It used to be that every California employer had to carry workers’ compensation insurance to compensate employees who have been injured on the job. However, a new law, effective July 1, 2018, allows corporate officers and board members, general partners and managing members of an LLC, and individuals in control of specific types of trusts to be excluded from coverage.
Corporate officers and board members who are paid for services they perform for the business are eligible to be excluded from coverage if:
- they own 10% of the issued and outstanding stock of the corporation, or
- they own at least 1% of the issued and outstanding stock of the corporation, a family member owns at least 10% of the corporate stock, and the officer is covered by a health insurance policy or health care service plan.
General partners or managing members of an LLC may also be excluded from coverage if they sign a waiver that they qualify as a general partner or managing member.
Individuals who hold the power to revoke a trust that contains shares of a corporation or interests in an LLC or partnership can be excluded from workers’ compensation coverage as long as the exclusion requirements for corporations, LLCs or partnerships are met.
If you are covered by workers’ compensation insurance and would like to be excluded, your insurance company can provide a written waiver that you can complete, sign, and return. The waiver remains effective until a written withdrawal is submitted. All workers’ compensation policies beginning or renewing as of July 1 are affected by this new law.
If you have questions or would like more information, please contact Eileen Harris at firstname.lastname@example.org or 844.4WINDES.