Your 2024 Guide to California Workers’ Comp Settlements

Workers’ compensation is designed to help employees after a workplace injury, but managing your claim can become a headache if you need to fight the insurance company to get the medical care and lost wages coverage that you deserve. Serious or long-term injuries that lead to settlements can lead to more complications.

To help you navigate the settlement process as smoothly as possible, let’s dive into how California workers’ comp handles payments, what you should look for in a settlement, and where you can get help at the various stages.

Workers’ comp payments 101

To frame this conversation, let’s take a step back to review how workers’ compensation payments work in general. Then we’ll look specifically at settlements.

When you get workers’ comp payments

After you get hurt or sick on the job in California, your employer’s workers’ compensation insurance policy should kick in to pay for your medical care and to pay for your lost wages while you’re unable to work. These payments are officially called disability benefits. How much California workers’ comp pays will depend on your income.

There are also multiple types of disability benefits based on whether your injury leaves you totally or partially unable to work.

Types of payments

Most people receive temporary disability benefits, which last for a pre-set amount of time and end once they can return to work. For an injury that results in the complete loss of use of the injured body part, workers’ comp will pay you permanent disability benefits instead. Permanent benefits could start immediately and last the rest of your life for severe injuries.

The majority of workers’ comp claims start with temporary benefits and then transition to permanent benefits once you reach a point where your doctor says you’ve recovered as much as possible but will never return to your pre-injury ability. So if you can never return to the same job you were working before your injury, you’ll qualify for permanent benefits and how long those last depends on what part of your body was injured and how severe the injury was (your doctor will provide a disability rating).

The disability benefits described above do not involve settlements. They are part of the normal workers’ comp process and everyone who’s eligible for workers’ comp can get them.

What is a workers’ comp settlement?

A settlement is a contract you sign with the insurance company where you agree to receive a lump-sum payment or other benefits, often in exchange for closing your workers’ comp claim. If you’re already on workers’ comp, the settlement replaces your current benefits with the terms of the settlement.

When most people talk about getting a settlement, they’re talking about getting a single, big payment, which is referred to as a lump-sum payment. In California, though, there is a second type of settlement that provides regular payments over time, as we’ll discuss below.

Do all workers’ comp cases end with a settlement?

No. In nearly all cases, the workers’ comp insurance company will only negotiate a settlement offer if you have a permanent disability and won’t fully recover from your work injury. Since most workers make a full recovery from their injury, most claims never get to the settlement stage.

When will workers’ comp offer a settlement in California?

You and the insurance company can negotiate a settlement at any point during your claim. That said, California workers’ comp settlements are most common when a worker has a permanent disability. Specifically, you’re most likely to get a settlement offer after you reach maximum medical improvement (MMI), the point where your doctor says you won’t recover further and assigns you a disability rating.

Insurance companies usually explore a settlement at MMI because it’s cheaper or easier to give you a single payment now than to pay you permanent benefits for years. At MMI, your condition has generally stabilized so it’s easier to estimate your future medical care and lost wages. Since you’ve been out of work longer, insurance may also hope that you’re more likely to accept a smaller settlement if it means getting a quick payment.

Less commonly, insurance may try to settle before MMI. This could happen if you have a condition that will result in a complicated or unpredictable recovery. In that situation, closing your claim early could save the insurance money over the long term. We suggest talking to a workers’ comp lawyer any time insurance asks you to settle.

Can you request a settlement?

It is possible to request that the insurer negotiate a settlement at any time. However, insurance doesn’t need to agree to a settlement and it likely doesn’t have much incentive to do so before MMI. If you need a lump-sum payment sooner or otherwise want to negotiate before MMI, we recommend that you contact a workers’ comp lawyer. They’ll be able to help you understand your options and negotiate the best possible settlement based on your situation.

Learn more: What Does A Workers’ Comp Lawyer Do That I Can’t?

2 types of California workers’ comp settlements

In the Golden State, workers’ comp settlements come in two varieties:

• A compromise & release (C&R) is a settlement that results in a lump-sum payment. These require negotiating with insurance to agree on a final payment amount.

• A stipulation with request for award (or stip, for short) results in benefit payments every two weeks and continued medical coverage, but no lump-sum payment. Benefits work similarly to permanent disability benefits.

Compromise and release (C&R)

The C&R is what you probably expect from a settlement: the insurer makes one lump-sum payment to you. You will have to negotiate with the insurance company, but your final payment is ideally enough to cover the estimated cost of future medical care and lost wages that result from your injury.

