California Policyholders: 2017 legislation AB 2883 affects officers, directors and working partners exclusions

You may have questions and concerns about this new change. We've compiled this information to help you understand the new legislation, and possible impacts it may have on your premium.

Included below:

 

Summary of the law and helpful references

AB2883 is new legislation which significantly changed Labor Code Section 3351. This could impact you if you currently exclude anyone from coverage.

AB 2883 seeks to clarify the "opt out of coverage" process by specifying, in the case of an officer or member of the board of directors, that they own at least 15% of the stock of the corporation in order to opt out of workers' compensation coverage, as well as sign a waiver stating that they are a qualifying officer or director. Similarly, AB 2883 also requires a general partner of a partnership or a managing member of an LLC to execute a waiver to opt out of workers' compensation coverage. All workers' compensation insurance policies in California, including current in-force policies, will be required to abide to this new standard.

AB 2883 summary of requirements:

  • To be eligible as an officer or member of the board of directors, you must own at least 15% of the stock of the corporation. Only then can you opt out of workers' compensation coverage.
  • To opt out, you must sign a waiver stating you are a qualifying officer or director.
  • If you are a general partner of a partnership or managing member of an LLC, you must execute a waiver to opt out of coverage.
  • Your waiver will remain in effect until you provide a written withdrawal to the insurance company. Existing waivers are not transferable to a new insurance company.
  • Grantors of revocable trusts are no longer deemed to be shareholders and do not qualify for exclusion.

What this means to you

In a nutshell, beginning on 1/1/2017 in order to exclude your officers, directors, managing members and general partners from workers' compensation coverage, they must meet certain qualifications. If qualified, each will need to submit a signed "waiver of coverage" to opt out.

Waiver of coverage forms

As a qualified officer, director, managing member or general partner, you must personally file a waiver of coverage to continue to be excluded. If you don't do so, you will be included in coverage and premium calculations.

There are three easy ways to send in your Waiver of Coverage form!

  1. Send us your email address and we'll send you the waiver via our online document service (DocuSign). Find our contact information for AB 2883 on the Contact us page.
  2. Mail your completed form via United States Post Office (USPS), using the pre-paid envelope we provided, or send to the address found on our Contact us page. Please be aware that this can take several days to reach us.
  3. Email us a scanned copy of your completed and signed waiver. Use our Contact us page for AB 2883 contact information.

Frequently asked questions

We hope these FAQs help answer your questions. Simply click to expand each topic!

See this sample: Sample Letter to Policyholders.

I'm sorry we have an error on the name. You can complete one of the Waiver Forms above, and we'll be sure to correct our records from your submittal.

You received a letter because your company has at least one excluded person on your current policy. Please note that, in some cases such as a Trust, due to the law change no one can be excluded as of 1/1/2017. If you do not have anyone who meets the criteria to be excluded as of 1/1/2017, you do not need to return any letter or waiver to ICW Group. Your policy will change on 1/1/2017 to include anyone previously excluded.

We must receive your completed Waiver of Coverage forms by 12/31/2016, in order for you to be in compliance with the new law on 1/1/2017. This is important as we are not able to backdate any waivers. The exclusion will be effective the date of receipt or 1/1/2017 whichever is later.

We want to make sure that we receive your waiver in time and apply it to your policy prior to the due date, so that your are not out of compliance with the new law.

Yes. According to the requirements each individual has to sign their own waiver.

Unfortunately, no. According to the requirements, each individual must sign their own waiver.

Unfortunately, no. You must sign a separate waiver for each company type. One for the corporation, one for LLC /Partnership.

Simply refer to the Waiver Forms section above to download the appropriate form you need.

Yes. The new law requires that we receive your signed waiver, regardless of existing endorsements.

Potentially, all waivers could be reviewed at audit.

No, that's the great part! As long as you renew with ICW group, your waiver will be on file until you remove it.

You have three easy ways to choose from! See the Waiver Forms section above for forms and details where to send them.

See the Waiver Forms section above for forms and details where to send them. Or, see Contact us for AB 2883 for our email address.

If the waiver is not signed, your officers/partners/managing members will be included for coverage. This may increase your premium.

If the officer leaves your company, they are no longer an employee. No changes need to be made.

While we took measures to direct your letter to the correct individual, it may have been misdelivered. We apologize for the inconvenience. If you currently have officers or partners of a CA corporation or partnership excluded on your policy, then this does apply to you even if you did not receive the letter.

No, but please email the completed waiver to us today! See Contact us for AB 2883 for our email address. If you are using the DocuSign document service, complete the signing process immediately, then Contact us for AB 2883 to let us know you've completed.

Unfortunately no. According to the change in the labor code, there are no exceptions and waivers cannot be retroactive.

Unfortunately no. According to the change in the labor code, there are no exceptions and waivers cannot be backdated.

