{"id":3456,"date":"2016-10-27T15:17:24","date_gmt":"2016-10-27T15:17:24","guid":{"rendered":"https:\/\/gillespieinsuranceservices.com\/?p=3456"},"modified":"2025-04-17T12:49:17","modified_gmt":"2025-04-17T12:49:17","slug":"can-owners-officers-be-excluded-on-workers-comp-in-california-2017-edition","status":"publish","type":"post","link":"https:\/\/finfrockweb.com\/gis\/business-insurance\/can-owners-officers-be-excluded-on-workers-comp-in-california-2017-edition\/","title":{"rendered":"Can Owners & Officers Be Excluded On Workers Comp In California? (2017 Edition)"},"content":{"rendered":"

This past May I wrote a\u00a0blog<\/a> on the conditions that allow officers and owners to be excluded on their workers comp policy. It was a great article, very informative (yes, I\u2019m congratulating myself), but it needs to be updated. Why? \u00a0Because the rules have changed as of January 1, 2017 in regards to corporations. Change is one constant thing you can expect in the insurance world. So here\u2019s the updated version, updating the change in rules for corporations.<\/h4>\n

<\/p>\n

The question is: can owners and officers in a corporation be excluded on a workers comp policy?<\/strong><\/p>\n

First, being \u201cexcluded\u201d means that you\u2019re not covered on a workers comp policy. \u00a0If you\u2019re not covered, it means you don\u2019t have to pay. \u00a0Naturally, business owners want to keep their costs as low as possible and generally would like to exclude everyone possible. \u00a0Being excluded is a good thing here.<\/p>\n

The answer is: yes, most of the time owners and officers can be excluded.<\/strong>\u00a0In a corporation, being able to exclude someone\/anyone requires that all owners also be officers. \u00a0If there are owners who are not officers, then no one can be excluded.<\/p>\n

Confusing enough?<\/p>\n

First let\u2019s break it down. \u00a0You have owners, and you have officers.<\/p>\n

Owners:<\/strong>\u00a0they own shares in the corporation. \u00a0They own a part, or all, of the company.<\/p>\n

Officers:<\/strong>\u00a0they have a leadership or management role in the company, which is noted by a title. \u00a0President, Vice President, Secretary, Treasurer, CEO, COO, CFO, CMO, CTO are all examples of titles given to officers.<\/p>\n

It\u2019s important to note that\u00a0owners do not have to be officers\u00a0and officers do not have to be owners. \u00a0These are independent categories.<\/p>\n

The rule was, and still is:\u00a0Corporate owners who are also officers can elect to be excluded IF there are no additional non-officer owners.<\/strong>\u00a0\u00a0But the new change for 2017 adds in that owners that want to be excluded have to own at least 15% of the stock in the corporation<\/strong>. \u00a0For example: let\u2019s say between the three of them, Art Vandelay, H.E Pennypacker, and Kel Varnsen (yes, I\u2019m still using\u00a0Seinfeld references<\/a>) own 100% of the stock in a corporation. \u00a0If all three are officers and own at least 15% of the stock then all three can be excluded. \u00a0But if any one of them is NOT an officer, they must all be included. \u00a0And if any one of them own less than 15% of the stock, \u00a0that individual cannot be excluded (but the other owner\/officers still can be excluded).<\/p>\n

What payroll is used to determine how much it to charge these people? \u00a0The owner\/officers that are included are subject to CA Min-Max payroll rules and the owner\/non-officers are subject to their actual payroll. \u00a0Owner\/non-officers that earn no wages or salary are neither covered nor excluded, nor is there any additional cost.<\/p>\n

