Ayala: A 50 Percent Increase for Employer Misconduct Is 50 Percent of Comp, Not Salary

Michael Ayala was a state correctional officer when a planned attack by inmates left him with significant injuries. The Workers’ Compensation Appeals Board found that his employer had committed serious and willful misconduct, and that finding raises a worker’s compensation by half. The fight that reached the California Supreme Court was over half of what. Ayala had been receiving his full salary through a state leave program. Workers’ compensation alone would have paid him less. A unanimous court held in Department of Corrections & Rehabilitation v. Workers’ Compensation Appeals Board, 17 Cal.5th 510 (2025) that the increase is measured by the smaller number. We refer to the decision as Ayala.

A planned attack and two kinds of disability pay

Ayala claimed that the Department of Corrections and Rehabilitation failed to take appropriate safety measures in response to a credible and specific threat of inmate violence. A judge initially rejected that argument, but the Board agreed with Ayala. The department did not challenge the misconduct finding, and the Supreme Court’s opinion addresses only how the increase is calculated.

The dispute was about money. An injured worker who cannot work while healing generally receives temporary disability, or TD, a workers’ compensation benefit capped at up to two-thirds of average weekly earnings. Ayala did not collect TD. He received industrial disability leave and enhanced industrial disability leave, which the opinion calls IDL and EIDL. These are benefits the Government Code gives certain public employees in place of TD. Under them, Ayala received his full salary, minus certain withholdings.

Labor Code section 4553 says that when an employer’s serious and willful misconduct causes an injury, the “amount of compensation otherwise recoverable” must be increased by one-half. The court described serious and willful misconduct as “an exceptionally high degree” of fault. The department said the half should be calculated on the TD Ayala could have collected. Ayala said it should be calculated on what he actually received.

Three decisions before the last one

The workers’ compensation judge sided with the department, reasoning that workers’ compensation law does not provide IDL or EIDL and that the Board has no jurisdiction to award those benefits. The Board reversed. It agreed it could not award IDL, but said it could calculate the increase, and that the base included the leave benefits. It relied on a Government Code section that defines industrial disability leave as “temporary disability as defined in” the Labor Code’s workers’ compensation divisions, and on Brooks v. Workers’ Compensation Appeals Board, 161 Cal.App.4th 1522 (2008).

The Court of Appeal reversed the Board as inconsistent with the plain meaning of the statute. Ayala sought review, and the Board supported him as a friend of the court. The Supreme Court affirmed the Court of Appeal.

The word that decided the case

Section 4553 does not define the compensation it increases. Labor Code section 3207 does. It provides that “‘[c]ompensation’ means compensation under this division and includes every benefit or payment conferred by this division upon an injured employee . . . without regard to negligence.” “This division” is division 4 of the Labor Code, the workers’ compensation law.

The definition is broad, the court said, but it “includes an essential limitation”: only benefits and payments under the workers’ compensation law count. TD is one of those benefits. IDL is not. Ayala himself agreed that IDL “is not ‘conferred by’ Division 4.” IDL benefits, the court wrote, are “benefits created and conferred under the Government Code.”

The court saw this as consistent with its earlier reading of “compensation.” It pointed to City of Moorpark v. Superior Court, 18 Cal.4th 1143 (1998), and Currie v. Workers’ Compensation Appeals Board, 24 Cal.4th 1109 (2001), which treated the remedy for discrimination against injured workers under Labor Code section 132a, located in division 1, as outside “compensation.” Location in the code mattered there, and it mattered here.

Why calling IDL “temporary disability” did not change the answer

Ayala’s main argument was that the Government Code defines IDL as temporary disability, so IDL should count like TD. The court said that argument “places substantially more weight” on the definition “than it can bear.” The court read that definition as focused on when the leave provisions apply, meaning during a period of temporary disability, rather than on what benefits are paid. And it adopted the Court of Appeal’s logic that when the Government Code borrows a Labor Code definition, that does not, by itself, expand what counts as “compensation” under the Labor Code.

