All employers in the State of California are required to have Workers' Compensation insurance. Workers' compensation is designed to provide an exclusive remedy against your employer in the event of a work-related injury or illness. If your employer is covered by Workers' Compensation, and you are injured on the job, you may file for workers' compensation but you cannot sue your employer.
However, if the negligence of someone other than your employer (a third party) is partly responsible for the injury, you may sue this third party, in addition to filing a workers' compensation claim. For instance, if you use an unsafe product, like a defective machine at work, and this machine contributes to the cause of injury, you may be able to sue the machine manufacturer for damages in a third party lawsuit.
More commonly, however, a third party case arises out of an automobile accident, which occurs during the course of your duties, and is the fault of the other driver. You can sue the other driver and pursue workers' compensation benefits at the same time.