AB 2883 Change in California Workers Compensation Law- Officer, Director, Partner, LLC Member Exclusions Effective January 1, 2017

Earlier this year, we reached out regarding California Assembly Bill 2883 (AB 2883), which drastically changed the legal requirements that allow an employer to exclude its corporate officers and the members of its board of directors from workers' compensation insurance coverage. As a result, this change will now affect ALL policies inforce as of January 1, 2017.

Below are key details to note:

• A Corporate Officer/Director must own 15% or more of the corporation’s issued and outstanding stock to be eligible to elect exclusion from WC coverage.
• A General Partner of a Partnership, or a Managing-Member of a LLC, is eligible to elect exclusion from the WC policy (Note – the 15% ownership requirement does not apply to General Partners and Managing Members).
• Grantors of Revocable Trusts are no longer deemed shareholders and are no longer eligible for exclusion.
• Each eligible Corporate Officer/Corporate Director/General Partner/Managing-Member must sign a new waiver attesting to his/her qualification to be excluded, under penalty of perjury. The new waiver(s) will replace any current Exclusion Letter.
• AB 2883 has eliminated the requirement that 100% of the stock must be held by titled Officers/Directors in order for a Corporate Officer/Director to be eligible for exclusion.

What next?

You will receive notification from your current workers compensation carrier explaining these changes. Keep in mind that in order to exclude a Corporate Officer, Member of a Board of Directors, General Partner, or Managing Member of an LLC, each individual to be excluded must sign a written waiver of workers’ compensation benefits certifying under penalty of perjury that he/she is a qualifying Officer, Director, General Partner, or Managing Member of an LLC.

Once a waiver is accepted, new waivers will only be required if there is a change in status or individual wishes to change their status.

If you have any questions please don’t hesitate to call us at (619) 937-0164.