On August 26, 2016, California’s Governor Brown signed Assembly Bill 2883 into law. The new law alters current Labor Code sections 3351 and 3352 by changing both the definition of an ’employee’ and the eligibility criteria allowing the exclusion of workers’ comp coverage. As of January 1, many companies that were previously able to exclude certain officers, directors, and other various parties will be required to cover them. This law will present unwelcome paperwork and additional premiums to many business owners throughout the state, and only furthers the difficulties owners face trying to operate in California’s unfriendly business environment.
A few important details on the new bill are:
- A Corporate Officer/Director must own 15% or more of the corporation’s issued and outstanding stock to be eligible to elect exclusion from workers’ comp coverage. This requirement does not apply to General Partners and Managing Members.
- A General Partner of partnership, or a Managing-Member of a LLC, is eligible to elect exclusion from the work comp policy.
- A new waiver must be signed, under penalty of perjury, attesting to qualifications to be excluded. Each Corporate Officer, Corporate Director, General Partner, and Managing Member must sign their own form.
- All active policies, regardless of effective date, are impacted and subject to the new law as of January 1.
All California workers’ comp carriers are required to comply with the new bill by January 1. Old Harbor’s insurance carriers are sending packets to each client with detailed information on the law and the steps required to be in compliance. We are working diligently to ensure all our active policies transition smoothly prior to the new year. If you have any specific questions, please contact our office at (951) 297-9740.
DISCLAIMER: This article is provided for general informational purposes only and should not be relied upon for legal advice. Old Harbor Insurance Services, LLC recommends you consult your risk manager, attorney, business advisor, or insurance representative for all questions or concerns.