Legislative FAQ: AB 2883

Legislative FAQ: AB 2883

Due to recent inquiries regarding legislation that was chaptered by Governor Brown in August, the Advocacy Team created a list of FAQs to assist ALPHA Fund Participants in understanding how it will impact your organization.

What is AB 2883?

AB 2883 was authored by the Assembly Insurance Committee to clean up provisions on the workers’ compensation law and close a loophole used by some companies to abuse a provision of law that allows employees to “opt out” of workers compensation coverage.  Specifically, prior to the chaptering of AB 2883, existing law defined an employee for the purposes of worker’s compensation in an ambiguous way, leading to the purposeful mishandling of the provision.

AB 2883 expands the definition of an employee to delineate that only officers or members of boards of directors that own “at least 15% of the issued and outstanding stock of the corporation” or individuals that are partners or managing members of an LLC may elect to be excluded from workers’ compensation.

AB 2883 takes effect on January 1, 2017.

Does AB 2883 apply to Healthcare Districts?

No.  Healthcare Districts are public entities and therefore are excluded from this provision.

Does AB 2883 apply to nonprofit entities?

This provision only applies to officers or members of boards of directors that “[own] at least 15 percent of the issued and outstanding stock of the corporation and [execute] a written waiver […] stating under penalty of perjury that the person is a qualifying officer or director.”  If this provision applies to an officer or board member of the nonprofit in question, they would be able to opt out of workers’ compensation coverage.

It is unlikely that AB 2883 applies to the Board members of your nonprofit organization.

If you have further questions or are concerned about the language of this bill, please contact Amber King, Senior Legislative Advocate, at amber.king@alphafund.org or (916) 266-5207.

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