There has been a significant change in California workers’ compensation law that will take effect January 1, 2017 and may alter your clients’ workers’ compensation insurance coverage and premiums on their current and renewal policy.

What is Assembly Bill 2883 (AB 2883)?

AB 2883 was signed into law August 26, 2016 and amends Labor Code sections 3351 and 3352 changing the definition of “employee” and the eligibility criteria to elect exclusion from workers’ compensation coverage.  Beginning January 1, 2017 all workers’ compensation insurance policies will be required to cover certain officers and directors of private and quasi-public corporations and working members of partnerships and limited liability companies who may have been previously excluded from coverage.

All California workers’ compensation (WC) carriers must comply with this new legislation beginning January 1, 2017 on all in-force policies (regardless of the inception date of the policy).

Below are key details to note:

– A Corporate Officer/Director must own 15% or more of the corporation’s issued and outstanding stock to be eligible to elect exclusion from WC coverage.

– A General Partner of a Partnership, or a Managing-Member of a LLC, is eligible to elect exclusion from the WC policy (Note – the 15% ownership requirement does not apply to General Partners and Managing Members).

– Each eligible Corporate Officer/Corporate Director/General Partner/Managing-Member must sign a new waiver attesting to his/her qualification to be excluded, under penalty of perjury. The new waiver(s) will replace any current Exclusion Letter.

– AB 2883 has eliminated the requirement that 100% of the stock must be held by titled Officers/Directors in order for a Corporate Officer/Director to be eligible for exclusion.

Please reference the following Carrier links to see how each is addressing this change:

Thank you in advance for discussing AB 2883 with your clients and helping prepare them for the changes required. We are committed to working with you and our mutual customers on achieving compliance with this new law.

Sincerely,

RIC Insurance General Agency

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