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24Oct 2017

Senate Bill 189 Attempts to Rectify Assembly Bill 2883

AB 2883 legislation put us all in overdrive making sure our clients understood the bill’s impact, and took action accordingly to verify employee/owner status.  Your partnership in helping our policyholders achieve compliance was critical and greatly appreciated.  We were all further challenged by a provision that the new requirements needed to be implemented as of January 1, 2017, for all policies, regardless of renewal dates.

As of October 13, 2017 Governor Brown signed into law Senate Bill (SB 189) which should give policyholders and carriers some administrative relief.   Senate Bill 189 puts the following changes into effect on July 1, 2018;

  • For corporations, lowers the threshold of who is considered an “owner” to a 10% ownership stake, down from the 15% threshold which was codified in AB 2883. Even though the ownership stake was lowered, it is still critical as more people who are considered owners instead of employees will not be covered under worker’s compensation policies.
  • For private corporations, excludes a sole shareholder/owner automatically from coverage unless they have elected to be included.
  • For cooperative corporations, provides eligibility for an officer or director to be excluded.  There is no ownership percentage threshold to be met, although they must have health and disability insurance.
  • Excludes an owner of a professional corporation (who is also a practitioner rendering those services) from the worker’s compensation requirement. This exclusion existed prior to AB 2883, and SB 189 helps resolve some of the ambiguity which resulted from it.
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