line of duty. Further, the bill ensures that an injured employee is entitled to at least two-thirds of the third-party defendant’s liability insurance limits when the employee proves total damages exceed the net amount available after the employer’s claim, and available insurance limits are insufficient to fully cover both the employer’s and the employee's damages.”

1. Civil Claims: In addition to a workers’ compensation claim, an injured peace officer or firefighter may pursue a civil claim against the third party at fault, such as a negligent driver, to recover additional losses. While workers’ compensation covers medical treatment and wage replacement, it does not cover additional losses, such as compensation for pain and suffering or loss of opportunities (promotions, overtime, etc.). However, an employer (either directly or through their workers’ compensation insurer) may seek reimbursement for the benefits provided to the injured worker from the proceeds of a civil claim against the third party. This process, called subrogation, is not limited to workers’ compensation claims. Insurers pursue subrogation in many settings to recover the costs of benefits paid for losses caused by a third party.

Public agencies may file subrogation claims on the civil settlements an injured peace officer or firefighter pursues. Currently, the law prioritizes public agencies to recover the costs from any third-party settlement or judgment awarded to an injured peace officer or firefighter. This means that the public agencies’ claims may significantly reduce the civil settlement recovery costs awarded to an injured officer or firefighter from the third party. This bill, SB 487, seeks to require that peace officers and firefighters injured in the line of duty retain at least two-thirds of the third-party defendant’s liability insurance limits under specified circumstances.

1. Opposition: Opponents argue that public safety officers enjoy generous salary continuation benefits, presumptions for several types of injuries and illnesses, and Industrial Disability Retirement (IDR) benefits that are not available to any other type of worker in the state. As a result, state and local governments have a higher cost of providing workers’ compensation benefits to police officers and firefighters, and recovering costs from responsible third parties is vitally important to protect public resources and the taxpayers. The employer’s only remedy for reimbursement of the costs incurred because of another party is via subrogation recovery.

Law Enforcement and firefighters already receive costly special benefits that protect them from economic harms associated with injuries. The legislature should more closely examine the need to also allow these employees to recover from responsible third parties before their employer who has financed generous special benefits. Benefits paid to first responders come directly out of public agency budgets. State and local governments generally are not covered by traditional insurance, rather are self-insured, so the costs associated with SB 487 will directly hit their budgets.

REGISTERED SUPPORT / OPPOSITION:

Support

Association for Los Angeles Deputy Sheriffs (ALADS)
Association of Orange County Deputy Sheriffs
California Fraternal Order of Police
California Professional Firefighters
California Statewide Law Enforcement Association
Long Beach Police Officers Association
Sacramento County Deputy Sheriffs Association
Sheriff's Employee Benefits Association (SEBA)

Oppose

California Association of Joint Powers Authorities
California Coalition on Workers Compensation
California Joint Powers Insurance Authority
California Special Districts Association
California State Association of Counties
City of Bell
City of Chula Vista
City of Santa Barbara
County of Butte
County of Fresno
County of Humboldt
County of Kings
County of Placer
Golden State Risk Management Authority
League of California Cities
Local Agency Workers’ Compensation Excess Jpa
Los Angeles City Attorney
Northern California Special Districts Insurance Authority
Public Risk Innovation, Solutions, and Management (PRISM)
Rural County Representatives of California
Schools Insurance Authority
Urban Counties of California (UCC)

Other

California Fire Chiefs Association
Fire Districts Association of California

Analysis Prepared by: Paul Riches / INS. / (916) 319-2086

 THIRD READING  

Bill No: SB 487

Author: Grayson (D)

Amended: 4/21/25

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/30/25

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

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/23/25

AYES: Caballero, Seyarto, Cabaldon, Grayson, Richardson, Wahab

NO VOTE RECORDED: Dahle

SUBJECT: Workers’ compensation

SOURCE: California Fraternal Order of Police

DIGEST:

This bill specifies, that when the injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than two-thirds of the third-party defendant’s liability insurance policy if 1) the employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim and, 2) the total liability insurance limits available are insufficient to fully compensate the employer and employee’s proven damages; and this bill limits an employer’s right to reimbursement, subrogation, or lien to the minimum recovery threshold, as specified.

