California may raise workers' comp benefits in 2025. See how SB 555 could impact your business and get a free workers comp insurance quote today.

What California Business Owners Should Know About Workers’ Comp Reform in 2025

California’s lawmakers are once again looking at changing workers’ compensation laws, and if you’re a business owner—this matters more than you might think.

A new bill—Senate Bill 555—has been introduced, and it could raise the amount of money paid to workers with long-term injuries, especially those who can’t fully recover but can still work in some capacity. This may sound like a good thing for workers (and in many ways it is), but it also has real consequences for the businesses footing the bill.

Here’s what’s going on, in plain English, and why your business should be paying attention.

Why Workers’ Comp Is a Political Battle in California

Let’s be honest—workers’ comp has always been a political tug-of-war in California. It’s a system that exists to help workers who get hurt or sick on the job by paying for their medical care and replacing some of their lost income.

But here’s the problem:

  • If benefits go up, insurance premiums for businesses often rise.
  • If rules tighten, workers might have a harder time getting the help they need.

That’s why every 8–10 years, lawmakers try to "reform" the system. One side wants to improve support for workers, while the other is focused on cost control for businesses.

In 2012, Governor Jerry Brown passed a law that raised some benefits while changing the rules on who qualifies and how care is delivered. That law helped stabilize the system—but prices have crept up again, and so has dissatisfaction.

Now we’re in 2025—and it’s happening all over again.

What Is Senate Bill 555?

SB 555 focuses on people with permanent partial disabilities. These are folks who were injured at work and may never fully recover—but they can still do some type of work, maybe at a reduced level or with restrictions.

Right now in California, those workers get a maximum of $1,256 per month.

That number hasn’t changed in over a decade.

SB 555 wants to:

  • Raise that monthly limit
  • Add automatic cost-of-living increases, so payments go up with inflation
  • Close what many are calling a gap in fairness for injured workers

Sounds reasonable—especially for employees who’ve been hurt and are trying to support a family. But…

Why Business Owners (and Insurers) Are Concerned

If the law passes, employers will likely see higher workers' compensation insurance rates.

That includes:

And here’s the kicker—these changes don’t always happen overnight, but the costs trickle down fast. Just like past reforms, what starts as a benefit increase can result in:

  • More claims
  • Higher payouts
  • Longer recovery periods
  • Increased premiums for you, the employer

What You Can Do Right Now

This isn’t about panic—it’s about preparation.

As an agency based in Ontario, California, we work with business owners across the state to help them:

  • Understand their current workers’ compensation coverage
  • Get ahead of rate increases and changes in eligibility rules
  • Find the right-sized policy through Farmers Insurance—whether you're a growing team or a long-standing operation

We also help new businesses or those with high-risk employees (like construction, healthcare, or transportation) get approved—even if you've had claims in the past.

Bottom Line

Workers’ compensation is changing. Again.

And while it’s too early to say exactly what SB 555 will look like if it passes, one thing is clear: business owners need to be proactive, not reactive.

Here’s what we recommend:

  • Review your current workers’ compensation policy
  • Ask about your risk class and whether it’s priced appropriately
  • Consider how a future increase in benefits could affect your premium
  • Make sure your documentation and safety practices are current—this can impact pricing

Need Help?

We offer:

Don’t wait for policy changes to raise your costs.

Get a free quote today and let’s make sure your business is protected and prepared.

Back to blog