Important California Workers Compensation Update: July 2018

Effective July 1, 2018, an amendment to California Workers Compensation Law (AB 2883) will change who may be excluded on a California workers compensation policy. Please note that this law does not apply to sole proprietors. Rules for Partnerships and LLCs will not change.

For All Corporations – Officers or members of board of directors who own at least 10% of the issued and outstanding stock of the corporation are eligible for exclusion

Family-Owned Corporations

Officers or members of board of directors who own less than 10% of the issued and outstanding stock of the corporation are eligible for exclusion if they;

  • Own at least 1% of the issued and outstanding stock of the corporation; and
  • Are related (parent, grandparent, sibling, spouse, child) to someone who owns at least 10% of the issued and outstanding stock of the corporation; and
  • Are covered by a health insurance policy or health care service plan.

Professional Corporations

Owners of professional corporations (created to allow certain kinds of professionals such as doctors, lawyers, accountants, or engineers to do business as a corporation) are eligible for exclusion if owners are:

  • Covered by a health insurance policy or a health care service plan; and
  • Are practitioners rendering the professional service for which the professional corporation was created

Cooperative Corporations

Officers or members of board of directors of cooperative corporations organized pursuant to the Cooperative Corporation Law are eligible for exclusion if they are covered by:

  • A health insurance policy or a health care service plan; and
  • A disability insurance policy that is comparable in scope and coverage, as determined by the California Insurance Commissioner, to a workers’ compensation policy.

Trusts

A person who holds the power to revoke a trust with respect to shares of a private corporation held in trust is eligible to execute a waiver under one of the conditions listed above.


Policies renewing after July 1, 2018 will need to submit signed waivers of exclusion prior to policy effective date, in order to successfully exclude eligible individuals and avoid an increase in premium.

For any questions regarding the change, please call our Anaheim office at 714.562.5910 or our San Jose office at 408.280.5551.

>>Read our previous post about how AB 2883 pertains to Partnerships and LLCs here.<<

 


3 Responses to “Important California Workers Compensation Update: July 2018”

  1. David M Isobe

    We are a non-profit corporation that employs 2 ministers. We issue them 1099’s at the end of the year. With this change in the law, do we need to continue purchasing Worker’s Compensation Insurance?