Owners, corporate officers, and/or directors are potentially eligible for exclusion as employees on your workers’ compensation policy. This means they won’t be eligible for workers’ compensation benefits and their payroll will not be included in your premium calculation. These exclusions may reduce the amount of the premium calculation on your policy.

How To Exclude Officers And Others From Workers’ Compensation Coverage

The California Labor Code requires a valid written waiver to exclude an eligible individual from coverage on your policy. If you’ve made a submission for a new policy, you’ll be provided an opportunity to fill out out the exclusion forms during the quoting process.

If you already have a policy with us and wish to exclude an eligible individual:

  1. Verify who can be excluded by reviewing the requirements for your entity type in the table below.
  2. Download and fill out the appropriate waiver form.
  3. You, or your broker, should then submit the waiver form to your assigned underwriter.
  4. If you do not have an assigned underwriter, you can contact customer support at (888) 782-8338 for more guidance.

Requirements For Exclusion Eligibility Are Determined By Legal Entity Type

The new Labor Code exclusion from workers’ compensation regulations are different depending on the legal entity type of your business.

Exclusion Rules by Entity Type Ownership Threshold Required for Exclusion Additional Exclusion Requirements What needs to be sent to
State Fund
Corporations An officer or director must have: At least 10% stock ownership
At least 1% ownership if this officer or director is a direct relative* of someone with at least 10% ownership.
If the officer/director has less than 10% ownership, then they must have health insurance. Each owner must submit a signed Waiver Form under penalty of perjury.
Professional Corporation There is no ownership percentage requirement. The owner must be a practitioner rendering the services for which the professional corporation is organized, and owner must also have health insurance. Each officer or director that is eligible for exclusion must submit a signed Waiver Form under penalty of perjury.
Cooperative Corporation There is no ownership percentage requirement. The officer or director must have health insurance and a disability insurance policy that will provide the same scope of employee coverage as a workers’ compensation policy. Prior to submitting a signed waiver form, Cooperative Corporations must contact the California Dept. of Insurance (CDI) at cooppolicyquestions@
to gain written approval that their disability policy meets the CDI’s requirements under the new law.
Corporations with a Sole Shareholder/Owner An officer or director who is a sole shareholder/owner of a private corporation is automatically excluded unless they specifically elect to be covered. N/A No Waiver is needed because exclusion from workers’ compensation coverage for a sole shareholder/sole owner is automatic.
Limited Liability Company (LLC) There is no ownership percentage threshold. Individual must be a Managing-Member to elect to be excluded from coverage. Managing-Member must submit a signed Waiver Form under penalty of perjury.
Partnership There is no ownership percentage threshold. Must be a General Partner to elect exclusion. General Partner must submit a signed Waiver Form under penalty of perjury.
Trust A person who holds the power to revoke a trust, with respect to shares of a private corporation held in trust
general partnership interest or limited liability company interests are held in trust.
Such individuals [trustor or trustee] can elect exclusion if they are deemed to be an employee under subsection (c) or (f) of Labor Code 3351 and also meet the criteria for exclusion per one or more of the provisions of Labor Code 3352. Such individuals must submit a signed Waiver Form consistent with the legal entity type of the company for which they work.

* A direct relative is defined as a parent, grandparent, sibling, spouse, or child.

Waiver Forms