AB 2883 Causing Headaches for Workers' Comp Insurers
With the enactment of AB 2883 on January 1st, 2017, workers’ comp insurers throughout the state of California must now provide coverage to certain officers and directors of private corporations and working members of partnerships and limited liability companies that may previously have been excluded.
Prior to the law’s passing, directors, officers, and working partners were not required to be covered under workers’ comp unless they opted to be covered and were not listed on a restricting and limited endorsement. Now, these parties must be covered unless they meet the definition of an excluded employee, which has since been narrowed. Partners, directors, and officers who own at least 15 percent of a company may now only opt out of coverage by signing a written waiver under penalty of perjury.
Insurers were instructed to inform employers of the new changes prior to the law’s effective date, though controversy has arisen in regards to the law’s applicability to in-force policies and the increase in premiums that employers will now face. Though originally introduced in the house as a bill approving a study on paperless systems for the approval of workers’ comp-related treatment requests, the bill was eventually reworded to address exemptions that were allegedly being abused by insured companies to avoid purchasing workers’ comp coverage for employees.
For more information on this important legislative change, click here.
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