Labor Code 5814 penalty

What it is

Labor Code section 5814 penalizes unreasonable delay or refusal to pay compensation, before or after an award. The WCAB may increase the delayed or refused payment by up to 25 percent or $10,000, whichever is less, using its discretion to reach a fair balance between the parties (section 5814(a)). Unlike the automatic 4650 increase, a 5814 penalty is usually claimed by petition.

The rule and its deadlines

If the employer discovers a potential violation before the employee claims a penalty, it may pay a self-imposed 10 percent penalty with the delayed amount within 90 days of discovery, in place of the larger penalty (section 5814(b)). A 5814 award is reduced by any 4650(d) increase already paid on the same payment. No action to recover a 5814 penalty may be brought more than two years after the payment was due (section 5814(g)). Approval of a C&R, findings and award, or stipulations conclusively resolves accrued penalty claims unless the order expressly excludes them, and submitting a benefit issue at trial resolves the related penalty unless it is also submitted or excluded (section 5814(c)).

Why it matters to an applicant firm

The two-year limit and the settlement presumption are the traps. Penalty claims found late in a case can be time-barred, and a settlement that doesn't carve them out ends them. Firms track unpaid and late benefits as they happen, decide early which delays to petition on, and list any reserved penalty claims in the settlement documents. See the temporary disability guide.