Important Changes to Workers' Compensation Law

November 11, 2016

The California Insurance Commissioner has determined that Assembly Bill 2883, effective January 1, 2017 applies to all new, renewal or existing policies. This legislation changes the definition of employees with respect to who is allowed to be excluded from workers’ compensation coverage as an officer of a corporation, member of boards of directors,  general partnerships and limited liability companies. These changes summarized below amend sections 3351 and 3352 of the California Labor Code. If either of the below types of business ownership applies to your insureds, please read carefully and assist your client in executing the appropriate waiver form for officers/directors or general partners/managing members that elect to be excluded from coverage. Any qualifying officer or director, general partner or managing member that does not execute a valid waiver is considered an employee, their payroll will be included for coverage and the insured may be subject to additional premium at final audit.


Corporations and Members of Boards of Directors
An officer or member of the board of directors must own at least 15% of the issued and outstanding stock of a quasi-public or private corporation while rendering actual service for the corporation for pay in order to be eligible for exclusion. Each officer or member of the board of directors that wishes to be excluded must sign a written waiver of his/her rights to be covered under the workers’ compensation policy, stating under the penalty of perjury that they qualify for exclusion for each corporate entity.
 
Partnerships and Limited Liability Companies
An individual who is a general partner of a partnership or a managing member of a limited liability company can elect to be excluded from coverage by executing a written waiver. Each general partner or managing member that wishes to be excluded must sign a written waiver of his/her rights to be covered under the workers’ compensation policy, stating under the penalty of perjury that they qualify for exclusion for each partnership or LLC entity.

 

If you have any questions, please contact us.

 

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