As of January 1, 2017, the laws on workers' compensation insurance in California have changed. Previously excluded employees are now required to be covered by workers' compensation. Unfortunately, the bill did not include language about policies that were already in force and a number of workers' compensation insurance providers were left unsure whether the changes impacted already excluded individuals.

Assembly Bill 2883 has amended the California Labor Code to make changes to workers' compensation exclusions. Certain individuals may be excluded from workers' compensation; however, they have to execute a written waiver of their rights under the labor code.

The changes affect some corporations, partnerships, and LLCs. For corporations, an officer or member of the board who provides services to the corporation must own at least 15% of outstanding corporate stock to be excluded from workers' comp coverage. If a qualifying individual wants to be excluded, they must sign a written waiver of workers' comp benefits under penalty of perjury.

Similarly, for partnerships and LLCs, general partners and managing members of an LLC who provide services for wages must also sign a waiver of benefits that they are a qualifying general partner or managing member.

The California Department of Insurance (CDI) issued a notice advising insurance providers of the changes. California Insurance Commissioner Dave Jones admitted the new change may cause some confusions.

“AB 2883 is going to cause significant disruption for workers' compensation insurers and employers,” said Commissioner Jones. “We have issued a notice today to workers' compensation insurers so that they know what the new law requires of them and we directed insurers to provide notice to employers so they are made aware of the new law.”

Those most likely confused by the changes are small companies that never knew they would need to watch workers' compensation laws. Many owners involved in businesses were exempted from workers' comp in the past. However, under the new law, owners need to submit in writing that they qualify for a waiver of workers' comp.

According to Commissioner Jones, the Association of California Insurance Providers, and other insurance groups, the changes apply to in-force policies. Qualifying officers, partners, and directors will be required to sign a waiver in order to opt out of workers' comp coverage.

If you are a general partner of a partnership, managing member of an LLC, or corporate officer, the new changes to California workers' compensation law may affect you. Talk to your California business attorney about these changes and make sure you are in compliance with the new law.

The laws and regulations for partnerships, corporations, and other businesses in California change all the time. It is important to stay up to date on the changes that affect your business. Butterfield Schechter LLP is Southern California's largest firm focusing its law practice on employee benefit plans and business counseling. Our firm can help your company keep up to date with the latest regulations and filing requirements. Contact our office today with any questions on how we can help you and your business succeed.