Types of Entities and Eligibility for Exclusion

Depending upon the type of entity, some employers can be eligible for exclusion from coverage.

What is exclusion and why is it important? Exclusion means that a person’s payroll is not included in the premium payment calculation; accordingly, the ‘excluded’ person is not entitled to workers’ compensation benefits. When an owner is eligible for exclusion, we require a signed exclusion waiver form.

A list of legal entities along with eligibility for exclusion is listed below. The chart provides the requirements and information for each entity; however, please click the corresponding links for more detailed information.

Entity Type

Required Information

% of Ownership

Excluded/Included

Sole Proprietor

Legal Name

100%

Not covered

Spouse and Spouse

Both Legal Names

50% / 50%

Not covered

General Partnership

1.  Legal Names of all Partners.

2.  Payroll and description of duties for Covered Partners.

Equal Ownership

Covered Partners subject to Minimum/Maximum earnings

Limited Partnership (LP)

1.  Names of General/Limited Partners.

2.  Payroll and description of duties for Covered Partners.

Equal Ownership of General Partners

Only General Partners can be Excluded, (not Limited Partners) subject to Minimum/Maximum

earnings

Corporation

1.  Legal Names of President, Secretary, Treasurer, and Directors.

2.  Actual payroll and job descriptions for all Covered Officers.

 

Combined total must equal 100%

 

See additional information below

Non-Profit Corporation

1.  Names of President, Secretary, Treasurer, and Directors.

2.  Actual payroll and job descriptions for all Covered Officers.

 

No Ownership

 

See additional information below

Non-Profit Organization

1.  Names of Officers.

2.  Actual Payroll and job description for Covered Officers.

 

No Ownership

 

See additional information below

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Entity Type

Required Information

% of Ownership

Excluded/Included

Limited Liability Company (LLC)

1.  Names of Manager-Members and Members.

2.  Actual payroll and job descriptions for Covered Members.

Equal Ownership

Only Manager- Members can be Excluded/Included subject to

Minimum/Maximum earnings

Limited Liability Partnership (LLP)

1.  Names of Limited Liability Partners.

2.  Actual payroll and job description for Covered Partners.

Equal Ownership

Covered Partners are subject to Minimum/Maximum earnings

Trusts:

Revocable & Irrevocable

Revocable: Names of Trustor, Trustee and Beneficiary

Irrevocable: Names of Trustee-Beneficiary  

More information

 

Association

 

No Ownership

All working persons are considered employees

Sole Proprietor (also referred to as an Individual Ownership)

Required:

  1. List Owner’s Name in the following format: ‘Last Name, First Name Middle Name’ Example: Doe, John Paul.

Additionally:

  • Individual owners are not covered in the policy contract.

Spouse and Spouse

Required:

  1. List each spouse’s name in the following format: ‘Last Name, First Name Middle Name’ Example: Doe, John Paul and Doe, Mary Jane.

Additionally:

  • When a sole proprietor is married, we will write the policy naming both spouses as policyholders and treat them as a single entity.
  • The spouses (owners) are not covered in the policy contract.
  • The spouse could be an employee, or a partner, or a fellow officer.
  • If both spouses exercise management control, a partnership may exist (thus, they are not automatically put into this entity code).

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General Partnership

Required:

  1. List all partners of the general partnership.
  2. For partners that are individuals, list their names in the following format: 'Last, First, Middle Name.'
  3. Provide the estimated annual payroll and complete description of duties for all partners who request coverage.

Additionally:

  • All partners are equal owners in the partnership, regardless of their investment and are equally liable for the debts of the partnership.
  • All individual partners can elect coverage or if they elect coverage, they are subject to executive minimum/maximum payroll requirements and if exclusion is requested, they must sign a State Fund Partnership Exclusion Letter to endorse exclusion.
  • Partners can be any kind of entity, not just individuals. It would be possible to have a partnership of partnerships or a partnership of corporations or partnerships of multiple different entities.
  • If a partner is other than an individual person, the complete listing of the other entity ownership must be provided. Exclusion eligibility is determined by the entity that is a partner and eligible principals must sign a State Fund General Partnership Waiver of Workers’ Compensation Coverage Form to endorse exclusion.
  • For exclusion eligibility, a person must be a natural person who is a named general partner working for the policyholder. If the general partner is a corporation, the owners of the corporation are not eligible to elect exclusion because they are not general partners (natural persons) of the policyholder (a General Partnership).

