Legal Question in Business Law in California

Re: Workman's comp requirement for corporation owners

A corporation can act only through its employees/agents. Thus, you and your "partner" are likely employees of the corporation. In such a case worker's compensation insurance would be required. Failure to maintain such insurance could result in significant penalties.

It is possible that you could be "independent contractors" for the corporation. If you are independent contractors you would not have to be covered by worker's compensation insurance.

However, there are a series of factors that will determine whether you are employees or independent contractors. The bias is for a determination that the person is an employee rather than independent contractor. You should consult with an attorney in this regard.

I would be happy to consult with you on this issue if you like.

J. Caleb Donner

DONNER & DONNER

LEGAL WARRIORS�

325 E. Hillcrest Drive, Suite 242

Thousand Oaks, CA 91360

Tel: 805-494-6557

Fax: 805-494-0990

email: [email protected]

website: www.legalwarriors.com

Re: Workman's comp requirement for corporation owners

I would contact an insurance carrier to discuss this. My understanding is that I as the CEO/Pres of my Professional Corp cannot receive workers comp despit the fact I am an employee. Check it out.

Re: Workman's comp requirement for corporation owners

The general rule is if you're an employee then you must be covered or you must cover if you were the employer all employees with workmen's compensation insurance if they are heard on the job. The Corporation is an entity and would be subject, in part to the same rules. You're not partners although you act like it and think you are. Under the law you're employees but, that's a very large but, if you are shareholders, officers and/or directors you're under a different set of rules in certain instances. These are very complicated and I would immediately call your attorney. If you want your own Corporation, start thinking in a reasonable and normal businesslike manner. Get an attorney!!!!! If you don't understand that this situation you probably don't understand a great deal about the operation of your business under a corporate entity. To save yourself a great deal of time, trouble, psychological trauma and money, possibly big money in the future, guess what I am going to say, call your attorney or get one who is knowledgeable in business entities in the operation of the same.i have been practicing law in this speciality for over 30 years in the san francisco bay area and if you wish to consult with me you can contact me at 925-945-6000.

Re: Workman's comp requirement for corporation owners

You have received two conflicting views. I think the best concept is to ask a workers' comp. insurance agent or broker. In my opinion, you are neither required nor forbidden to be covered; it is optional. However, the option is exercised in most cases by buying coverage, then having the owners exempted through a rider to the policy which exempts the salaries of the owners from the premium calculation and at the same time denies the owners the benefits of coverage. This works in companies that have non-owner employees as well as owner employees. In your case, no insurer would want to issue a policy where 100% of the employees were exempt, and I frankly don't know how you would obtain a bulletproof exemption in a situation such as yours.

I think your insurance agent is the source of the advice you need.