California’s Sneaky Revision of Workers’ Comp Law

The government enacted 900 (yes, you read that correctly) new laws for 2017. One they snuck under everyone’s nose is a revision of the very expensive workers’ comp system (AB-2883 Workers’ compensation: employees).

Here is what they changed. You now must be a 15% owner of your corporation, partnership or LLC to be exempt from the worker’s comp system. In addition, you have to sign a form, under the penalty of perjury, that you meet this rule and are exempt. If you are a general partner or managing member of an LLC, you are exempt. In fact, with a LLC, which has become the most common form of business entity in California, you have to not only be a 15% owner but also managing member of your LLC. This makes you more liable under other laws for the operation of the LLC.

Californians will not be aware of this until they go to renew their workers’ comp policies. Many owners may be notified by their insurance companies as the law takes effect January 1, 2017, but confusion reigns.

Happy New Year to everyone in California. And to you in the other 49 states, Happy New Year and say hello to your new California neighbors who will soon be coming your way.