CALIFORNIA WORKERS’ COMPENSATION LAW IS CHANGING ON 1/1/17

9November,2016
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LAW WILL IMPACT EXCLUDED OFFICERS, DIRECTORS & EMPLOYEES

California Insurance Commissioner, Dave Jones notified all workers’ compensation insurance carriers writing policies in the state about changes to procedures related to excluded employees created by a new law.

As of January 1, 2017, Assembly Bill 2883 (AB 2883) provides that all business workers’ compensation insurance policies, including policies currently in-force, will be required to cover certain officers and directors of private corporations and working members of partnerships and limited liability companies that may have been previously excluded from coverage.

Prior to the passage of AB 2883, officers, directors and working partners were not required to be covered under the business’s workers’ compensation policy unless they opted to be covered and were not listed on a limiting and restricting endorsement.

As of 1/1/17 officers, directors and partners are required to be covered under the employer’s workers’ compensation policy unless they meet a narrower definition of “excluded employee.”  Under the narrower definition officers, directors and partners can only opt out of coverage by signing a waiver under penalty of perjury and filing the waiver with their employer’s insurance carrier.

Furthermore, AB 2883 revises the exemption language to permit only officers and directors that own at least 15% of the issued and outstanding stock of the company or an individual who is a general partner of a partnership or a managing member of a limited liability company to be exempt if they execute a waiver under penalty of perjury that they meet one of these qualifications.

Insurance carriers are required to identify and provide notice to each employer that may have employees that were previously excluded from coverage and are affected by the new law, and they are required to report the premium and loss experience associated with those who have not chosen to opt out of coverage.

Source:  Insurance Journal 10/18/16