hr blog
Workers' Compensation Changes Definition of Excluded Employees
Insurance Commission Dave Jones recently announced changes to California Workers' Compensation involving the definition of "employee."
Beginning in January 1, 2017, all business workers' compensation insurance policies, including in-force policies, will be required to cover, among other things, certain officers and directors of private corporations and working members of partnerships and limited liability companies ("LLC") that may be excluded from coverage under current law.
Under AB2883, "...officers and members of boards of directors while rendering actual service for the corporation for pay will be covered employees unless the officer or member of the board of directors owns at least 15 percent of the issued and outstanding stock of the corporation...." Similarly, working members of a partnership or LLC receiving wages irrespective of profits from the partnership or LLC will be covered employees.
An officer or member of the board of directors, including members of a partnership or LLC may file a waiver of his or her rights under the Labor Code stating under penalty of perjury that they are a qualifying officer or director. To be valid, the waiver must be received and accepted by the insurance carrier.
Lastly, AB2883 is applicable to all in-force policies as of January 1, 2017, and that unless a duly executed waiver is received and accepted by the insurance carrier on or before January 1, any individual that had been exempted from coverage, including but not limited to, an officer or member of the board of directors of a corporation, or an individual who is a general partner of a partnership or a managing member of an LLC, will need to be added to the coverage provided by the insurer.