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New Waiver Rules for Workers Compensation Effective January 2017
Dec 02, 2016
New Exclusion Rule Effective January 2017
The recent passage of AB 2883 introduces a significant change to the exclusion rules governing Workers' Compensation policies.
Currently, certain individuals are provided benefits under a Workers Compensation policy by election, but effective January 1, 2017, these same individuals will no longer be excluded from the Workers' Compensation policy unless a compliant waiver is signed and submitted to the Work Comp carrier.
If waivers are not submitted to the carrier by the required deadline, the individuals listed below will be considered employees and premium will be charged for all new, renewing and inforce policies.
- An officer or director who owns 15% or more of the issued and outstanding stock of a corporation.
- A managing member of a Limited Liability Company (LLC).
- A general partner of a Partnership.
IMPORTANT NOTE: officers or directors owning less than 15% of the issued and outstanding stock of a corporation are no longer eligible for Work Comp exclusion even if they sign and submit a waiver. These individuals will be considered employees and premium will be charged beginning January 1, 2017.
Should any of the above criteria apply, the individual(s) that wish to maintain their exclusion from Work Comp coverage must complete the following:
- Each individual must sign a waiver form certifying under penalty of perjury that the person qualifies for exclusion.
- Even if a waiver form was previously signed, it is recommended that the most recent waiver form be obtained from the carrier and signed by ALL excluded individuals.
- A waiver is effective upon acceptance of the Work Comp carrier and will remain effective until a request to withdraw the exclusion is received.
We recommend that all brokers do the following, REGARDLESS if they write Work Comp policies as an added value service to their clients:
- Advise all clients with Work Comp policies of the new Work Comp exclusion requirement.
- Have all existing and eligible individuals that wish to remain excluded from Work Comp, complete the carrier's required waiver form.
- Clearly identify the current-inforce policy number on all waiver forms.
- Ensure the properly completed waiver form is received by their Work Comp carrier no later than December 31, 2016.
December 31, 2016
- Deadline to submit the required waiver form to the respective Work Comp carrier.
- Please note, Work Comp carriers are in the process of distributing the new rules and the required waiver to their clients.
January 1, 2017
- New exclusion requirements go into effect for all new, renewing, and inforce California Work Comp policies.
Should you have any questions regarding AB 2883 compliance, please contact Patrick Kim at 925-296-5478 for assistance.