Worker’s compensation is financial or medical benefits provided by employers to workers after a valid work-related injury. Examples of work-related injuries are falling, being struck by or caught in machinery, vehicle-related injuries, fires, explosions, or repetitive stress, and overexertion injuries.

To receive worker’s compensation, the employee must prove that their injury was during work, not intentional, and while they were following work protocol. There is a burden of proof that must be presented before receiving worker’s compensation which may be proven by records of:

  • clocking-in
  • medical reports
  • witness testimonies
  • photographs of the injury
  • maintenance report of machinery that caused injury, and
  • a record of injury sent to an employer.

The monetary extent of workers’ compensation depends on the type of injury, type of job, and if there is any blame on either the employer or machinery.

Who Can Be Excluded From Workers’ Compensation?

Under California State Labor Laws, most workers are entitled to compensation if they obtain an injury during work-related duties. However, certain workers such as executive workers, shareholders, and board directors can exclude themselves from this compensation if they meet all requirements.

What Type Of Employees Are Included for Receiving Worker’s Compensation?

Worker’s compensation applies to most employees in any given business besides independent workers. These compensations also extend to migrant workers, part-time workers, seasonal workers, and All persons incarcerated in a state penal or correctional institution while engaged in assigned work or employment.

What Type Of Employees Are Not Included to Receive Worker’s Compensation?

Under Labor Code 3352, an “employee” is not any of the following:

  • Someone employed by parent, spouse, or child
  • A person voluntarily working at a non-profit operated recreational camp or lodge
  • A student participating as an athlete in amateur sporting events sponsored by a public agency or public or private nonprofit college, university, or school, who does not receive remuneration for the participation
  • A person, other than a regular employee, performing services as a sports official for an entity sponsoring an intercollegiate or interscholastic sports event

These workers are not eligible for worker’s compensation because they are mainly volunteers working without compensation. However, workers are considered employees if they receive monetary, lodging, food, or transportation compensation.

Independent Contractors

Most independent contractors are not eligible for workers’ compensation. However, there are rigid conditions that qualify a worker as an independent contractor, such as:

  • The hiring entity does not maintain direction/control over the individual in the performance of the work, both in terms of the contract and actual performance of the work
  • The work performed is not usual for a hiring entity/company.
  • The individual is performing work that is “customarily engaged” similarly to work being performed by a hiring entity

For example, if someone owns a small online business that sells phone cases. They obtain, make, and distribute their phone case sells themselves; they are considered an independent contractor because they:

  • Own the business and is its employer/ employee
  • Runs the business similarly to a hiring entity because the owner does the finances, marketing, and production.

Because these independent contractors blur the lines of employee/employer relationships, they cannot receive worker’s compensation. Unless the independent contractors are roofers, they are not required to purchase compensation or insurance for themselves.

Who Can Waive Their Worker’s Compensation?

While most workers who do not receive workers’ compensation are volunteer-based jobs, higher-level workers in corporations can exclude themselves from worker’s compensation. Examples of these workers include:

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

These employees can waive their compensation if they meet the requirements stated under California Labor Code Sections 3351 and 3352. As of July 2018, these requirements are:

  • An exempt director, executive officer, or partner must own at least 10% of the issued and outstanding stock of the corporation
  • An officer or member of the board of directors is covered by both a health care service plan or a health insurance policy and a disability insurance policy that is comparable in scope and coverage to a workers’ compensation policy;
  • A managing member of a limited liability company who is a qualifying managing member

Additionally, executive officers such as president, vice president, secretary, assistant secretary, treasurer, or assistant treasurer can be exempt from workers’ compensation if paid more than the payroll maximum.

If a member is qualified for exemption, the individual must truthfully create a document, knowing the penalty of perjury, that waives their rights under the Labor Code and states that they have the qualifications or coverage 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.

Payroll Minimums and Maximums for Exempt Employees

California’s Workers’ Compensation Reporting Plan (Part 3, Section V, Rule 1, Subrules J) states that both executives and partners can be exempt from worker’s compensation if they receive more than $144,300 a year or if they make more than $10,400 a week. However, it is still mandatory that executives and partners provide truthful documentation that is covered by both healthcare and insurance policies.

Contact Pride Legal

If you or a loved one has more concerns regarding workers’ compensation, we invite you to contact us at Pride Legal for legal counseling or any further inquiries. To protect your rights, hire someone who understands them.