AB 2883 New law changes the Workers Compensation Insurance

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​AB 2883 becomes the newest law that changes the existing rules of Workers Compensation Insurance in California. Jan 1, 2017 is the effective day of AB 2883.
 
 
The new law, AB 2883, makes the following changes:

1. Any eligible individual (officer, director, general partner, managing member) electing exclusion from workers' compensation benefits must provide a signed waiver to the insurance carrier prior to January 1, 2017 
2. For corporations, officers and directors (i.e., members of the Board of Directors) must now also meet a 15% ownership threshold in order to be eligible for exclusion
3. For partnerships, only general partners are eligible for exclusion
4. For LLCs, only managing members are eligible for exclusion

Many business owners are utilizing the exclusion features of Workers Compensation Insurance:
 
If their companies are incorporated, shareholders with as low as 1% share could be excluded from the Workers Compensation Insurance Coverage. 
 
Partners of partnerships could generally be excluded.
 
Members of LLCs could generally be excluded.
 
Hence they can save big portion of the premium as normally they are highly compensated.  Also they would be working 24/7 and they would have their hands on all aspects of the operations even the highest risk exposure tasks.
 
This new law, AB 2883, would cut down the exclusion eligibility and drive up the Workers Compensation Insurance Premium.  Unfortunately this new law falls off the radars of the mass media and social networks that not many business owners are aware of its passing.  Talk to your agents now as it may cost you a bundle if you do not act before January 1, 2017.