If temporary disability was paid at an incorrect rate in 2012, what action should be taken?

• A. pay the amount due
• B. pay the amount due with a self-imposed penalty of 10%
• C. begin paying at the correct rate.
• D. begin paying at the correct rate plus 10% for the delay.

Answer: (B)

When temporary disability payments have been calculated at the wrong rate, the payer must make the employee whole for the underpayment and also deter future errors. In California, there is a 10% penalty on amounts that were not properly paid due to miscalculation. That means the correct action is to reimburse the employee the full amount that was due at the correct rate and also add a 10% penalty on that underpaid portion. This self-imposed penalty recognizes the error and encourages accurate future payments.

Starting to pay at the correct rate now addresses the current period but does not remedy past underpayment, and simply paying the correct rate plus a delay penalty would misstate the required remedy because the focus is on reimbursing the underpaid amount and applying the 10% penalty to that amount.