The prevalence of mental health injuries among nurses and other healthcare professionals has reached crisis proportions. An entire workforce is dealing with invisible psychological wounds as a result of years of systemic understaffing, ongoing workplace pressure, and exposure to chronic trauma. However, these workers soon learn that psychiatric claims are subject to far more stringent legal requirements than physical injuries when they turn to California’s workers’ compensation system.
Workers must meet the 51% “predominant cause” standard under Labor Code §3208.3, which requires them to demonstrate that their diagnosed mental illness was more than 50% caused by their actual work-related experiences. Because of this, stress claims are among the most intricate legal issues in the system.
SB 294—the Workplace Know Your Rights Act—gives this issue additional weight. It mandates that healthcare employers provide employees with a separate written notice that clearly explains their right to submit psychiatric workers’ compensation claims, with effect from February 1, 2026. The fact that psychological trauma is a protected injury under California law will be new to many healthcare professionals.
What Does California Law Consider to Be a Psychiatric Injury?
Definition in Accordance with Labor Code §3208.3
Three requirements must be met for a psychiatric injury to be considered: it must be a diagnosed mental illness as determined by DSM-5 procedures, it must result in a documented need for medical treatment or actual disability, and it must occur during and as a result of employment. A diagnosis by itself is insufficient if there is no functional impairment or need for treatment.
Not Just Stress
Common workplace stressors like challenging coworkers, long hours, or rigorous schedules are typically not compensable in and of themselves. The injury needs to be medically verified and linked to particular work-related incidents rather than the overall nature of the occupation. Harassment, discrimination, trauma from patient violence, or exposure to catastrophic events are among the circumstances that may overcome this bar.
Typical Situations in Medical Facilities
PTSD after violent patient encounters, Major Depressive Disorder from long-term exposure to pain and loss, generalized anxiety disorders exacerbated by understaffing, and trauma-related disorders from repeated exposure to patient deaths or workplace violence are among the psychiatric diagnoses most commonly found in healthcare workers’ compensation claims. A physical injury may also result in compensable mental health issues, such as depression after a severe back injury.
An Explanation of the 51% “Predominant Cause” Rule
Workers must demonstrate by a preponderance of the evidence that actual work-related events were the primary cause of the psychiatric injury overall in accordance with Labor Code §3208.3. This implies that over 50% of all contributing factors, including personal stressors, must be related to work.
A Qualified Medical Evaluator (QME) or Agreed Medical Evaluator (AME) reviews claims using a method that separates stress from personal life issues. Instead of focusing on the 12-hour shifts, trauma exposure, ongoing understaffing, and workplace violence that characterize healthcare workers’ everyday lives, insurers frequently try to blame personal vulnerabilities for their anxiety or depression.
One significant exception is that the standard is lowered to a “substantial cause” threshold of roughly 35% to 40% if the psychiatric injury was caused by direct exposure to significant workplace violence or by being the victim of a violent act.
If the injury was significantly brought on by legal, nondiscriminatory management actions carried out in good faith, such as a performance review, transfer, or disciplinary action, then claims are barred by Labor Code §3208.3(h), the “Good Faith Personnel Action” Defense. In hospital settings, this defense comes up a lot. One of the trickiest parts of psychiatric workers’ compensation litigation is figuring out the difference between protected personnel actions and unacceptable workplace conditions.
The Employment Requirement of Six Months
For a psychiatric injury, workers’ compensation benefits cannot be paid unless the worker had been employed by the company for at least six months at the time of the injury. This rule presents a special obstacle for psychiatric claims because it does not apply to physical injuries.
There is a crucial exception provided by the law: if the injury results from a “sudden and extraordinary” employment circumstance, the six-month requirement is not applicable. A violent patient assault resulting in significant bodily harm, witnessing a mass casualty incident, or experiencing another catastrophic workplace event that causes acute psychological trauma—even if the worker was recently hired—are examples of situations that may qualify in the healthcare industry.
These are fact-specific exceptions that need to be carefully examined. Without first speaking with a knowledgeable workers’ compensation lawyer, a healthcare worker hurt in their first few weeks of employment shouldn’t assume they are automatically disqualified from filing a psychiatric claim.
