New Year, New Workers' Comp "Opt Out" Rule For Execs

Seyfarth Synopsis: New legislation effective 2017 will expand California workers' compensation coverage by requiring coverage for certain high-level individuals unless they affirmatively opt out and waive coverage, thereby reversing the prior rule by which those individuals, to get coverage, had to opt in.

As a general rule, California employers must provide employees with workers' compensation insurance coverage for work-related and industrial injuries and illnesses. Until now, the definition of "employee" has included paid corporate officers and directors, but has excluded corporate officers and directors who are the sole shareholders and has excluded working members of a partnership or limited liability company ("LLC"). These folks were not considered employees unless they "opted in" to workers' compensation coverage.