Cal. LAB § 3852

(a) The claim of an employee, including, but not limited to, any peace officer or firefighter, for compensation does not affect their claim or right of action for all damages proximately resulting from the injury or death against any person other than the employer. Except as provided in subdivision (b), an employer who pays, or becomes obligated to pay compensation, or who pays, or becomes obligated to pay salary in lieu of compensation, or who pays or becomes obligated to pay an amount to the Department of Industrial Relations pursuant to Section 4706.5, may likewise make a claim or bring an action against the third person. In the latter event the employer may recover in the same suit, in addition to the total amount of compensation, damages for which they were liable including all salary, wage, pension, or other emolument paid to the employee or to their dependents. The respective rights against the third person of the heirs of an employee claiming under Section 377.60 of the Code of Civil Procedure, and an employer claiming pursuant to this section, shall be determined by the court.

(b) (1) This subdivision applies only to an employee who is a peace officer, as defined in Chapter 4.5 (commencing with Section 830) of Title 3 of Part 2 of the Penal Code, or a firefighter who is employed by any of the following:

(A) A city.

(B) A county.

(C) A city and county.

(D) A fire protection district.

(2) An employer of an employee described in paragraph (1) shall be entitled to receive no more than one-third of a third-party defendant’s applicable liability insurance policy limits, if both of the following are true:

(A) The employee establishes that their total damages exceed the net recovery available after satisfaction of the employer’s claim.

(B) The total liability insurance limits available are insufficient to fully compensate the employer and employee’s proven damages.

(3) The one-third maximum allocation under this subdivision is intended to reflect a fair and equitable share of the recovery in light of the injured employee’s total damages, attorney’s fees, and costs of suit, and shall be deemed exclusive of any lien or offset by the employer.

(4) The employer’s right to reimbursement or subrogation shall be subordinate to the maximum allocation set forth in this subdivision. The maximum allocation to the employer described in this subdivision shall apply to all settlement agreements and judgments and shall take precedence over any employer lien or subrogation claim. Any remaining proceeds may then be allocated in accordance with existing lien and subrogation principles.