By accepting this check, you release the insurance company from any requirement to make payments related to your claim in the future. It’s important to agree on a fair amount before you sign anything, and since the insurance company will have its own lawyers to help negotiate, the best way for you to secure a fair payment is to get a professional opinion from a workers’ comp lawyer. A lawyer won’t charge anything upfront and only gets paid after they help you get a settlement or additional benefits.

Settlements with Atticus lawyers are also twice as high as cases that don’t involve a lawyer. Get connected today for help with your C&R.

Stipulation and award

Stips don’t come with a big payout, but benefits work in the same basic way as the workers’ comp benefits you’re already receiving. The insurance company agrees to make regular payments (every two weeks) to cover your permanent disability benefits. They also agree to keep paying for medical care.

How long benefits last depends on the disability rating you got from your workers’ comp doctor. California labor law sets the length of permanent benefits for different injuries based on your disability rating, so this form of settlement is more standardized than C&Rs.

With a stip settlement, you also retain your right to reopen the case if you need to apply for additional benefits within five years of your settlement.¹ For that reason, insurance may prefer a C&R.

Every stipulation agreement is reviewed by a workers’ comp judge, so you also have some guarantee that you’re getting a fair settlement.² After the judge reviews your case, their finding is called a findings and award, or F&A, so stips may be called stipulated F&As.

Should you get a C&R or a stipulation settlement?

Both settlement options have their advantages and the best option for you depends on your situation.

Looking at medical care, a C&R offers more freedom since you can choose your doctors and treatments without needing the insurer’s approval. But if your health changes or you have unexpected complications later on, you can’t renegotiate for more money.

Insurance still pays for your medical care through a stipulation agreement, but you may need to go through the additional work of proving that your care or the doctors you want to see are both reasonable and necessary for your condition.

If you’re trying to maximize your benefits, you’ll probably earn a higher total payment from a C&R than a stip agreement since you can negotiate your payment. At the same time, we don’t recommend handling negotiations by yourself. Hiring a lawyer to help you will cost money, though services from workers’ comp lawyers effectively pay for themselves as we discuss later on.

Ultimately, how you handle your settlement is a personal decision. If you want a professional opinion along the way, an Atticus lawyer can explain your options and help you chart a path forward.

Negotiating a workers’ comp settlement

Settlements are negotiable and you should almost certainly negotiate if you want to get the best payout. Negotiating a fair deal with the insurance and its lawyers is much easier with a lawyer on your side, so we recommend that you connect with a lawyer before you do any negotiations.

To give you a sense of what happens during a normal negotiation, here’s what you can expect:

1. Receive a settlement offer from insurance. The offer is likely too low and you’ll want to request more.

2. Negotiates a higher settlement amount. There will likely be considerable back and forth here with the insurer’s legal department.

3. Request a mandatory settlement conference (MSC). If you and the insurer don’t agree on a fair settlement value, you’ll need to go through this court process, which starts with filing a Declaration of Readiness to Proceed. You and the insurer will also need to complete a joint statement, called a Pre-Trial Conference Statement, that explains where you and the insurance company disagree. A lawyer can handle all of this for you.

4. Attend the MSC. A California workers’ comp judge will hear your case and either make a decision or move your case to an official trial. If they make a decision, they’ll issue what’s called a findings and award (F&A). That F&A is an order for the insurance company to make the payments it lays out unless the insurer appeals. Again, a lawyer will know how to best present your case in front of the judge.

5. See an agreed medical evaluator. If you and the insurance disagree on your medical care, the judge may order you to see an independent medical professional. Unless you have a lawyer, you can’t choose who you see.

6. Attend a court hearing. If you make it to this stage, a judge will make a final decision on your settlement. A lawyer can again handle presenting your case if you hire one.

The steps above may also vary in length or complexity, but they’re always much more manageable with a lawyer by your side. For help finding a good workers’ comp lawyer near you, start with this 3-minute workers’ comp quiz.

How much will my California settlement be worth?

Unfortunately, there is no single answer here. Ideally, you want a settlement that is worth enough to cover your future medical care, any future lost wages from being unable to work, and other expenses you have related to your injury. Depending on how long your condition will affect you, your settlement will be tens or even hundreds of thousands of dollars. Since estimating those values isn’t easy, we recommend consulting a workers’ comp lawyer. They’ll be able to talk through your situation and calculate what they believe is a fair settlement amount. If you have specific concerns, they can help you negotiate around those.

But can’t you give me an estimate?

We know that it’s nice to have a sense of how much a settlement could be worth, so we have written advice on average workers’ comp settlements. We’ve also covered permanent disability payment rates in California. But a reasonable payout for your claim will depend on multiple factors. Even two settlements for the same injury could be worth vastly different amounts.

What factors affect my settlement amount?