SB 294 and the “Know Your Rights” Notice of 2026
What SB 294 Needs
SB 294 mandates that all covered employers, including healthcare employers, give each current employee a separate written notice outlining their workers’ compensation rights as of February 1, 2026. Disability compensation, available medical care, and the Division of Workers’ Compensation (DWC) contact details must all be specifically covered in the notice. All new and current employees must receive this notice from their employers by February 1, 2026, and then every year after that.
Why It Is Important for Claims Related to Mental Health
The biggest effect of SB 294 on healthcare is awareness. Many employees are just unaware that they may be eligible for benefits if they suffer from PTSD, major depression, or other trauma-related conditions brought on by their jobs. This right is made clear by the required notice. Additionally, SB 294 forbids employers from taking adverse action against any worker who exercises the rights outlined in the notice. This is a crucial safeguard for healthcare professionals who are afraid of losing their jobs if they file a claim.
Possible Effects in 2026
Legal experts predict that as healthcare professionals become more conscious of their rights, the number of psychiatric claim filings will rise throughout 2026. Additionally, employer response procedures, workplace violence reporting under Title 8, Section 3342, and the management of internal complaints regarding harassment and understaffing will all be subject to increased scrutiny.
The Proof of Psychiatric Claims
A well-documented evidentiary record is necessary to prevail on a psychiatric claim. According to the QME or AME, work is responsible for over half of all contributing factors, and actual employment events were the direct cause of the psychiatric injury.
It is crucial to have supporting documentation. Hospitals must notify Cal/OSHA of workplace violence in accordance with Title 8, Section 3342. Incident reports submitted following traumatic events offer contemporaneous, official records. Internal complaints, such as emails or HR grievances regarding harassment or understaffing, aid in proving that distress was caused by particular workplace circumstances rather than individual circumstances.
Current symptoms must be directly linked in medical records to specific events that occurred at work. Work that exacerbates an existing condition is still compensable, so pre-existing conditions do not automatically prevent recovery. Employees should also be aware that social media and personal documents will be closely examined by insurers. To keep this from undermining a legitimate claim, early legal advice is crucial.
Benefits Obtained Upon Approval of a Claim
Subject to the Utilization Review (UR) procedure, healthcare professionals who have approved psychiatric claims are entitled to medical treatment that includes therapy, psychiatric care, and medication management.
Benefits for temporary disability (TD) cover lost income while an employee is unable to work. Temporary total disability (TTD) benefits in 2026 are based on the State Average Weekly Wage and range from a minimum of $264.61 to a maximum of $1,764.11 per week. Benefits for permanent disability (PD) are available for long-term impairments that impact one’s ability to earn money in the future.
Employees may be eligible for a $6,000 Supplemental Job Displacement Voucher for retraining or education if they are unable to return to their previous healthcare position. As of January 1, 2026, medical travel reimbursement is $0.725 per mile.
Summary
In California’s system, psychiatric workers’ compensation claims are some of the most legally complex. Labor Code §3208.3’s 51% predominant cause standard is a strong obstacle that necessitates careful medical documentation and knowledge of how insurers will try to disprove causation. At the same time, SB 294 eliminates one of the most enduring barriers that has prevented healthcare workers from pursuing the benefits they are entitled to, bringing significant new protections in 2026.
It is essential to comprehend these legal requirements prior to filing. If evidence is not collected quickly, it could be lost. Medical opinions that are created without legal advice might not satisfy California’s requirements for causality.
Contact ODG Law Group Right Now
Under California workers’ compensation law, you might have rights if you are a healthcare worker who is suffering from PTSD, depression, anxiety, or any other mental illness brought on by your job. In complicated psychiatric workers’ compensation cases, ODG Law Group represents medical professionals in Glendale and Fresno. Our team has extensive knowledge of SB 294’s developing protections, the good faith personnel action defense, and Labor Code §3208.3.
For a private consultation, get in touch with ODG Law Group. Every case is assessed separately, and we will assist you in determining whether your circumstances qualify for compensation under the law.