Here\u2019s\u00a0a\u00a0chart to help explain:<\/p>\n

\n
\n
\n
\n
\n
\n\n\n\n\n\n\n
Owner<\/td>\nOwnership %<\/td>\nTitle<\/td>\nCan Be Excluded?<\/td>\nPayroll Basis<\/td>\n<\/tr>\n
Art Vandelay<\/td>\n34<\/td>\nPresident<\/td>\nYes!<\/td>\nn\/a<\/td>\n<\/tr>\n
H.E. Pennypacker<\/td>\n33<\/td>\nSecretary<\/td>\nYes!<\/td>\nn\/a<\/td>\n<\/tr>\n
Kel Varnsen<\/td>\n33<\/td>\nTreasurer<\/td>\nYes!<\/td>\nn\/a<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n\n\n\n\n\n\n
Owner<\/td>\nOwnership %<\/td>\nTitle<\/td>\nCan Be Excluded?<\/td>\nPayroll Basis<\/td>\n<\/tr>\n
Art Vandelay<\/td>\n43<\/td>\nPresident<\/td>\nYes!<\/td>\nn\/a<\/td>\n<\/tr>\n
H.E. Pennypacker<\/td>\n43<\/td>\nSecretary<\/td>\nYes!<\/td>\nn\/a<\/td>\n<\/tr>\n
Kel Varnsen<\/td>\n14<\/td>\nTreasurer<\/td>\nNo!<\/td>\nActual Pay or CA Min Max?\u00a0 Don\u2019t know yet!<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n\n\n\n\n\n\n
Owner<\/td>\nOwnership %<\/td>\nTitle<\/td>\nCan Be Excluded?<\/td>\nPayroll Basis<\/td>\n<\/tr>\n
Art Vandelay<\/td>\n34<\/td>\nPresident<\/td>\nNo!<\/td>\nCA Min-Max<\/td>\n<\/tr>\n
H.E. Pennypacker<\/td>\n33<\/td>\nSec \/ Treas<\/td>\nNo!<\/td>\nCA Min-Max<\/td>\n<\/tr>\n
Kel Varnsen<\/td>\n33<\/td>\nnone<\/td>\nNo!<\/td>\nActual Pay<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n

 <\/p>\n

\n
\n

CA Min-Max means that the owner will pay workers comp based on his actual payroll with a minimum attributed payroll of $45,500 and a maximum of $117,000 (as of 2016 because the 2017 update is not out yet). \u00a0For example, If Vandelay pays himself anything lower than $45,500, his workers comp company will charge him based on $45,500. \u00a0If he pays himself anything over $117,000, his workers comp company will charge him based on $117,000. \u00a0If he pays himself anything between $45,500 and $117,000, his workers comp company will charge him based on the actual amount.<\/p>\n

Here\u2019s another chart to help explain this:<\/p>\n<\/div>\n<\/div>\n

\n
\n\n\n\n\n\n\n\n
Vandelay\u2019s Actual Payroll<\/td>\nVandelay\u2019s Attributed Payroll<\/td>\n<\/tr>\n
$25,000<\/td>\n$45,500<\/td>\n<\/tr>\n
$75,000<\/td>\n$75,000<\/td>\n<\/tr>\n
$100,000<\/td>\n$100,000<\/td>\n<\/tr>\n
$150,000<\/td>\n$117,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n

 <\/p>\n

\n
\n

There you have it. \u00a0The 2017 updates.<\/p>\n

The biggest change (there are a few minor changes I didn\u2019t discuss) in all this is that corporations with officer\/owners that have less than 15% ownership will now be including those officer\/owners on their workers comp. \u00a0This could be a major unexpected price increase to the businesses with those numbers. \u00a0Adjust your corporate stock\u00a0before your policy renews if you want your minority owners to remain excluded!<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

This past May I wrote a\u00a0blog on the conditions […]<\/p>\n","protected":false},"author":3,"featured_media":3454,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,7,13],"tags":[],"class_list":["post-3456","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-insurance","category-liability-insurance","category-workers-compensation"],"_links":{"self":[{"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/posts\/3456","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/comments?post=3456"}],"version-history":[{"count":1,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/posts\/3456\/revisions"}],"predecessor-version":[{"id":44633,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/posts\/3456\/revisions\/44633"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/media\/3454"}],"wp:attachment":[{"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/media?parent=3456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/categories?post=3456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/tags?post=3456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}