The California Legislature recently passed AB 2883, which will take effect January 1, 2017 and affects all workers’ compensation insurance business, including all currently in-force policies. The new law clarifies who may be excluded from coverage and the method by which an individual may be excluded.
Corporations, Partnerships, and LLCs
Prior to the passage of AB 2883, officers, directors, and working partners were not required to be covered under a business' workers’ compensation policy unless they elected to be covered.
AB 2883 revised the exemption language to permit only officers and directors that own at least 15 percent of the corporation’s stock, or who are a general partner of a partnership or a managing member of a limited liability company, to be exempt. The new law now requires everyone in such organizations to be covered under workers’ compensation insurance unless they meet the new eligibility requirements and sign a waiver under penalty of perjury stating they do qualify for exempt status.
A separate, signed waiver is required for each individual electing to be excluded from coverage and is not effective until received and accepted by the workers’ compensation insurance carrier.
This means you may be hearing from your workers’ compensation insurance carrier to determine if the officers you excluded on your policy do qualify. Also, everyone who does qualify must sign the waiver required by law, even if they already have an exempt status on the policy. Otherwise, individuals currently excluded from coverage will be added to the workers’ compensation policy, which may result in additional premium owed at the time of premium audit.
CAP Agency is here to help and support you through this new change. Please feel free to contact us by phone at 800-819-0061 or email CAPAgency@CAPphysicians.com with your questions.