Workers Comp – 2017 Compliance

IN THE last quarter of 2016 you should have received correspondence from your insurance carrier if you have claimed any owners or officers as exempt from workers’ compensation coverage on
your policy.

The notification was in response to Assembly Bill 2883, which amended rules related to the exclusion of officers and members of boards of directors of private or quasi-public corporations, general partners of a partnership and managing members of a limited liability company under a workers’ compensation policy.

Starting Jan. 1, 2017 only officers or directors who own 15% or more of the stock of the corporation may be excluded from coverage.

Based on this wording, only six individuals can be excluded on any one policy.

Also, AB 2883 changes the method by which individuals may be excluded.

Individuals eligible for exclusion were required to have submitted no later than Dec. 31, 2016 a written waiver of workers’ compensation benefits under penalty of perjury certifying that they are a qualifying officer, director, general partner or managing member of an LLC.

If you claimed an exclusion, you would have received correspondence asking that you submit the required documentation by Jan. 1.

If you failed to comply, you will have rendered your exclusions invalid under the law and your policy will be subject to additional premium.

This rule applies to all in-force policies, even those that do not incept on Jan. 1.

Insurance companies are still working on how and when they will charge the premium for individuals who no longer qualify to be excluded (those who own less than 15% of the organization).

They will use the typical factors in determing the premium, like job duties, class code and salary.

Inclusion will be effective from Jan. 1, 2017 until the expiration of your policy.

If you have questions or concerns about these changes, do not hesitate to call us. We are always here to help.

Who Can And Can’t Claim Exemption from Coverage

Eligible individuals
Corporations – Officers, directors (i.e. members of board of directors) must own 15% or more of the stock of the corporation.
Partnerships – Only general partners.
• LLCs – Only managing members.

Ineligible individuals
Any individuals in the organization that are not included in the above requirements.
Individuals will be endorsed to the policy as of Jan. 1, 2017 and subject to officer minimum/maximum payrolls.

2017 Minimum/Max Payroll
• Minimum officer payroll $48,100
• Maximum officer payroll $122,200
• Payroll will be prorated from 1/1/17 to expiration of policy