The amount of money your settlement pays out hinges on quite a few factors. Here are seven that could significantly affect the value of your settlement:

• The type of settlement. If you choose a C&R, your settlement is one big check. If you choose a stip, your bi-weekly payments are based on your disability rating and the value of your medical care.

• Your injury or illness. California law doesn’t handle all injuries the same. For example, an injury to your brain or spine will earn higher and longer payments than if you have a hand or wrist injury. Complications or side effects that limit your ability to work will also impact the amount you can negotiate. A pre-existing condition that is worsened by your injury can lead to a higher payout.

• The medical care you need. Workers’ comp settlements involving an amputation are worth more than six figures, on average, according to the National Safety Council. The more medical care you need, the higher your settlement total. Any complicated or expensive medical treatment also increases your negotiable payout. Anything that involves a long recovery period will mean more money because you’re missing more work days.

• What type of work you do. Lost work income has a big effect on your settlement. If you can’t do your job at all because of your condition, you’ll get a higher settlement than if you could do a modified role and still earn some money.

• Previously unpaid benefits. If the insurance company initially denied your claim or any medical care, your settlement might be a chance to get that money back. Missed permanent disability benefits also factor in here.

• Your permanent disability rating. When you reach MMI, you’ll get a disability rating from California’s Disability Evaluation Unit (DEU). This rating is a percentage that represents how much capability you’ve lost due to your injury. For example, complete loss of hearing in one ear might result in a 15% disability rating while loss of mobility in one ankle would get a rating between 20% and 40% at a minimum. A higher disability rating entitles you to a bigger disability benefit payment and longer-term payments with a stipulated F&A.

• Whether you have a lawyer. Negotiating your settlement is one clear way to get more than the insurance company’s initial offer. The easiest way to negotiate is with a workers’ comp lawyer. Payouts are also much higher with a lawyer. For example, Atticus workers’ comp lawyers help clients get payouts that are twice as large, on average, compared to cases that don’t have a lawyer.

Related: Does Surgery Increase Your Workers’ Comp Settlement?

How long does it take to get your settlement check?

With a compromise and release, you should get the check for your lump-sum payment within 30 days of signing the settlement agreement and having it approved by the state.³

If you chose a stipulation with request for awards and you have a permanent disability rating, there shouldn’t be any lapse in your benefits checks. You’ll continue to receive your check every two weeks unless your agreement states a different pay frequency. Any disability checks you were getting before the settlement agreement goes into effect transform into your awards checks once the stip is approved by the state.

Can you get a settlement after you’ve returned to work?

You won’t receive workers’ comp payments after you fully recover from your injury, but you can get a settlement at any time if you haven’t fully recovered. That’s true even if you are doing light duty, modified duty, or reduced hours at work according to your doctor’s plan.

If you are working, your settlement will be lower than if you couldn’t work at all since one factor affecting your payout is lost wages while you’re injured.

The key with returning to work is that you need to follow your doctor’s orders. If they say you can’t lift anything over 20 pounds, for example, be careful about what you carry. Doing more work than your doctor recommends can result in losing benefits entirely.

Read more about when you can work on workers’ compensation.

Do I need a lawyer for a workers’ comp settlement?

You don’t technically need a lawyer to get a settlement. California workers’ comp law also requires a state judge to review and approve your settlement agreement, so you do have some protection to ensure that the insurance company doesn’t take advantage of you. But you are unlikely to get the best settlement offer if you have to negotiate it yourself.

The insurance company will want to minimize how much money it pays you and it will have its own team of lawyers to work toward the lowest possible settlement. So negotiating a fair payout is much easier with a workers’ comp lawyer. An experienced lawyer will know how to fight for the best possible settlement based on your specific injury, your job, and your medical history. They can also handle paperwork, appeals, court hearings, and calls with your insurance so you can focus on getting better and moving on with your life.

Can I afford a lawyer?

Yes. A good workers’ comp lawyer will offer a free consultation and if you agree to work with them, won’t charge anything upfront. After your lawyer negotiates your settlement, you will pay them a fee of up to 15%, which comes out of your total settlement amount. The payment also automatically goes to the lawyer, meaning you don’t need to worry about sending money yourself.

Since settlements are much higher with a lawyer (twice as high with Atticus lawyers on average), that fee is also coming out of money that you likely wouldn’t even have earned if not for the lawyer’s help.

How can I find a good lawyer?

Atticus is a California-based worker’s comp law firm that can connect you with an experienced lawyer we trust. Your initial consultation is always free and there are no upfront costs. To get advice on your workers’ comp claim today, start with our workers’ comp intake questionnaire. A member of our team will reach out to learn more about your situation, answer any questions you have, and connect you with a lawyer who’s a fit for your case.