Starting January 1, 2017, under California Labor Code Section 3351(c) an “employee” will include all “officers and members of boards of directors of quasi-public or private corporations while rendering actual service for the corporations for pay.” Although the statute does not define “pay” any remuneration provided to a director or officer is likely to be interpreted as “pay.” Thus, most directors and officers will be included in the calculation of worker’s compensation insurance premiums.
There is an exception to this rule provided under Labor Code Section 3352(p). That Section provides a safe harbor for officers and directors who own at least fifteen percent (15%) of the issued and outstanding stock of the corporation who execute a written waiver of their worker’s compensation rights as a “qualifying officer or director.” The waiver is effective upon receipt by the worker’s compensation insurer and remains effective “until the officer or member of the board of directors provides the insurance carrier with a written withdrawal of the waiver.”
If your worker’s compensation premiums are high you may want to consider having all officers and directors who own at least fifteen percent (15%) of the issued stock of the corporation sign written waivers so that they are not included in the calculation of the worker’s compensation insurance premium. Consult legal counsel to assure that the written waiver complies with the Labor Code.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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