Existing law states that the Workers Compensation system will compensate an employee for injuries sustained in the course of his or her employment. Existing law also allows for some individuals to choose to exclude themselves from Workers Compensation if he or she owns part of the company. In the case of a Corporation, an owner could only be excluded if:
1) He or She owned at least 1 share of the Corporation and
2) He or She is a titled Corporate Officer
That just changed. In new legislation just approved by Governor Brown, AB2883 revises that exception to the following:
1) He or She owns at least 15% of the issued and outstanding stock of the Corporation and
2) He or She elects to be excluded by executing a written waiver of his or her rights under the laws governing Workers Compensation, stating under penalty of perjury that he or she is a qualifying officer or director
This new law will force many people that are currently excluded from Workers Compensation benefits to become covered and therefore will be subject to the Workers Compensation remuneration rules. I think this is a good move.
As Workers Compensation is deemed to be the sole remedy to injuries sustained in the course of employment, Health Insurance Carriers are becoming more and more aggressive in denying claims for medical coverage to owners of businesses that are hurt in the course of work, but have chosen to exclude themselves from Workers Compensation coverage.
To me, the key component of this new law is the written waiver of rights under the laws governing Workers Compensation. Now there will be a signed document confirming that Workers Compensation benefits were available, but a choice was made to reject them.
If an excluded owner were injured while at work, I believe that their Health provider would now have a powerful reason to deny payment of any medical treatment required to treat such a work related injury.
If you are an owner of a business and are not sure how this new law affects you, we are always here to help. Give me a call at (559) 634-7140 or email me.