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California Labor Code §4061 — Permanent Disability Advance Payments
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By Eman Yazdchi, Esq. · Certified Specialist in Workers' Compensation Law, State Bar of California Board of Legal Specialization · Cal Bar #285231
(a) Together with the last payment of temporary disability indemnity, the employer shall, in a form prescribed by the administrative director pursuant to Section 138.4, provide the employee one of the following: (1) Notice either that no permanent disability indemnity will be paid because the employer alleges the employee has no permanent impairment or limitations resulting from the injury or notice of the amount of permanent disability indemnity determined by the employer to be payable. (2) Notice that permanent disability indemnity may be or is payable, but that the amount cannot be determined because the employee's medical condition is not yet permanent and stationary.
What does California Labor Code section 4061 establish?
Section 4061 requires the workers' compensation carrier to begin permanent disability advance payments as soon as the treating doctor declares maximum medical improvement.
Section 4061 is the rule that requires the workers' compensation carrier to start paying permanent disability advances at the temporary-disability rate as soon as the treating doctor says the injury has reached maximum medical improvement. The PD advance starts long before the final award. Certified Specialist Eman Yazdchi (California Board of Legal Specialization, State Bar of California) handles PD advance triggers and disputes on every file.
California Labor Code section 4061 requires the California employer or workers' compensation insurer to commence permanent disability advance payments when temporary disability ends and the California injured worker has reached permanent and stationary status (P&S). Under section 4061, the California advance payments are calculated based on the treating physician's estimate of likely PD impairment and the corresponding §4660 rating; the California insurer makes the advances at the statutory PD weekly rate without waiting for the final §4660 rating to be assigned. The section 4061 rule prevents the California injured worker from losing all wage-replacement income during the gap between TD termination and final PD payout under California Labor Code §4658, the statute that converts the PD rating into a dollar indemnity award.
When do section 4061 California PD advances actually start?
PD advances begin the day temporary disability ends, usually when the treating physician issues the report declaring maximum medical improvement.
Under California Labor Code section 4061, the California PD advance payments start when the California injured worker is declared permanent and stationary by the treating physician (or a California Labor Code §4062.1 or California Labor Code §4062.2 QME) and TD payments end under the California Labor Code §4653 California TD rate framework. The section 4061 California rule means the California worker transitions immediately from TD payments to PD advances, no gap in California wage-replacement income. The section 4061 California start date is keyed to the P&S date in the medical record, not to the date the insurer completes a final California Labor Code §4660 California rating; the California insurer must estimate the PD rating and start paying.
How are section 4061 California PD advance amounts calculated?
Advance amounts are calculated at the worker's temporary-disability rate and paid every two weeks until the final permanent-disability rating issues.
Under California Labor Code section 4061, the California PD advance amounts are calculated based on the treating physician's whole-person impairment estimate, adjusted by California Labor Code §4660 California rating mechanics (or section 4660.1 California for 2013-onward injuries). The section 4061 California advance is paid at the statutory PD weekly rate for the year of injury. The California insurer makes a good-faith estimate of the PD rating and starts paying advances at the corresponding weekly amount; once the final California Labor Code §4660 California rating is determined, the insurer reconciles the advances against the final PD obligation.
What happens if the section 4061 California PD advances exceed the final PD rating?
When advances exceed the final PD award, the overage is treated as a credit against future benefits, not a debt the worker must repay.
Under California Labor Code section 4061, when the California advance payments paid out exceed the final California Labor Code §4660 California PD rating once that rating is established (because the insurer over-estimated the impairment), the California insurer is generally not entitled to recoup the excess from the California worker, the California advances are not refundable when they exceed the final award. The section 4061 California rule places the over-estimate risk on the California insurer, not on the California worker. When the section 4061 California advances were lower than the final PD rating, the California insurer pays the difference under California Labor Code §4658 California as a true-up.
How does section 4061 California interact with §4660, §4658, and §4658.7 SJDB?
