SB 189: CA Workers' Compensation Policy Provisions Take Effect July 1, 2018

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This is a reminder that SB 189, which became effective beginning on January 1, 2018, made certain changes to the definition of employee, and exclusions from the definition of employee, as set forth in Labor Code sections 3351 and 3352. Certain provisions of SB 189 went into effect on July 1, 2018.

According to the Workers’ Compensation Insurance Rating Bureau (WCIRB) of California, individuals who may elect to exclude themselves from a workers’ compensation policy will include:

  • an officer or member of the board of directors of a quasi-public or private corporation who owns at least 10% of the issued and outstanding stock of the corporation, or at least 1% of the issued and outstanding stock of the corporation if that officer’s or member’s parent, grandparent, sibling, spouse, or child owns at least 10% of the issued and outstanding stock of the corporation and that officer or member is covered by a health insurance policy or a health care service plan;
  • an officer or member of the board of directors of a cooperative corporation organized pursuant to the Cooperative Corporation Law (California Corporations Code, §§12200, et seq.) who states that he or she is covered by both a health care service plan or health insurance policy, and a disability insurance policy that is comparable in scope and coverage, as determined by the Insurance Commissioner, to a workers’ compensation policy;
  • an owner of a professional corporation, as defined in Section 13401 of the Corporations Code, who is a practitioner rendering the professional services for which the professional corporation is organized and who states that he or she is covered by a health insurance policy or a health care service plan;
  • a general partner of a partnership who is a qualifying general partner;
  • a managing member of a limited liability company who is a qualifying managing member; and
  • a person who holds the power to revoke a trust with respect to shares of a private corporation held in trust or general partnership or limited liability company interests held in trust, to the extent he or she is considered an employee pursuant to the provisions defining as employees officers and members of boards of directors of quasi-public or private corporations or working members of a partnership or limited liability company, and otherwise meets the criteria for exclusion.

In order to be excluded, the individual must execute a document, in writing and under penalty of perjury, waiving his or her rights under the Labor Code and stating that he or she has the qualifications or coverage(s) identified above.

If you have questions regarding your workers’ compensation coverage, please contact your MMA team to discuss the implications of these new requirements.

 

Additional resources:

California Department of Insurance SB 189 notice and FAQs

AB 2883: CA Workers’ Compensation New Waiver Rules

CA DOI Legal Opinion on Senate Bill 189 Disability Policy Requirement