If you fall into any one of the above categories, then you should concern about SB 189 which would affect substantially your workers compensation insurance premium. Governor Brown just signed SB 189 in October into a new law to redefine what is considered as an employee for the purpose of Workers Compensation Law.
Before 1/1/2017, even if you only hold one percent of the outstanding shares of a corporation, or you are an ordinary partner of a partnership or an ordinary member of a LLC, you could be exempted from the compulsory workers compensation insurance. It saves you a bundle in WC premium as you are rated not by how much you are compensated but by imposing a fix range of income which starts at $48,100 and tops at $122,200 in 2017. If you are in certain industries or trades that accrue high rate, your premium could be substantial.
But after 1/1/2017, only if you hold 15% of the issued and outstanding shares of a corporation or you are the general partner of a partnership or you are the managing member of a LLC; and your WC insurance policy carrier received your signed written waiver form before 1/1/2017, then you could be exempted from the WC insurance. The law was passed in a hurry in 2016 and many people were caught off guard about submitting the written waiver form. Some submitted the form but what submitted was not the correct one (corporation and partnership and LLC demand different forms) and their exemptions were voided. Oh la! The Insurance Companies would send you to the collection companies if you do not pay for the extra premium accrued because of your request of exemption is voided. The extra premium I have seen so far could go as high as $10,000.00 per account.
Probably, the confusion of such hurried passed law created big fuss among the insurance companies, the agents and insured with complaints, names callings flying all over the places. Therefore, with little fanfare, SB 189, was signed by Governor and passed into new law in October 13, 2017. What gives:
1. Insured can now backdate the validity of the exemption to 12/31/2016 if they submit the written exemption form executed before 12/31/2016 and received by the insurance company before 12/31/2017.
2. Effective from 7/1/2018, you only need to hold 10% of the outstanding shares of a corporation instead of 15%. And catch this, if your parent, grandparent, sibling, spouse or child owns at least 10% of the issued or outstanding stock of that corporation and you are covered by a health care service plan, then you only need to own 1% of the issued or outstanding stock.
There are other revisions of the definition of “employees” and for those are really concerned about the new law implication, I would highly recommend them to visit the California Legislative Information site, checking out SB-189 Workers’ compensation: definition of employee (2017-2018). The link is listed below: