Workers Compensation Rule Change
to exclude Corporate Officers and Directors
If you currently exclude any owner/officers of your corporation from workers comp benefits the rules have changed. The exempted officer must sign a new form acknowledging they want to be exempt from workers comp coverage and the subsequent premium charged for their payroll. AND they must own at least 15% of the company stock.

This is meant by regulators to protect officers that are excluded without their knowledge to save money. Also to keep employers from making all employees 1% owners with sole purpose of exempting them from coverage and premiums.

Details of the new rules are attached below. If you have an exempted employee the company will mail you the forms and notice.

Please call us 650-328-1000 for help with this and any other insurance needs.

The purpose of this letter is to inform you that 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.

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).

If any of your insureds have any qualifying corporate officer or director, LLC managing member or general partner, who desires to be exempt from California workers' compensation coverage, they must sign the appropriate enclosed waiver. We will apply it to the policy when received. These waivers will remain in effect with us, until withdrawn in writing.

Insurance by Allied Brokers
630 Cowper Street
Palo Alto, CA 94301
P: 650-328-1000
F: 650-324-1142
Open M-F 8:30-5pm
LIC# 0525309
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Chris Grammar
Steve Fox
Account Manager
Mimi Watson
Commercial Lines
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