California Senate Bill 487, signed into law in 2025, brings significant changes to the way employers and insurers can recover costs in workers’ compensation cases involving peace officers. The new law, heavily opposed by the employer community, places strict limits on subrogation recovery and eliminates a long-standing credit right that has been a cornerstone of cost control in public safety claims.
These changes will have a substantial impact on counties, cities, and other public entities that handle workers’ compensation claims for law enforcement officers.
Two Key Changes Under SB 487
Recovery Cap on Third-Party Claims For example:  if a deputy is injured by a negligent driver with a $100,000 policy, the employer’s maximum recovery will be about $33,000, even if the employer or insurer has far exceeded that amount in paid benefits.Elimination of Credit Rights Against Future Benefits
Why It Matters
For public employers, the financial implications are significant. The combination of capped recovery and the loss of credit rights means that many claims will remain open longer, reserves will rise, and total claim costs will increase. The traditional subrogation strategy used by counties and cities will need to be reevaluated.
Employers should act quickly to assess potential exposure:
Review all open peace officer claims  with a third-party component.Reevaluate recovery expectations  and adjust reserves accordingly.Train claims staff  as the old subrogation playbook will no longer apply.Reconsider your subrogation approach  now that the cost-benefit equation has fundamentally changed.
