New law requires corporate officers to be covered by comp
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A California law set to take effect next year will require officers, directors and working partners of companies to be covered under workers compensation policies -- something the state insurance commissioner said he expects will cause "significant disruption" in the state comp system.
California Insurance Commissioner Dave Jones on Monday notified all workers comp insurers writing policies in California about changes to the definitions of excluded employees due to the passage of California Assembly Bill 2883, which was signed into law in August.
Effective Jan. 1, A.B. 2883 requires all workers comp insurance policies, including in-force policies, to cover certain officers and directors of private corporations and working members of partnerships and limited liability companies, according to a California Department of Insurance statement.
Officers, directors and working partners currently are not required to be covered under their businesses’ workers comp policies unless they opted to be covered and were not listed on a limiting and restricting endorsement, the department said.
The new law only allows such executives to be exempt from workers comp if they own at least 15% of a company's outstanding stock.
"A.B. 2883 is going to cause significant disruption for workers' compensation insurers and employers,” Mr. Jones said in a Monday statement.
Mr. Jones said much of the disruption will be caused by the fact that A.B. 2883 affects existing workers comp policies. He said he has met with the Washington-based American Insurance Association, the Sacramento, California-based Association of California Insurance Companies and the California Department of Industrial Relations to discuss the law’s implementation.
"Unfortunately, A.B. 2883 did not include any language exempting in-force policies or delaying its effective date so as not to impact in-force policies,” Mr. Jones said in the statement
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