SB 555 Defeated: Bill to Potentially Increase Permanent Disability Benefits by $1.8 Billion Withdrawn by Author After Intense Opposition
July 17, 2026
Senate Bill 555 (SB 555) has been withdrawn by its author due to insufficient support within the Assembly, after significant opposition from California Coalition on Workers’ Compensation, insurance carriers, third party administrators, and employers throughout the state.
The Bill, sponsored by Senator Anna Caballero, with support from the California Applicant’s Attorneys Associate (CAAA), aimed to increase the PD rates for dates of injury occurring on January 1, 2027 and beyond to a minimum of $242.00 and a maximum of $438.67 (based on 2/3 of one’s average weekly wage). In other words, anyone with an average weekly wage above $658 would qualify for the new maximum PD rate. Thereafter, on an annual basis, increases in PD rates would be automatically tied to Social Security COLA adjustments, similar to annual increases in life pension rates and TD rates.
Proponents of the bill argued that the current permanent disability calculation method is outdated, as it has remained unchanged since 2014, and that a COLA adjustment would simply bring permanent disability benefits in line with benefits like minimum and maximum temporary disability, life pension, and permanent total disability benefits species, for which the Labor Code provides yearly COLAs or other adjustments. Opponents of the bill cited the fact that permanent partial disability is intentionally treated differently than other species of workers’ compensation benefits, and that an automatic yearly increase to permanent disability benefits would result in massive increases in claim costs, medical-legal costs, and further incentivize the applicant’s bar to increase permanent disability awards by drawing out cases. Opponents claim that these ancillary costs were not calculated in the estimated impacts to carriers and employers, and that other such reforms were paid for by “reducing frictional costs elsewhere.”
While opponents of the Bill are not entirely opposed to an increase in permanent disability rate calculations, they argued that an overhaul with the potential impact posed by the bill must be accompanied by balanced reforms aimed at reducing ballooning workers’ compensation insurance premiums by tackling higher medical treatment and adjustment costs, as well as dealing with the sharp increase in cumulative trauma claims.
While this iteration of the bill has been defeated, expect to see further negotiations between management and labor to deal with permanent disability rates in the future.
Written By:
Mark Turner, Esq., Partner, of our LFLM-Sacramento Office
Laughlin, Falbo, Levy & Moresi, LLP.