California Tightens Workers’ Comp Laws

New law amends existing rules

February 09, 2017

A California law that went into effect Jan. 1, 2017, aims to prevent businesses from skirting workers’ compensation insurance laws. Companies must provide workers’ comp coverage to employees, but until now, the definition of “employee” didn’t include corporate shareholders or working members of a partnership or LLC. 

The new law, Assembly Bill 2883, amends those rules. Now, all officers and board members who work for a corporation must be covered unless the individual owns at least 15 percent of the company. These amendments were designed to keep companies from giving employees phony titles or small ownership shares to avoid covering them.

California has the most costly workers’ compensation rates in the country at $3.24 per $100 of payroll. The lowest is North Dakota is 89 cents per $100.

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