ANALYSIS:

Existing law:

1. Establishes a comprehensive system of workers' compensation, administered by the Administrative Director of the Division 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 insure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by obtaining insurance from a company authorized by the state. (Labor Code §§3200-6002)
2. Requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. (Labor Code §§4600-4615)
3. Establishes a Workers’ Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board (Labor Code §§3200-3219)
4. Authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employer’s obligations. (Labor Code §3852)
5. Relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorney’s fees, and the employer’s lien. (Labor Code §3858)
6. Requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. (Labor Code §§3859-3860)
7. Authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employer’s liability for compensation, as specified. (Labor Code §3861)
8. Authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments. (Labor Code §3862)

This bill:

1. Specifies, that when the injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than two-thirds of the third-party defendant’s liability insurance policy if:
   1. The employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim and,
   2. The total liability insurance limits available are insufficient to full compensate the employer and employee’s proven damages.
2. Limits an employer’s right to reimbursement, subrogation, or lien to the minimum recovery threshold, as specified.
3. Prohibits an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers’ compensation benefits, as specified.
4. Requires a settlement or release to limit an employer’s claim for reimbursement to the portion of the settlement not allocated to the employee, pursuant to these provisions.

Background

Workers’ Compensation. Workers’ compensation temporary disability (TD) 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. Injured employees are entitled to TD benefits equal to two-thirds of their average weekly wages. Certain public safety classifications, such as peace officers and firefighters, receive workers’ compensation benefits that other employees do not receive, including “4850 leave,” which grants up to one year of full salary instead of the regular method for calculating temporary disability benefits. Once 4850 leave benefits are exhausted, if the employee is still temporarily disabled, they are eligible to receive workers’ compensation TD. In most cases, TD will not be paid beyond 104 weeks.

If an on-duty peace officer or firefighter is injured on the job due to a third party, for instance, a traffic accident, assault, or shooting, they may be entitled to 4850 leave for up to one year, and after that period of time, can file a workers’ compensation claim at two-thirds their salary.

Civil Claims Against Third Parties. In addition to a workers’ compensation claim, an injured peace officer or firefighter may pursue a civil claim against the third party at fault, such as a negligent driver, to recover additional losses. While workers’ compensation covers medical treatment and wage replacement, it does not cover additional losses, such as compensation for pain and suffering or loss of opportunities (promotions, overtime, etc.).

Under a third-party claim, an employer’s workers’ compensation insurance provider may seek reimbursement for the benefits it paid. This process is called subrogation, which means the employer’s workers compensation insurance company can seek reimbursement from the worker for the disability payments, or other benefits, received if the worker also receives financial recovery from a third party (the party at fault).

Public agencies may file subrogation claims on the civil settlements an injured peace officer or firefighter pursues. Currently, the law prioritizes public agencies to recover the costs from any third-party settlement or judgment awarded to an injured peace officer or firefighter. This means that the public agencies’ claims may significantly reduce the civil settlement recovery costs awarded to an injured officer or firefighter from the third party. This bill, SB 487, seeks to require that peace officers and firefighters injured in the line of duty retain at least two-thirds of the third-party defendant’s liability insurance limits under specified circumstances.

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

According to the Senate Appropriations Committee:

• The bill would not have a fiscal impact to the Department of Industrial Relations (DIR).
• Any administrative costs to the California Department of Human Resources (CalHR) have yet to be identified.
• This bill would result in increased compensation costs to the State as a direct employer, as it would only allow state departments to recover one-third of costs in specified instances. The magnitude of the increase is unknown, but likely in the millions of dollars annually (General Fund and special funds).

SUPPORT: (Verified 5/23/2025)

California Fraternal Order of Police (Source)
Association of Orange County Deputy Sheriffs
California Statewide Law Enforcement Association
Long Beach Police Officers Association
Peace Officers Research Association of California
Sacramento County Deputy Sheriffs Association
Sheriff's Employee Benefits Association

OPPOSITION: (Verified 5/23/2025)

None received

ARGUMENTS IN SUPPORT:

According to the sponsor, the Fraternal Order of the Police:

“This important measure recognizes the sacrifices made by our public safety personnel and protects their right to retain a percentage of their award granted through civil judgments or settlements. Currently, when peace officers or firefighters are injured by a negligent third party—whether in a traffic collision, assault, or shooting—they may pursue civil claims to recover damages not covered by workers’ compensation, including lost overtime, special pay, missed promotion opportunities, pension losses, and pain and suffering. Despite this, existing law allows public agencies to place liens on these civil settlements or judgments to recover the costs of workers’ compensation benefits they have already provided. In many cases, this practice leaves injured officers and firefighters with little to no compensation for the devastating personal and financial losses they have endured.

