California lawmakers sent a plethora of bills to Gov. Gavin Newsom as the 2025 legislative session ended, including bills that would bring some reforms to the Subsequent Injuries Benefit Trust Fund (SIBTF), QME reporting, and subrogation against third-party lawsuits.
The California Assembly and state Senate finalized versions of a number of smaller workers’ compensation bills as the 2025 legislative session came to a close on Sept. 12. Gov. Gavin Newsom now has until Oct. 12 to either sign the bills into law, or veto them.
Please note that the bills mentioned in this article are not law until Gov. Newsom signs them.
SIBTF BILL
One of the biggest cost-drivers on the Department of Industrial Relations’ radar in recent years – and especially 2025 – has been the Subsequent Injuries Benefits Trust Fund (SIBTF). The fund is California’s version of a “Second Injury Fund” that provides benefits to injured workers who have a prior preexisting disability that combines with a second injury.
If you’re a claims adjuster or claims manager, you’ll sometimes see an applicant’s attorney file a claim with the SIBTF after you have settled with the applicant.
Applicants can get benefits from the fund by proving that a combination of a preexisting disability and a second injury have brought them to 70% PD or more, which is the level of PD where life pension benefits begin.
Gov. Newsom’s staff wrote that they expect the SIBTF payments to cost as much as $1.3 billion per year by the end of the decade, according to the governor’s 2025 budget proposal. That would increase the annual employer assessment to $1.5 billion per year.
With those skyrocketing costs in mind, lawmakers sent Assembly Bill 1329 to Newsom for approval. The bill would:
- require applicants who want SIBTF benefits to provide “substantial medical evidence” of a prior permanent partial disability that predates a second injury, and that the disability caused earnings loss.
- call for the Division of Workers’ Compensation to create a database of qualified medical evaluators who are familiar with second injury claims.
- change the trustee of the fund’s money to the Department of Industrial Relations. The current trustee is the State Compensation Insurance Fund.
OTHER BILLS SENT TO NEWSOM’S DESK
Here are some of other bills that were sent to the governor for approval that we previously wrote about in 2025:
- AB 1293: This bill proposes creating new forms in an attempt to eliminate confusion amid QME reporting. The bill would require the Administrative Director of the DWC to:
- Make a template form for QME reports, to help QMEs include all necessary statutory and regulatory requirements.
- Make a joint medical evaluation request form.
- Establish a method for grading the quality of QME reporting, which would also include standards as to whether QME reports are a) incomplete and whether they are b) insubstantial evidence on PD or apportionment. This would also incorporate use of Findings and Award and Opinions on Decision.
- Create new regulations to provide guidance on all of the above.
- SB 487: This bill would limit municipal governments’ ability to subrogate against police and firefighters’ third-party recoveries. It states that police officers and firefighters would receive no less than two-thirds of a third-party defendant’s liability insurance policy limit when the following criteria are met:
- Their damages in the third-party suit exceed the net amount recoverable after satisfying the employer’s lien for workers’ compensation payments;
- And the third-party defendant’s total liability insurance limits are too low to fully compensate all damages.
- SB 447: This bill allows minor dependents of deceased firefighters, peace officers, and Sheriff’s special officers of Orange County to remain on their parent’s group health insurance through the age of 26. Current law only allows them to remain on their parent’s insurance until age 21. The bill would achieve this goal by amending Labor Code sect 4856.
- SB 847: This bill authorizes the Administrative Director of the Division of Workers’ Compensation the power to investigate and determine whether substantial shareholders of an uninsured employer tried to hide real property (aka tangible assets) after a work-related injury. The intent of the bill is aimed at allowing the DWC to attach liens to property transferred by uninsured employers.
- SB 291: This bill would require the Contractors State License Board to penalize contractors who violate workers’ compensation requirements. For example, any sole owner licensee found to have employed workers without maintaining workers’ compensation coverage would face a minimum $10,000 civil penalty. Offending contractors would not be able to reinstate their licenses until they have provided a valid certificate of insurance. The bill would also make the board issue an annual report about the number of disciplinary actions for failure to obtain workers’ compensation insurance.
PEO BILL HELD OVER
In a surprising last-minute move, legislators held onto a bill (AB 1515) that would have barred businesses from advertising themselves as professional employer organizations (PEOs) unless they are registered with the Division of Labor Standards Enforcement. In short, this would have required PEOs to pay an initial registration fee. The purpose of this requirement would be to help the Division of Labor Standards to enforce labor laws against PEOs.
The lawmakers’ action means that they can reconsider the bill during the 2026 legislative session. According to the Senate Rules Committee’s legislative analysis, lawmakers have considered this and similar PEO reforms dating back to 2010, only to see them stall in the Legislature.
“Across the country, PEO regulations and licensing requirements vary. In California, PEOs are not statutorily-defined or regulated,” the committee’s staff wrote.
The National Association of Professional Employer Organizations supported the bill, and the bill did not have any formal opposition, the analysis states.
CONCLUSION
Fall is always an exciting time of year for those who follow the Legislature, as there’s always a few surprises from the sitting governor that will impact what bills become law in the coming year. For example, the governor usually issues a surprising veto of at least a few bills that looked ripe for approval, and issues concise explanations in veto messages intended to provide feedback to lawmakers. Conversely, the governor also sometimes signs a few workers’ compensation bills into law that flew beneath the radar of those reporting on the Legislature.
We at the Law Offices of Bradford and Barthel will continue to monitor the latest legislative developments, and provide an update to you in mid-to-late October.
Got a question about workers’ compensation defense issues or pending legislation? Feel free to contact John P. Kamin. Mr. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location, where he monitors the recent legislative affairs as the firm’s Director of the Editorial Board. Mr. Kamin previously worked as a journalist for WorkCompCentral, where he reported on work-related injuries in all 50 states. Please feel free to contact John at jkamin@bradfordbarthel.com or at (818) 654-0411.
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