Brooks did not help. As the court described it, that case held that IDL payments count toward the two-year limit on aggregate disability payments in Labor Code section 4656, and that limit, the court noted, is not confined to benefits payable under the workers’ compensation law. Section 3207 is confined that way. The court left the Brooks holding intact, but it issued a warning. In a footnote, it said that to the extent Brooks has been read to mean IDL is for all purposes interchangeable with TD, “this conclusion is incorrect and Brooks should no longer be cited for it.”

Ayala also relied on State of California v. Workers’ Compensation Appeals Board, 44 Cal.App.4th 128 (1996), known as Ellison, where, as the court described the case, a state employer was penalized for unreasonably delaying benefits to a worker entitled to IDL. That case cut against him. The penalty there, the court explained, was calculated on what the worker would have received in TD, not on what she was owed in IDL.

A salary plan is not comp merely because it interacts with comp

Two more arguments rested on Labor Code provisions that mention other kinds of payments. Section 4650 excuses a late-payment penalty when an employer continues wages under a salary continuation plan, and IDL qualifies. Ayala argued that this makes IDL a benefit under the workers’ compensation law. The court noted the argument would sweep in every kind of salary continuation plan, including those adopted under collective bargaining agreements and employer policy, and said that accepting it would “upend the established distinction” between required compensation and benefits beyond what the state requires.

Section 4909, which prevents double recovery, did not help either. A payment outside the workers’ compensation law, the court said, does not become a payment under that law merely because the law prevents double recovery for the same injury.

“He will receive no more, but also no less”

Ayala warned that the decision would make the increase useless for public employees on leave. The court said that assumption was wrong. The increase still applies to what the worker is entitled to under the workers’ compensation law. It is undisputed, the court wrote, that the base includes the compensation to which Ayala is entitled under that law, including TD benefits. Ayala did not receive TD checks, but the court explained that TD and other division 4 benefits still “represent the compensation that is ‘recoverable’ to him” under the workers’ compensation law, even if he was receiving other amounts as IDL. The court quoted the Court of Appeal: Assuming Ayala “would have been entitled to temporary total disability, the base compensation would have been two-thirds of his salary, subject to statutory limits.” His premium is calculated the same way as other employees’. In the court’s words, “He will receive no more, but also no less.”

The base is not only TD. As the judge held and the department agreed, it covers the benefits and payments to which he is entitled under the workers’ compensation law, including, “most significantly,” TD and reimbursement of medical and legal costs stemming from the injury.

Three other points close the opinion. The rule that workers’ compensation law is liberally construed for workers will not “justify an otherwise erroneous construction.” The Board’s view of its own statute gets appropriate weight, but the court could not follow a position contrary to the plain language. And the reading can help workers in another case. Subject to statutory exceptions, a worker whose own serious and willful misconduct caused the injury faces a one-half reduction under section 4551, and the court quoted the Court of Appeal’s observation that IDL would not be cut in half in that situation for the same reason. And, again quoting the Court of Appeal, the court said that if the Legislature wants something different, “it can say so.”

What this means for your claim

These steps are our practical reading of Ayala.

• Calculate the increase on workers’ compensation benefits, not salary. If you receive IDL or EIDL, expect the increase to be measured by what workers’ compensation would have paid, not your take-home pay. In our reading, you should still claim that increase even if you never received a TD check.
• Do not stop at TD. The court described the base as including other benefits and payments under division 4. List every category when you compute the claim.
• Other wage continuation plans deserve the same caution. Ayala involved a state leave program, but the court observed that Ayala’s section 4650 argument would apply equally to plans adopted under collective bargaining agreements and employer policies, and it rejected that argument. In our view, an employer or worker should expect the same analysis there.
• Stop citing Brooks for all-purpose equivalence. In our view, lawyers on either side can still cite it for the two-year limit, because the court said it cast no doubt on that holding. The court’s footnote 3 rejects the broader use.
• Keep the misconduct proof separate. The department did not contest the finding here, so, in our reading, Ayala says little about how to prove serious and willful misconduct. Our guide on Cal/OSHA citations and the increase addresses a different piece of that question.

For help with a claim involving employer misconduct, see our California workers’ compensation practice.