SB 487 addresses this inequity by allowing injured officers and firefighters to recover a percentage of their losses from civil judgement or settlements, while still allowing the public agency to recover for their losses as well. It ensures that these brave men and women—who have risked their lives to protect our communities—retain a portion of the financial settlements they have rightfully earned through civil proceedings. SB 487 is a commonsense and compassionate solution that acknowledges the hardships these individuals face and honors their service by protecting a percentage of their financial recovery.”

ARGUMENTS IN OPPOSITION:

None received

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

5/25/25 18:09:07

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2025 - 2026 Regular Session

SB 487 (Grayson) - Workers’ compensation

Bill Summary:

SB 487 would provide that when an injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than two-thirds of the third-party defendant’s liability insurance policy if specified criteria are met.

Fiscal Impact:

• The bill would not have a fiscal impact to the Department of Industrial Relations (DIR).
• Any administrative costs to the California Department of Human Resources (CalHR) have yet to be identified.
• This bill would result in increased compensation costs to the State as a direct employer, as it would only allow state departments to recover one-third of costs in specified instances. The magnitude of the increase is unknown, but likely in the millions of dollars annually (General Fund and special funds, see Staff Comments).

Background:

As summarized by the Senate Committee on Labor, Public Employment and Retirement, workers’ compensation temporary disability (TD) 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. Injured employees are entitled to TD benefits equal to two-thirds of their average weekly wages. Certain public safety classifications, such as peace officers and firefighters, receive workers’ compensation benefits that other employees do not receive, including “4850 leave,” which grants up to one year of full salary instead of the regular method for calculating temporary disability benefits. Once 4850 leave benefits are exhausted, if the employee is still temporarily disabled, they are eligible to receive workers’ compensation TD. In most cases, TD will not be paid beyond 104 weeks.

If an on-duty peace officer or firefighter is injured on the job due to a third party, for instance, a traffic accident, assault, or shooting, they may be entitled to 4850 leave for up to one year, and after that period of time, can file a workers’ compensation claim at two-thirds their salary.

In addition to a workers’ compensation claim, an injured peace officer or firefighter may pursue a civil claim against the third party at fault, such as a negligent driver, to recover additional losses. While workers’ compensation covers medical treatment and wage replacement, it does not cover additional losses, such as compensation for pain and suffering or loss of opportunities (promotions, overtime, etc.).

Under a third-party claim, an employer’s workers’ compensation insurance provider may seek reimbursement for the benefits it paid. This process is called subrogation, which means the employer’s workers compensation insurance company can seek reimbursement from the worker for the disability payments, or other benefits, received if the worker also receives financial recovery from a third party (the party at fault).

Public agencies may file subrogation claims on the civil settlements an injured peace officer or firefighter pursues. Currently, current law prioritizes public agencies to recover the costs from any third-party settlement or judgment awarded to an injured peace officer or firefighter. This means that the public agencies’ claims may significantly reduce the civil settlement recovery costs awarded to an injured officer or firefighter from the third party. This bill, SB 487, seeks to require that peace officers and firefighters injured in the line of duty retain at least two-thirds of the third-party defendant’s liability insurance limits under specified circumstances.

Proposed Law:

This bill, among other things, would do the following:

• Specify, that when the injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than two-thirds of the third-party defendant’s liability insurance policy if (1) the employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim, and (2) the total liability insurance limits available are insufficient to full compensate the employer and employee’s proven damages.
• Limit an employer’s right to reimbursement, subrogation, or lien to the minimum recovery threshold, as specified.
• Prohibit an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers’ compensation benefits, as specified.
• Require a settlement or release to limit an employer’s claim for reimbursement to the portion of the settlement not allocated to the employee, as specified.

Staff Comments:

CalHR has identified 33 state departments that use peace officer employment classifications. State Compensation Insurance Fund data indicate that, for the 12 months ending in March 2025, there were 112 recoveries. Roughly $9 million was recovered in credit, and $2.1 million in cash. Thus, under the bill, for this period, the recovery amount by the State would have been $7.5 million lower during that time period.

