We always advocate for the importance of Workers’ Compensation coverage if you have at least one employee. It’s also important to note that not everyone stakeholder is considered an employee. As covered in our New CA Law Changes Inclusion of Officers for Workers’ Comp Coverage blog, 2016 was an opportunity for savings, 2018 there are even more opportunities to save through California Senate Bill 189.
In terms of the laws governing CA Workers’ Compensation, an employee is defined as the following:
- Officers and members of boards of directors of quasi-public or private corporations while
rendering actual service for the corporations for pay, and
- All working members of a partnership or limited liability company receiving wages
irrespective of profits from the partnership or limited liability company
On the other hand, the following is not considered an employee (in regards to Workers Comp):
- An officer or member of the board of directors of a quasi-public or private corporation who owns at least 15% of the issued and outstanding stock and executes a written waiver of his or her rights under the laws governing workers’ compensation stating under penalty of perjury that he or she is a qualifying officer or director, and
- An individual who is a general partner of a partnership or a managing member of a limited liability company who executes a written waiver of his or her rights under the laws governing workers’ compensation stating under the penalty of perjury that he or she is a qualifying general partner or managing member.
Effective July 1st, 2018 an officer or member of the board of directors that meets the definition of an employee may elect to waive coverage if they own at least 10% of the issued outstanding stock. Additionally, if they own at least 1% of the issued and outstanding stock while their parent, grandparent, sibling, spouse, or child owns at least 10 percent of the issued and outstanding stock and is covered by a health insurance policy or health care service plan.
NOTE: Sole Shareholders of Private Corporations are excluded from employee status, but may elect to be subject to liability for workers’ compensation coverage.
Workers Comp Premiums depend on the following:
- Workers Class Code Rate
- Experience Mod
With the exemption of 10% owners, their respective contribution to payroll will be removed, significantly lowering the premium.
If you have any questions regarding Workers’ Compensation Coverage email email@example.com or give us a call directly at 805-499-7300.