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By: Pilar Mitchell, Senior Partner, Michael Sullivan & Associates LLP

Fall of 2025 saw significant legislative activity on workers’ compensation policy, as Governor Gavin Newsom signed several bills focused on expanding coverage and making changes to processes. This overview will focus on a few noteworthy new laws, the most significant being SB 487(Grayson), which was opposed by the employer community. 

SB 487 extends additional benefits to certain public safety officers by limiting the reimbursement an employer can claim in third-party recovery actions. Traditionally, the workers’ compensation system has allowed employers to seek reimbursement through subrogation when an employee receives both workers’ compensation benefits and damage from a third-party lawsuit. This is to prevent double recovery.

However, SB 487 significantly restricts this recovery, ensuring a specified peace officer or firefighter is entitled to at least two-thirds of the available liability insurance, provided that: 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. The bill described this new limit as fair and equitable considering the employee’s total damages, attorney’s fees, and cost of suit involved in the third-party action.

In addition to this new minimum recovery threshold for public safety officers, the law also restricts the employer’s subrogation rights to this threshold. It prohibits employers from using any recovery by the injured employee as a credit or offset against future workers’ compensation and requires that any settlement or release limit the employer’s claim for reimbursement. 

SB 487 significantly shifts the balance in favor of specified public safety officers, limiting their employers’ ability to recover subrogation amounts and increasing their financial exposure. This development is a setback for public employers, as it restricts recovery options and imposes additional burdens on them.

Another notable expansion of workers’ compensation benefits will come through the enactment of SB 230 (Laird), which expands the scope of public safety rebuttable presumptions for firefighters. The bill extends presumptions for conditions, such as cancer and PTSD, to active firefighting members of a fire department that provides fire protection to a commercial airport. Additionally, it broadens the rebuttable presumption for other injuries, including pneumonia, to active firefighting members of a fire department that provides fire protection to a commercial airport, a NASA installation, or a U.S. Dept of Defense installation. 

SB 447 (Umberg) extends health benefits for minor dependents of certain public safety personnel, including specified firefighters, peace officers, and Orange County Sheriff’s Special Officers, who die in the line of duty. Previously, California law provided that minor dependents of peace officers and firefighters killed in the line of duty are eligible to receive employer provided health benefits until the age of 21. While the Affordable Care Act, passed in 2010, extended the federal age limit to 26, California law had not been updated to reflect the federal change. Although many employers voluntarily honored the federal 26-year age threshold, it was not a legal requirement, potentially leaving the children of fallen officers without health benefits after the age of 21. This bill, which addresses the gap, passed without opposition.

AB 799 (Rodriguez, Celeste) requires the California Department of Corrections and Rehabilitation to pay a death benefit for the death of any incarcerated individual hand crew members assigned to the California Conservation Camp program who die because of their duties on an active deployment or during training exercises, notwithstanding specified workers’ compensation provision. The death benefit is limited to the sum of $50,000 and an amount equal to 50 percent of the annual compensation earned by the deceased crew member during the 12 months immediately preceding their fatality.

AB 1125 (Nguyen) extends the heart injury presumption to peace officers employed by the State Department of State Hospitals, offering the same benefits as have been previously made available to Atascadero State Hospital under the presumption.

Shifting focus, AB 1293 (Wallis) addresses a different aspect of workers’ compensation law—specifically, its trends towards creating standards for documents produced as part of the claim. The bill requires the state to create a template for Qualified Medical Examiner (QME) reports, which will incorporate all necessary statutory and regulatory requirements. While the use of these forms does not constitute prima facie evidence that a report is complete, accurate, or compliant with applicable statutory or regulatory requirements, they will be made available for parties and evaluators with the goal of enhancing the quality and consistency of reporting in workers’ compensation claims. The bill also requires the state to create a medical evaluation request form for communicating with a panel qualified medical evaluator, as specified.

While the above bill focuses on standardizing QME report documentation, AB 1398 (Valencia) addresses the issue of fraud within the workers’ compensation system. AB 1398 builds on existing conflict of interest law by adding a new requirement that all interested parties shall disclose to a third-party payer, or other entity to whom a claim for payment is presented for services furnished pursuant to a referral, any financial interest in an entity providing services. “Interested party” means, among others, an injured employee, the employer of an injured employee, and, if the employer is insured, its insurer, and a claims administrator, including a self-administered, self-insured employer, as well as a joint powers authority.

Governor Newsom’s recent legislative actions reflect efforts to enhance protections for public safety officers, adjust workers’ compensation processes, and address fraud. As the most significant and consequential development of the 2025 legislative season, SB 487, solidifies and reinforces ongoing efforts to favor a special class of public employees whose service is deemed vital to the public’s interest. While bills like AB 1293 aim to improve systemic efficiency, the overarching theme of the 2025 legislative session is clear: a continued and significant expansion of protections and benefits for public safety officers, signaling a legislative priority that public employers must now strategically navigate.

Implementation Summary

• January 1, 2026: SB 487 (Grayson), SB 230 (Laird),
  SB 447 (Umberg), AB 799 (Rodriguez), AB 1125 (Nguyen), AB 1398 (Valencia)
• January 1, 2027: AB 1293 (Wallis)

This article was contributed by Pilar Mitchell from Michael Sullivan & Associates LLP. Readers can contact Pilar Mitchell at SullivanAttorneys.com.

This communication is provided for general information only and is not offered or intended as legal advice. Readers should seek the advice of an attorney when confronted with legal issues and attorneys should perform an independent evaluation of the issues raised in these communications.

Take a look back at previous parts of the 2026 New Laws Series in CSDA eNews for more in-depth overviews of new laws affecting special districts:

Missed Part 8? Read it now: New Mandatory Trainings for Local Government Board Members and Staff (SB 827)
Missed Part 7? Read it now: 45-Day Notification Prior to Contracting for Services (AB 339)
Missed Part 6? Read it now: Positioning Special Districts for Success Under New Permitting and Planning Laws
Missed Part 5? Read it now: Biggest Brown Act Revamp in Decades (SB 707)
Missed Part 4? Read it now: Clarifying Timing for Collection of Development Related Fees (SB 499)
Missed Part 3? Read it now: Certified Payroll Records Requests on Prevailing Wage Public Works Projects (AB 538)
Missed Part 2? Read it now: Additional CEQA Exemptions and Reforms
Missed Part 1? Read it now: CA Supreme Court Denies Elected Officials Right to Sue as “Employees” Under Whistleblower Statute