Newsom Signs California's Workers' Comp Fund Overhaul; Illinois Sets a Flat Utility Discount Charge and Bans PFAS in Cosmetics

The bottom line today

Gov. Newsom signed SB 171 on Monday, July 13, and the employers of California got most of what they asked for [1, 3]. The labor trailer bill to the 2026 budget overhauls the Subsequent Injuries Benefits Trust Fund, a workers’ compensation program every employer pays for and one that has grown far past its purpose [2, 3]. It is the best news for business in this week’s signings. It is not a clean win: older claims stay under the old rules. In Illinois, Gov. Pritzker signed a utility discount law that tells regulators exactly how businesses may be billed for it, and a cosmetics ingredient ban that mostly tracks Europe [6, 10].

CA California SB 171: the second-injury fund gets its reform

What it does. SB 171, by the Senate Committee on Budget and Fiscal Review, makes the statutory changes for the labor portion of the Budget Act of 2026 [2]. According to the Assembly floor analysis, it changes the Subsequent Injury Benefits Trust Fund to better align its requirements with the existing workers’ compensation benefit program, and specifies when those changes do not apply [2]. It also lets the Department of Industrial Relations require the annual employer assessment to be paid by electronic funds transfer, makes permanent a rule on how the Workers’ Compensation Appeals Board counts its time to act on petitions for reconsideration, and removes the salary cap for the Division of Workers’ Compensation’s administrative director [2].

The fund dates to 1945. It pays extra benefits to a worker with a pre-existing disability whose combined disability is substantially greater after a work injury, so that the employer pays only for the injury at its workplace [3]. According to the California Coalition on Workers’ Compensation, applications rose from about 1,000 a year to about 3,000, the backlog reached about 30,000 pending claims, and employer assessments climbed from about $35 million in 2014-15 to nearly $850 million in 2024-25 [3]. The California State Association of Counties traces much of the growth to the 2020 Todd v. SIBTF decision, and says many new claims rest on conditions such as acid reflux, migraines and sleep apnea [5].

Where it stands. The Legislature passed SB 171 on June 29 as a compromise between the governor’s proposal and AB 1576 by Assemblymember Liz Ortega [3]. Newsom signed it July 13 [1].

Pratt’s read. Credit first. The assessment is a cost every California employer carries, public and private, and the counties report their own assessments grew between 102% and 621% from 2020 to 2025 [5]. A fund meant to protect employers who hire workers with disabilities had become one of the faster-rising lines on the workers’ comp bill. SB 171 puts in place much of what RAND and the Legislative Analyst’s Office recommended [3].

The catch is the pending caseload. The governor’s version applied new eligibility standards to all non-final claims. SB 171 keeps current law for claims filed before July 1, 2020 and for claims that had already substantially progressed at the appeals board [3]. With 30,000 claims in the queue, that carve-out decides how fast employers see relief, and no public analysis has measured it [3].

The other side made two arguments, as the employer coalition reported them. Ortega said a change this large belonged in the regular policy process rather than a budget trailer bill, and she objected to applying new rules to cases not yet final [4]. The process point is fair. The grandfathering answered the second.

IL Illinois HB 4456: a flat charge, not a usage tax

What it does. HB 4456, by Rep. Laura Faver Dias and Sen. Adriane Johnson, writes the Illinois Commerce Commission’s low-income discount into the Public Utilities Act [6, 8]. The commission may approve a discount that applies to a qualifying residential customer’s whole bill, delivery and supply included, for households at or below 300% of the federal poverty level [7].

The business provision is one sentence. A utility “may fund its low-income discounts under this subsection (d-5) through a surcharge on both its residential and non-residential customers’ electric and natural gas bills” [7]. Any such charge must be “assessed solely on a fixed, per-customer basis” and may not be recovered on a volumetric, usage-based or demand-based basis, though it may vary by customer class [7]. Utilities with more than 100,000 customers that need a new or amended discount must file a tariff within 30 days of the effective date, and the commission has 90 days to rule [7].

