For our California Employers, effective January 1, 2017 California Assembly Bill 2883 goes into effect, which changes California’s workers’ compensation law regarding exemptions from the law by corporate officers and directors, partners, and limited liability company (“LLC”) members.
In keeping with both the past practices and current developments Owners, Officers, and Managing Members getting both dividend and wage compensation will be required to make an election to be covered, or be excluded under workers compensation policies.
Specifically, officers and directors of quasi-public and private corporations who provide actual services to the corporation for pay are considered an “employee” of the corporation unless they elect to be excluded from coverage. See Cal. Lab. Code § 3351(c) (Eff. Jan. 1, 2017). However, now the officer or director can only elect to be excluded from coverage “if he or she owns at least 15 percent of the issued and outstanding stock of the corporation and executes a written waiver of his or her rights under this chapter stating under penalty of perjury that the person is a qualifying officer or director.” Cal. Lab. Code § 3352(p) (Eff. Jan. 1, 2017).
Also, working partners and LLC members who receive wages irrespective of profits are now considered employees, unless they exempt themselves from coverage. Cal. Lab. Code § 3351(f).
General partners and LLC managing members may, under penalty of perjury, execute a written waiver of their rights under the California workers’ compensation laws. Cal. Lab. Code § 3352(q).
Please note that if any of our clients have any officers, directors, LLC managing members or general partners who were exempt from California workers’ compensation coverage prior to the January 1, 2017 law change, they must submit a new signed exclusion / waiver form to the carrier in order to continue that exemption, provided that they meet the qualifying requirements. This applies to in-force policies and renewals.
So, there you are, more of the same and additional paperwork.