Yes, we really don't have a choice. We will have to include anyone who hasn't signed a waiver as of 1/1/2017. The good news is, as soon as the waiver is signed and received, we will exclude the individual.

No. The officer can provide a written letter indicating they no longer wish to be excluded, and are cancelling their exclusion waiver. This letter must contain the officer's name, the start date they wish to be included, and a signature by the officer. More than one officer can be on this letter, as long as the name, date, and signature appears for each.

Unfortunately, yes. If you move to a new carrier, you will need to resubmit your waiver for your new coverage.

Yes. A copy of AB2883 is located on the California Legislature website: Assembly Bill No. 2883.

Yes. Currently, no other states have this requirement.

Absolutely not. This is a recent law change made by the California Legislature and is totally out of our control.

It may, if your business is in California and you have persons meeting the criteria. If you received a letter from ICW Group, please follow the instructions provided.

You have 3 ways to exclude someone now. See the Waiver Forms section above for forms and details.

Great question. Depending upon the percentage change, it may impact your waivers. You'll want to contact your agent to check.

Beginning January 2017, your policy will include their payroll.

Don't worry! Your payroll will be adjusted at final audit.

We will be pro-rating the officer min/max at final audit. (CA 2016 annual maximum $117,000; annual minimum $45,500.)

Only officers who are direct owners of a business can be excluded under the new rules. Ownership in a company that is the owner or partner of another business does not constitute direct ownership. You should reach out to your legal advisor or your agent for more advice on this question.

Only general partners can be excluded under the new rules. Partnership in a company that is the owner or partner of another business does not constitute direct ownership. You should reach out to your legal advisor or your agent for more advice on this question.

The new rules may allow you to do so! Contact your agent or broker to discuss.

Previously, if your company isn't publicly traded but has outside investors, your officers were not allowed to be excluded. However, the new rules may now allow you to do so! Contact your agent or broker to see if you qualify.

Unfortunately, no. The new laws prohibit you from this previous exclusion.

All shares that are issued directly in your name are included in the 15% ownership calculation.

If there were no exclusions on your policy, then this change to the labor code will not affect your policy.

No, there no longer is this requirement!

If an officer is not active and not paid, they would not be defined as an employee. They would not be included in your premium or at audit.

All California ICW Group policyholders with exclusions were sent a letter with a list of the excluded officers on your policy prior to the law change. If you have misplaced this letter, simply contact us (see the Contact us page for AB 2883 contact information).

Exclusions only apply to the company where the officer or director owns 15% or more of the stock, to the managing member of a LLC or the General Partner in a partnership. The exclusion will not apply to subsidiaries or affiliates that are owned by the company, LLC or partnership. You should reach out to your legal advisor or your agent for more advice on this question.

No. Limited partners cannot be excluded.

Within a trust there are no allowable exclusions. You could reach out to your legal advisor agent for more information.

If the waiver is not signed, it may affect your premium. The premium adjustment will be done at final audit, unless you request it be done sooner.

Unfortunately, the law requires us to receive signed waivers.

You do not need to submit signed waivers. The changes to the CA Labor code have no impact on your officers in other states.

At this time, the law does not allow for us to waive the premium.

Yes. In the weeks since our initial announcement, clarification on the law has been provided. The labor code change applies to all policies as of 1/1/2017. We apologize for any misunderstanding this may have caused.

This may take a few weeks to receive and process your waiver. If it has been longer than that, please use the Contact us for AB 2883 form to send us an email. Be sure to include your company name and policy number for faster processing.

Initial information on the new law suggested that it would apply only to new and renewed policies as of 1/1/17. Due to updated legal interpretation, the new law actually effects all policies. We are reacting as quickly as possible to inform you and help you with this new process.

Yes, DocuSign is well known and trusted for electronic document review and signing. For your convenience, you can access it from your desktop or mobile device. See https://www.docusign.com/ for more information.

We're happy to help with this! See these quick references: How does DocuSign Work and How do I sign a DocuSign Document?. If you still need help, contact us for AB 2883 assistance!

It's actually just a few quick clicks. See this helpful reference: How do I download and print a document that I received?. If you still need help, contact us for AB 2883 assistance!

Absolutely not. You have two other ways to send us your signed waiver: USPS using the pre-paid envelope or email us a copy of the signed waiver. See Waiver of Coverage Forms above.

If these are reminders that you need to sign the document, simply complete the signature process and the emails will immediately stop. If you are receiving newsletters from DocuSign, the "Subscribe" box may have been checked by accident when you signed your document. To turn these off, scroll down to the bottom of the email and click on the "Unsubscribe" link.

This may take a few weeks to receive and process your waiver. If it has been longer than that, please use the Contact us for AB 2883 form to send us an email. Be sure to include your company name and policy number for faster processing.

Want more information?

If you still have questions or need more information, see: Contact us for AB 2883.