Senate Bill 189, which becomes effective July 1, 2018, changes the definition of employee for purposes of workers compensation. The bill amends sections 3351 and 3352 of the California Labor Code and expands the scope of employees who are potentially eligible for exclusion from workers compensation coverage.

SB 189 Highlights for new and renewal CA policies effective on/after July 1

  • The stock ownership requirements for corporate officers, general partners, etc. have been lowered to 10%, with an added requirement that they must be covered by a health care policy. Note: If you were ineligible before at 15%, but are eligible now at 10%, be sure to submit your waiver.
  • Certain corporate officers can be eligible for exclusion, if they own at least 1% of the stock AND if their parent, grandparent, sibling, spouse, or child owns at least 10% of issued and outstanding stock.
  • Officers and Directors of a cooperative corporation may be eligible for exclusion, if they are covered by a health care policy or service plan.
  • Individuals holding the power to revoke a trust of a private corporation/partnership/LLC are eligible for exclusion.
  • Owners of professional corporations rendering professional services are eligible for exclusion. 
  • Sole shareholders of corporations (private or professional) are automatically excluded — no waiver necessary — but can be included for coverage.
  • All waivers should be submitted by the effective date of the policy. The bill permits a 15-day grace period for backdating exclusions, with signer's consent to allow the exclusion back to the inception date of the policy (effective July 1, 2018 and after).

See SB 189 on the California government site for details: SB 189 Officer / Director exclusion rules.

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