California’s workers’ compensation system continues to experience moderate but persistent cost growth due to wage increases, labor market conditions, rising medical expenses and system complexity.
Payments per claim in California’s workers’ comp system have risen steadily since 2021, according to a new study, which shows that for claims evaluated in 2025, total payments per claim increased by 6%.
The Workers Compensation Research Institute’s CompScope Benchmarks for California report examines costs and system performance in California’s workers’ comp system from 2020 to 2025, using multistate comparisons across a range of claims and benefit measures.
Related: Workers’ Comp Medical Costs Per Claim Rose 5%-12% Across Most States in Study
California’s overall growth pattern was considered typical compared with other study states, according to the WCRI report’s authors.
The growth in payments in California was driven by increases across key components including indemnity benefits, medical payments, and benefit delivery expenses, according to the WCRI.
Wage growth among injured workers was a major cost driver. California’s labor market and minimum wage increases contributed, including the statewide minimum wage increase to $16.50 per hour in 2025 and special higher wages for fast-food and healthcare workers, were major contributes to the growth, the report shows.
According to the report, medical payments per claim rose 7% in 2025 after years of stability, increases that were tied to higher hospital and nonhospital payments, including evaluation and management services, physical medicine, ambulatory surgery center services, and inpatient hospital care.
California ranked among the highest states for these expenses related to litigation, medical management, and administrative handling, with costs for these services rising 9% in 2025.
Topics
Trends
California
Workers’ Compensation
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