California Exclusion Rules FAQs
How exactly will this affect my premium and when?
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.
What if I have multiple states on my policy and my officers are in a non-California entity?
The changes to the California Labor code have no impact on your officers in other states. You don’t need to submit signed California waivers, however, you may want to check with your agent for the rules of the applicable state.
How do we request that the premium be waived for our officers who have been included for coverage?
At this time, the law doesn’t allow us to waive the premium.
We’ve received our final audit and notice that you included our officers. What can we do to get this revised?
If you submitted waivers and ICW Group accepted them in 2017, CA-Bill-AB-2883 contact the AB 2883 team and provide this information and we’ll look into it. If the officers did not complete waivers, we won’t be able to revise the final audit; however, we’d love to help you get the waivers issued on your current policy to ensure that the officers will be able to be excluded in the future.
Waiver of coverage
I already submitted a signed waiver and it was accepted by ICW Group in 2017. Do I need to submit another one?
No. Previously submitted written waivers of workers’ compensation coverage accepted by ICW Group remain in effect until there is a written withdrawal or you no longer have an inforce policy with ICW Group.
What day is the waiver of coverage due and when will it be effective?
Policies with an effective date of 7/1/2018 or after
- Signed waiver is due on the effective date of the policy.
- Waiver is effective as of the date of acceptance by the insurance carrier, however, there is a 15 day grace period that allows us to accept the waiver up 15 days prior to acceptance.
Policies with effective dates of 6/30/2018 and before
- Signed waiver is due on or before the effective date of the policy.
- Waiver is effective as of the date of acceptance by the insurance carrier.
Do I have to have a separate waiver for each person?
Yes. According to the requirements each individual has to sign their own waiver.
Can we add all our corporations and LLCs on one waiver?
Unfortunately, no. You must sign a separate waiver for each company type. One for the corporation, one for LLC/partnership.
How do I get a copy of the waiver form?
Simply refer to the waiver of coverage forms section of the California Exclusion Rules page to download the appropriate form you need. Please make sure the waiver you select is the proper entity type (Corporation or Partnership/LLC) for your company.
California Labor code
Is there someplace I can go to find the statute/law?
Yes. A copy of SB 189 is located on the California Legislature website: Senate Bill No. 189. You may also refer to the California Labor Code Section 3351.
So this is for California only?
Yes. These specific requirements are for California only at this time.
Exclusions & inclusions
What are my options if I am an officer who is also the sole stockholder?
You will automatically be included unless you sign and submit a waiver of coverage.
What if I have a policy effective date of 6/30/2018 or before, and have an officer that owns 10% stock?
Because SB 189 is effective on policies with an effective date of 7/1/2018 and after, the officer owning 10% stock was not eligible for exclusion. For your next policy period as long as after 7/1/2018, you can submit a waiver and that officer will be able to be excluded.
What if the ownership percentages change later?
Great question. Depending upon the percentage change, it may impact your waivers. You’ll want to contact your agent to check.
I’m a general partner of a business, and the partnership is a partial owner of another business. I’m currently excluded from this second business through my partner status. Can I continue to be excluded?
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.
Our company is formed as a trust. Can we now exclude owners?
SB 189 now allows a person holding the power to revoke a trust to opt out of coverage. See the Waiver Forms section above for forms and details.
If I own shares through an “ESOP”, do they count toward the percentage of ownership necessary for exclusion?
All shares that are issued directly in your name are included in the 15% ownership calculation (policies effective 1/1/2017 – 6/30/2018); 10% ownership calculation (policies effective 7/1/2018 and after).
If I didn’t exclude any officers or partners from coverage, how does this affect me?
If there were no exclusions on your policy, then this change to the labor code will not affect your policy.
Am I prohibited from excluding anyone if non-officers own stock (open corporation)?
No, this requirement no longer exists.
What if officers own less than 10%, are not working and not paid?
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, and do not require a signed waiver.
If I have a corporation that is wholly owned by an LLC, how does the exclusion work?
Exclusions only apply to the company where the officer or director owns 15% or more (policies effective 7/1/2018 and after)/10% or more (policies effective 1/1/2017 – 6/30/2018) of the stock, is 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.
Can I exclude a limited partner of a general partnership?
No. Limited partners cannot be excluded.