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SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Lola Smallwood-Cuevas, Chair

2025 - 2026 Regular

Bill No: SB 487 Hearing Date: April 30, 2025

SUBJECT: Workers’ compensation

KEY ISSUE

This bill specifies, that when the injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than two-thirds of the third-party defendant’s liability insurance policy if 1) the employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim and, 2) the total liability insurance limits available are insufficient to fully compensate the employer and employee’s proven damages; and this bill limits an employer’s right to reimbursement, subrogation, or lien to the minimum recovery threshold, as specified.

ANALYSIS

Existing law:

1. Establishes a comprehensive system of workers' compensation, administered by the Administrative Director of the Division 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 insure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by obtaining insurance from a company authorized by the state. (Labor Code §§3200-6002)
2. Requires an employer to provide all medical services reasonably required to cure or relieve the injured worker from the effects of the injury. (Labor Code §§4600-4615)
3. Establishes a Workers’ Compensation Appeals Board and sets forth various proceedings that are required to be brought forth before the board (Labor Code §§3200-3219)
4. Authorizes an employer who pays or becomes obligated to pay compensation, salary in lieu of compensation, or an amount to the Department of Industrial Relations to make a claim or bring an action against a third person who caused the injury or death of an employee that gave rise to the employer’s obligations. (Labor Code §3852)
5. Relieves the employer from an obligation to pay further compensation to or on behalf of the employee if the employer has paid litigation expenses, attorney’s fees, and the employer’s lien. (Labor Code §3858)
6. Requires any release or settlement of a claim to include notice to both the employer and employee, as specified, and the written consent of both the employer and employee, in order for the release or settlement to be valid. (Labor Code §§3859-3860)
7. Authorizes the appeals board to credit the employer with an amount equal to the recovery by the employee that has not been applied to certain expenses, to be applied against the employer’s liability for compensation, as specified. (Labor Code §3861)
8. Authorizes an employer to enforce payment of a lien against a third party, or against the employee, if damages have been paid to the employee, in the manner provided for enforcement of money judgments. (Labor Code §3862)

This bill:

1. Specifies, that when the injured employee is a peace officer, as defined, or a firefighter, they are entitled to receive no less than two-thirds of the third-party defendant’s liability insurance policy if:
   1. The employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim and,
   2. The total liability insurance limits available are insufficient to full compensate the employer and employee’s proven damages.
2. Limits an employer’s right to reimbursement, subrogation, or lien to the minimum recovery threshold, as specified.
3. Prohibits an employer from asserting any recovery by one of these injured employees as a credit or offset against future workers’ compensation benefits, as specified.
4. Requires a settlement or release to limit an employer’s claim for reimbursement to the portion of the settlement not allocated to the employee, pursuant to these provisions.

COMMENTS

1. Background:

Workers’ Compensation

Workers’ compensation temporary disability (TD) 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. Injured employees are entitled to TD benefits equal to two-thirds of their average weekly wages. Certain public safety classifications, such as peace officers and firefighters, receive workers’ compensation benefits that other employees do not receive, including “4850 leave,” which grants up to one year of full salary instead of the regular method for calculating temporary disability benefits. Once 4850 leave benefits are exhausted, if the employee is still temporarily disabled, they are eligible to receive workers’ compensation TD. In most cases, TD will not be paid beyond 104 weeks.

If an on-duty peace officer or firefighter is injured on the job due to a third party, for instance, a traffic accident, assault, or shooting, they may be entitled to 4850 leave for up to one year, and after that period of time, can file a workers’ compensation claim at two-thirds their salary.

Civil claims against third parties

In addition to a workers’ compensation claim, an injured peace officer or firefighter may pursue a civil claim against the third party at fault, such as a negligent driver, to recover additional losses. While workers’ compensation covers medical treatment and wage replacement, it does not cover additional losses, such as compensation for pain and suffering or loss of opportunities (promotions, overtime, etc.).

Subrogation

Under a third-party claim, an employer’s workers’ compensation insurance provider may seek reimbursement for the benefits it paid. This process is called subrogation, which means the employer’s workers compensation insurance company can seek reimbursement from the worker for the disability payments, or other benefits, received if the worker also receives financial recovery from a third party (the party at fault).