The advance rule interacts with the rating schedule, the PD payment scale, and the Supplemental Job Displacement Benefit voucher entitlement.
Under California Labor Code section 4061 (PD advances), California Labor Code §4660 (rating), California Labor Code §4658 (PD payment schedule), and California Labor Code §4658.7 (SJDB), the California post-TD framework operates as a sequence. Section 4061 California advances bridge the gap between California Labor Code §4653 California TD termination and California Labor Code §4660 California final rating; California Labor Code §4660 California then assigns the final PD percentage; California Labor Code §4658 California pays out the final PD weeks; and California Labor Code §4658.7 California provides the $6,000 SJDB voucher for workers who do not return to modified or alternative work. The section 4061 California advances are the front-end of this post-TD sequence.
Related on yazdchilaw.com: California workers' comp settlement pillar · California Labor Code §4061.1 explained · California Labor Code §4663 (apportionment) · What happens at a mandatory settlement conference in california workers comp.
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Tap to call →Frequently Asked Questions
What does California Labor Code section 4061 actually establish for PD advances?
California Labor Code section 4061 requires the California employer or workers' compensation insurer to commence permanent disability advance payments when temporary disability ends and the California injured worker has reached permanent and stationary status. Under section 4061, the California advance payments are calculated based on the treating physician's estimate of likely PD impairment and the corresponding California Labor Code §4660 California rating; the California insurer makes the advances at the statutory PD weekly rate without waiting for the final California Labor Code §4660 California rating to be assigned. The section 4061 California rule prevents the California worker from losing wage-replacement income.
When do section 4061 California PD advance payments actually start?
Under California Labor Code section 4061, the California PD advance payments start when the California injured worker is declared permanent and stationary by the treating physician (or a California Labor Code §4062.1 or California Labor Code §4062.2 QME) and TD payments end under the California Labor Code §4653 California TD rate framework. The section 4061 California rule means the California worker transitions immediately from TD payments to PD advances, no gap in California wage-replacement income. The section 4061 California start date is keyed to the P&S date in the medical record, not to the date the insurer completes a final California Labor Code §4660 California rating.
How are section 4061 California PD advance amounts actually calculated?
Under California Labor Code section 4061, the California PD advance amounts are calculated based on the treating physician's whole-person impairment estimate, adjusted by California Labor Code §4660 California rating mechanics (or section 4660.1 California for 2013-onward injuries). The section 4061 California advance is paid at the statutory PD weekly rate for the year of injury. The California insurer makes a good-faith estimate of the PD rating and starts paying advances at the corresponding weekly amount; once the final California Labor Code §4660 California rating is determined, the insurer reconciles the advances against the final PD obligation.
What happens if the section 4061 California PD advances exceed the final PD rating?
Under California Labor Code section 4061, when the California advance payments paid out exceed the final California Labor Code §4660 California PD rating once that rating is established (because the insurer over-estimated the impairment), the California insurer is generally not entitled to recoup the excess from the California worker, the California advances are not refundable when they exceed the final award. The section 4061 California rule places the over-estimate risk on the California insurer, not on the California worker. When the section 4061 California advances were lower than the final PD rating, the California insurer pays the difference under California Labor Code §4658 California as a true-up.
How does section 4061 California interact with §4660, §4658, and §4658.7 SJDB?
Under California Labor Code section 4061 (PD advances), California Labor Code §4660 (rating), California Labor Code §4658 (PD payment schedule), and California Labor Code §4658.7 (Supplemental Job Displacement Benefit), the California post-TD framework operates as a sequence. Section 4061 California advances bridge the gap between California Labor Code §4653 California TD termination and California Labor Code §4660 California final rating; California Labor Code §4660 California then assigns the final California PD percentage; California Labor Code §4658 California pays out the final PD weeks; and California Labor Code §4658.7 California provides the $6,000 SJDB voucher when applicable. The section 4061 California advances are the front-end of this California post-TD payment sequence.
Last reviewed by Eman Yazdchi, Esq., June 2026.
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