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Workers' comp settlements in California

By Richard Vaughn CPCU, ARM, AIS. Reviewed November 8, 2026. Richard is an insurance professional, not an attorney. This page explains the law; it is not legal advice.

What is being settled

A workers' compensation settlement resolves what the claims administrator still owes you once the medical picture is clear: permanent disability payments, future medical treatment, and any disputed past benefits. It does not pay for pain, lost promotions or the injury itself; those are not workers' comp benefits, so they are not in the settlement. The amount in a settlement is built from the same components the law would award at trial: the permanent disability rating turned into weeks at the weekly rate for your year of injury (Labor Code §4658(e), §4453(b)), plus a value for future medical care if it is being closed, plus any temporary disability or mileage that went unpaid.

Because the components come from medical reports, settlement normally waits until the treating doctor or a qualified medical evaluator has found you permanent and stationary and the disability has been rated. Before that, nobody knows what is being settled.

Stipulations with request for award

In stipulations with request for award, usually called Stips, you and the claims administrator agree on the permanent disability percentage and the weekly rate, and a judge converts the agreement into an award. Permanent disability is then paid every two weeks over the scheduled number of weeks (Labor Code §4650(c)), less any advances already made. Future medical treatment for the injury usually remains open: the claims administrator keeps paying for care that is reasonably required, through the same utilization review process as before.

The award can be reopened. If the original injury causes new and further disability within five years of the date of injury, you can petition to reopen and have the percentage raised (Labor Code §5410). That is the central advantage of Stips for a condition that may worsen, and the reason adjusters prefer the alternative when the medical future is uncertain.

Compromise and release

A compromise and release, or C&R, pays a lump sum in exchange for closing the claim. The sum covers the permanent disability, the estimated value of future medical care, and any disputed items, in one payment. After approval the claims administrator has no further liability: future treatment is your responsibility, and the case cannot be reopened for new and further disability.

A C&R makes sense when you want to choose your own doctors outside the workers' comp system, when the claim is disputed and both sides want certainty, or when you have moved out of state. It is a poor fit for an injury that is likely to need surgery or long-term medication, because the lump sum has to last. If you are on or expect Medicare, federal Medicare Secondary Payer rules can require that the part of a C&R intended for future medical care be set aside and spent on the injury before Medicare pays; the claims administrator and your attorney handle the set-aside, and it lengthens the approval process (42 U.S.C. §1395y(b)(2)).

What the settlement documents contain

Both settlement forms are standard DWC documents, and both list the same things: the parties, the date and body parts of the injury, the average weekly earnings and the temporary disability paid, the permanent disability percentage and the weeks and rate it produces, any credit the claims administrator claims for advances, the attorney's fee requested, and the treatment of future medical care. A C&R adds the lump sum, the allocation of it among permanent disability, future medical and other items, and any Medicare set-aside. Read the body-part list closely in either document: a body part that is not listed is not covered by a stipulated award's open medical, and is released by a C&R along with everything else. The settlement also states whether the voucher is being provided; for injuries on or after 2013 the voucher cannot be settled for money.

The judge must approve

Every settlement, Stips or C&R, is submitted to a workers' compensation administrative law judge, who reviews it for adequacy before it takes effect. The judge checks that the permanent disability figure is supported by the medical reports, that the worker understands what is being given up, and in a C&R that the medical component is reasonable. A judge who finds a settlement inadequate can refuse to approve it or ask for more information. If you have an attorney, the judge also sets the attorney's fee, which is paid from the award and cannot be charged to you separately (Labor Code §4906).

An unrepresented worker can take a proposed settlement to an Information and Assistance officer before signing. The officer answers questions about the documents and what is being released, without charge and without taking a side, but cannot act as your representative or negotiate for you; the judge who reviews the settlement decides whether it is adequate.

If there is no agreement

If you and the claims administrator cannot agree, the disputed issues go to a workers' compensation judge at a mandatory settlement conference and, if still unresolved, a trial. The judge issues a Findings and Award, which has the same effect as Stips: permanent disability is paid over the scheduled weeks, medical care stays open, and the award can be reopened within five years. Either side can petition for reconsideration of the decision within the time the Labor Code allows. Most cases settle before trial, but the right to a decision is what gives both sides a reason to be reasonable.

Timing

A first offer usually arrives after the permanent and stationary report has been rated, often within a few weeks of the rating. If a qualified medical evaluator was involved, the offer follows that report instead. Settlement discussions in a disputed claim, where the question is whether the injury is covered at all, can come earlier and are priced for the risk of losing. There is no deadline to accept an offer, and an offer withdrawn can be made again; the deadlines that do bind you are the one-year period to file with the appeals board and the five-year reopening window, both covered on the deadlines page.

Questions people ask

Richard Vaughn CPCU, ARM, AIS

Richard Vaughn spent 35 years in commercial property and casualty insurance, most of it in workers' compensation: running a self-insured group, auditing premiums, and implementing claims systems for carriers and third-party administrators. He is not an attorney. dickvaughn.com