Summary of the SB 189 changes, effective July 1, 2018

Senate Bill 189 (SB 189) amended Sections 3351 and 3352 of the California Labor Code, allowing more corporate officers, and/or directors and owners of professional corporations to waive workers’ compensation insurance coverage. State Fund is reaching out to your clients affected by SB 189 to explain their rights under the new law.

Here is a summary of the SB 189 changes, effective July 1, 2018:

  • Corporations: The stock ownership requirement for exclusion eligibility for officers and directors is reduced from 15 percent to 10 percent. Additionally, an officer or director with at least one percent ownership who is also a direct relative of an officer or director with at least 10 percent is eligible for exclusion.
  • Licensed Professional Corporations: Owners of businesses who practice a licensed profession and who have health insurance coverage are eligible for exclusion.
  • Trusts: a trustee or grantor of a trust is eligible for exclusion if s/he is an employee of the Corp, LLC, or Partnership in which the trust has an ownership stake and s/he is eligible to elect exclusion as an officer, managing-member, or general partner of those entities.
  • Cooperative Corporations: To be eligible for exclusion, SB 189 requires the policyholder have a disability policy that is comparable to workers’ compensation coverage as determined by the California Department of Insurance (CDI). Currently CDI has not identified any insurance product on the market that meets this requirement.

State Fund will endorse SB 189 exclusions for eligible policyholders who have submitted a valid exclusion waiver. We have a comprehensive plan to assist those who want to elect exclusion under the new law. Here are important highlights from that plan:

  • On April 30, 2018, we will send a package to potentially impacted policyholders that explains the new law, instructs them on how to complete and submit valid exclusion waivers, and includes a waiver form.
  • We will provide information about exclusions, including the SB 189 rules, on statefundca.com, under the “I’m an Employer” tab where our customers can access and submit all waiver forms.
  • SB 189 only grants a 15 day grace period for back dating exclusions so policyholders who wish to be excluded from coverage are encouraged to submit valid waivers to State Fund as soon as possible via the following options:

Option 1:  Sign and submit the waiver form electronically.

Visit statefundca.com and click “I’m an Employer.” Go to lower left-hand nav and click “How to Exclude Owners, Management Members, Sole Shareholders, and Partners from your Workers’ Compensation Policy.” Open the appropriate waiver form for your company. Then follow the instructions to sign and submit the form via Adobe Sign using Chrome internet browser.

Option 2:  Sign the waiver form, scan it, and email it to SB189form@scif.com.

Option 3:  Sign the waiver form and fax it to 707-452-7849.

Option 4:  Sign the waiver form and mail it to: State Fund–Attn: SB 189 Waiver, 1030 Vaquero Circle, Vacaville, CA 95688.

A customer who is unsure about the exclusion status of a particular owner/officer/director can contact their broker, the assigned underwriter, or call our Customer Service Center at 888-STATEFUND (888) 782-8338.

Thank you for your support in helping to identify any candidates who may be eligible for exclusion under SB 189. We appreciate your business. If you have questions regarding this information, please contact your State Fund Marketing Representative or our Broker Hotline at 1-800-834-2393.

Thank you,

Kate Craft
Senior Vice President, Regional Operations
Orange County

Posted on: May 14th, 2018 at 4:37pm by howardhwang. Filed under: Customer News Letter, Worker's Compensation Insurancxe
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