Icon Tax Group: New California Workers Comp Rules For Officers


by Michael Lodge

Effective January 1, 2017 the workers compensation rules for officers have changed.

For Corporations – Labor Code Section 3352(p) – Officers or Directors must now own a minimum 15% of the stock of a corporation to be excluded from their Corporation’s Workers’ Compensation Insurance policies.  Each qualifying officer or Director must sign a Waiver of Coverage Form stating, under the penalty of perjury, that they are eligible for exclusion.

For Partnerships and Limited Liability Companies – Labor Code Section 3352(q) – General Partners or Managing Members of LLC’s must sign and date a Waiver of Coverage Form stating, under penalty of perjury, that they are eligible for exclusion under their Partnership’s or LLC’s Workers’ Compensation Insurance Policy.

For Revocable Trusts – Grantors of revocable trusts are no longer eligible for exclusion.  Each Grantor must be covered under California’s workers’ compensation insurance law.

(Information sourced from Preferred Employers and https://leginfo.legislature.ca.gov

How does this affect you?  If you have directors and/or officers in your corporation that own less than the 15%, then it will affect your workers compensation costs because their payroll must now be included according to officer minimum and maximum.  Officer payroll guidelines for 2017 are $48,100 minimum and $122,200 Maximum.  Now, if the officer has less than 15% and is not active in the business, your insurance agent can request that their workers compensation coverage be waived.  The approval of the waiver is subject to carrier guidelines.  Work with your insurance agent on the details of your business and the officers/partners/members issues you may have.

If you have tax issues or tax preparation needs, call our office at:  877.778.1770