The law also amends the Energy Assistance Act. From January 1, 2027, the base Energy Assistance Charge is $0.80 a month “with no additional step-up provisions” at utilities required to run a discount, and $0.40 at those that are not [7]. Non-residential accounts pay 10 times the base, and electric accounts with 10 megawatts or more of peak demand pay 375 times it [7]. By this column’s count, that is $8 and $300 a month.

Where it stands. The House passed it 74-37 and the Senate 42-17. Pritzker signed it July 9 as Public Act 104-0540, effective immediately [6]. He signed Rep. Dave Severin’s HB 5524 the same day; it requires a line-by-line report on every charge on an energy bill and what it pays for [8].

Pratt’s read. Supporters make a real case: Faver Dias said families in low-income communities spend up to 20% of their income on utilities [8]. Pritzker said the state is “returning savings to consumers” [8].

The cost lands partly on businesses that receive none of the discount. Still, the drafting is better than it could have been. A usage-based surcharge would have hit the manufacturers, cold-storage operators, hospitals and data centers hardest, the customers whose rates decide where load gets built. A fixed per-account charge caps that, and ending the step-ups puts a ceiling on the assistance charge [7, 8]. The weak point is “may vary by customer class,” which leaves the commission free to set a much larger fixed charge for commercial accounts [7]. Severin’s report is the right companion. He said himself it won’t lower anyone’s bill [8].

CA California AB 34: public power keeps its hydro credit

What it does. AB 34, by Assemblymember Joe Patterson, lets a publicly owned utility that gets more than 40% of its retail sales from large hydroelectric plants, under contracts in effect on January 1, 2018, keep reducing its renewables purchases in compliance periods after 2030 [9]. Under current law the exemption ended with 2030, while the renewables standard itself does not [9].

Where it stands. Signed July 13 [1]. The Northern California Power Agency sponsored it, and the Senate analysis lists no opposition [9]. A 2025 version, AB 1273, was vetoed over unrelated provisions on Public Utilities Commission procedure [9].

Pratt’s read. Plain credit. The City of Palo Alto Utilities estimates the lapse would have cost it about $25 million from 2030 to 2045 in renewable power it did not need [9]. Palo Alto, Healdsburg, Gridley, Biggs and Silicon Valley Power are the utilities the analysis names [9]. Their commercial customers, from storefronts to labs, would have paid. The state discourages new large dams for environmental reasons, which is why large hydro is not counted as renewable [9]. AB 34 builds nothing new. It only keeps public power from paying twice.

IL Illinois HB 3409: an EU ingredient list, with a long runway

What it does. HB 3409, by Rep. Sonya Harper and Sen. Mattie Hunter, creates the Chemicals in Cosmetic Products Act [10]. From July 1, 2028, no one may knowingly manufacture, sell, deliver, hold or offer for sale in Illinois a cosmetic containing any of 12 listed intentionally added ingredients or ingredient groups, among them formaldehyde, mercury, two phthalates, two parabens and a set of PFAS [11]. A product made through a process intended to comply, with a technically unavoidable trace from impurities, manufacturing, storage or packaging, is exempt [11]. The Act says it is meant to be consistent with the EU’s cosmetics regulation [11].

Where it stands. The Senate passed it 57-0 and the House concurred 74-38. Pritzker signed it July 10 as Public Act 104-0545 [10]. Capitol News Illinois notes that the law sets no penalties for makers or sellers that fail to comply [12].

Pratt’s read. Hunter’s case: “For too long, the cosmetics industry has operated without the kind of oversight we apply to food, medicine and drinking water” [12]. The business cost here is modest. Many of these ingredients are already banned in cosmetics sold in the European Union, so brands that sell there have worked around most of the list [12]. The “knowingly” standard and the trace exemption protect the salon and the drugstore that stock a product in good faith [11]. Small domestic brands that never sold abroad carry the reformulation, and they have until July 1, 2028 [11].

On the calendar

Illinois utilities that need a new discount tariff must file within 30 days of July 9, and the Energy Assistance Charge settles at $0.80 on January 1, 2027 [7]. The cosmetics ban starts July 1, 2028 [11].