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Executive Officers and Partners

Certain business owners who meet the statutory requirements may elect to exclude themselves from workers' compensation insurance coverage, including:

  • Officers and members of boards of directors of certain types of corporations
  • Owners of professional corporations
  • General partners
  • Managing members of limited liability companies 

The California Labor Code (Sections 3351 and 3352) governs the exclusion of these individuals. Effective July 1, 2018, the individuals who may elect to exclude themselves from coverage if they meet the requirements for exclusion include:

  • a qualifying officer or member of the board of directors of a quasi-public or private corporation who owns at least 10 percent of the issued and outstanding stock of the corporation, or at least 1 percent of the issued and outstanding stock of the corporation if that officer’s or member’s parent, grandparent, sibling, spouse or child owns at least 10 percent of the issued and outstanding stock of the corporation and that officer or member is covered by a health insurance policy or a health care service plan;
  • an officer or member of the board of directors of a cooperative corporation organized pursuant to the Cooperative Corporation Law (California Corporations Code, §§12200, et seq.) who states that they are covered by both a health care service plan or health insurance policy, and a disability insurance policy that is comparable in scope and coverage, as determined by the Insurance Commissioner, to a workers’ compensation policy; 
  • an owner of a professional corporation, as defined in Section 13401 of the Corporations Code, who is a practitioner rendering the professional services for which the professional corporation is organized and who states that they are covered by a health insurance policy or a health care service plan; 
  • a general partner of a partnership who is a qualifying general partner;
  • a managing member of a limited liability company who is a qualifying managing member; and
  • a person who holds the power to revoke a trust with respect to shares of a private corporation held in trust or general partnership or limited liability company interests held in trust, to the extent they are considered an employee pursuant to the provisions defining as employees officers and members of boards of directors of quasi-public or private corporations or working members of a partnership or limited liability company, and otherwise meets the criteria for exclusion.

In order to be excluded, the individual must execute a document, in writing and under penalty of perjury, waiving their rights under the Labor Code and stating that they have the qualifications or coverage(s) required by the Labor Code. There are additional waiver requirements for officers or members of the board of directors of a cooperative corporation and owners of a professional corporation. 

Effective July 1, 2018, a sole shareholder who is an officer or director of a private corporation or a private cooperative corporation, or who is an owner of a private professional corporation, is excluded from the definition of “employee,” unless the officer, director, owner, private corporation, private cooperative corporation or private professional corporation, as applicable, has elected to be subject to liability for workers’ compensation pursuant to Labor Code Section 4151(a). 

If you have questions concerning these exclusions, please consult your insurance professional or legal advisor.

Payroll – Minimums and Maximums

When the above individuals are subject to workers' compensation coverage, the annual payroll used for premium computation is subject to minimum and maximum limitations. These limitations apply based on the effective date of the policy, may be adjusted annually and can be found in Part 3, Section V, Rule 1, Subrules j – m and p of the California Workers' Compensation Uniform Statistical Reporting Plan—1995. Below is a list of recent minimums and maximums:

Effective Date Minimum Maximum
9/1/2023 $59,800 $154,700
9/1/2022 $57,200 $149,500
9/1/2021 $55,900 $144,300
1/1/2020 $54,600 $139,100
1/1/2019 $52,000 $133,900