Public agencies may file subrogation claims on the civil settlements an injured peace officer or firefighter pursues. Currently, the law prioritizes public agencies to recover the costs from any third-party settlement or judgment awarded to an injured peace officer or firefighter. This means that the public agencies’ claims may significantly reduce the civil settlement recovery costs awarded to an injured officer or firefighter from the third party. This bill, SB 487, seeks to require that peace officers and firefighters injured in the line of duty retain at least two-thirds of the third-party defendant’s liability insurance limits under specified circumstances.

2. Need for this bill?

According to the author:

“Under current law, public agencies have the priority to recover costs from any third-party settlement or judgement awarded to injured officers and firefighters. Even though these individuals may be entitled to substantial damages for additional losses, the agencies’ claims can significantly reduce or completely absorb those funds. As a result, injured officers and firefighters often receive insufficient compensation for their broader losses, including lost overtime, missed promotions, and pain and suffering. Additionally, any settlement received may result in a credit against future workers’ comp benefits, reducing coverage for medical treatment, disability, salary, and other benefits.

SB 487 would guarantee that peace officers and firefighters injured in the line of duty would be entitled to the compensation they obtain from a settlement after being injured by a third party. Specifically this bill would prohibit public agencies from unfairly collecting on the settlement, leaving injured officers without the financial compensation they earned in the line of duty. After amendments the bill ensures that an injured employee is entitled to at least two-thirds of the third-party defendant’s liability insurance limits when both:

1. The employee proves their total damages exceed the net amount available after the employer’s claim is satisfied.

2. The available insurance limits are insufficient to fully cover both the employer’s and the employee’s proven damages.

This two-thirds minimum reflects a fair share of the recovery considering the employee’s damages, attorney’s fees, and costs, and is not subject to any employer lien or offset.

The employer’s right to reimbursement, or subrogation, is subordinate to this minimum allocation, which applies to all settlements and judgments and takes priority over any employer claims. Any remaining proceeds are distributed according to standard lien and subrogation rules.”

3. Proponent Arguments

According to the sponsor, the Fraternal Order of the Police:

“This important measure recognizes the sacrifices made by our public safety personnel and protects their right to retain a percentage of their award granted through civil judgments or settlements.

Currently, when peace officers or firefighters are injured by a negligent third party—whether in a traffic collision, assault, or shooting—they may pursue civil claims to recover damages not covered by workers’ compensation, including lost overtime, special pay, missed promotion opportunities, pension losses, and pain and suffering. Despite this, existing law allows public agencies to place liens on these civil settlements or judgments to recover the costs of workers’ compensation benefits they have already provided. In many cases, this practice leaves injured officers and firefighters with little to no compensation for the devastating personal and financial losses they have endured.

SB 487 addresses this inequity by allowing injured officers and firefighters to recover a percentage of their losses from civil judgement or settlements, while still allowing the public agency to recover for their losses as well. It ensures that these brave men and women—who have risked their lives to protect our communities—retain a portion of the financial settlements they have rightfully earned through civil proceedings.

SB 487 is a commonsense and compassionate solution that acknowledges the hardships these individuals face and honors their service by protecting a percentage of their financial recovery.”

4. Opponent Arguments:

None received.

4. Letter of Concern:

The California Coalition on Workers’ Compensation submitted a letter of concern to the committee, outlining the following:

“We’re reflexively opposed to any action that diminishes an employer’s right to recover their costs from third parties that cause workplace injuries, but we want to have a more complete understanding of the perceived problem that the bill seeks to resolve and analyze the late amendments more completely. It can be complicated when a third party is responsible for a workplace injury. The worker has many of their actual damages paid directly by the employer or insurer. And, depending on the circumstances, there can be a limited ability for all parties to recover from the responsible third party. There is a web of statutes, judicial procedures and practices, and behaviors by the parties that currently exist for a reason, and we are wary of any effort to broadly change the rules to address a rare anecdote. We think there are both constitutional and policy considerations with respect to the April 21, 2025, amendments that need to be more fully evaluated before we can clearly position on the bill.”

SUPPORT

California Fraternal Order of Police (Sponsor)

Association of Orange County Deputy Sheriffs

Long Beach Police Officers Association

Sacramento County Deputy Sheriffs Association

Sheriff's Employee Benefits Association (SEBA)

OPPOSITION

None received.

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