Limited Partnership (LP)

Required:

  1. List all General Partners; LPs must have at least one General Partner. Example: General Partners that are individuals, list their name in the following format: ‘Last Name, First Name Middle Name.’
  2. Provide the estimated annual payroll and complete description of duties for all General Partners who request coverage.

Additionally:

  • General Partners are considered equal owners of the LP.
  • General Partners can elect coverage or exclusion. If they elect coverage, they are subject to executive minimum/maximum payroll requirements and if exclusion is requested, they must sign a State Fund General Partnership Waiver of Workers’ Compensation Coverage Form to endorse exclusion.
  • Limited Partners have limited legal liability (up to the amount of their investment in the business) and are not eligible for exclusion.
  • If Limited Partners work in the business, they are covered as an employee.

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Corporation

Required:

Provide the name(s) of the officers who hold the Corporation Officer titles of:

  1. President or CEO.
  2. Secretary.
  3. Treasurer or CFO.
  4. One person may hold all three Corporate Officer titles.
  5. Provide ownership of 100% of all outstanding shares of stock.
  6. Provide the estimated annual payroll and a detailed description of job duties for all corporate officers and/or directors.

Exclusion Information:

  • A Corporate Officer and/or director may only be excluded from coverage under the following conditions:
    • When the officer or director holds at least 10% of the issued and outstanding stock.

OR

  • When the officer or director holds at least 1% of the issued and outstanding stock and his or her direct relative (parent, grandparent, sibling, spouse, or child) owns at least 10% of the issued and outstanding stock, AND
    • The officer or director who owns less than 10% of the corporate stock is also covered by a health insurance plan or health care service plan.
  • When the officer(s) or director(s) to be excluded also signs and returns the Corporate Officer/Directors Waiver of Workers’ Compensation Coverage Form.
  • Working Corporate Officers who are not excluded by endorsement are covered and subject to premium charge at minimum/maximum payroll requirements.
  • Working Directors who are not excluded by endorsement are covered at their actual wages.

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Non-Profit Corporation

Required:

  1. Provide the name(s) of the officers who hold the Corporation Officer titles of:
    • President or CEO.
    • Secretary.
    • Treasurer or CFO.
  2. Provide the estimated annual payroll and a detailed description of job duties for all Corporate Officers.

Exclusion Information:

  • If officers are working and paid, they cannot be excluded and are subject to minimum/maximum limits.
  • There is no stock ownership.The ‘owners’ for Experience Rating Plan purposes are the members of the Board of Directors.
  • Executive Directors are usually employees, not officers, and are not subject to minimum/maximum payroll requirements.
  • Unpaid workers are considered ‘volunteers.’ They are not covered, unless the employer passes a Board resolution to deem the volunteers ‘employees’ for workers’ compensation purposes and volunteer coverage is endorsed on the policy.

Non-Profit Organization (Unincorporated)

Required:

  1. Provide a list of the Organization’s officers.
  2. Provide the estimated annual payroll and a detailed description of job duties for all Corporate Officers.

Exclusion Information:

  • Working and paid officers cannot be excluded and are not subject to the minimum/maximum limits.
  • Control is vested in the organization’s officers. The Articles of Association and Bylaws determine the authority of officers and committees to act on behalf of the organization. There is no stock ownership. Ownership is considered to be equally divided among the Board members or members of a comparable governing body.
  • Unpaid workers are considered ‘volunteers.’ They are not covered unless the employer passes a Board resolution to deem the volunteers ‘employees’ for workers’ compensation purposes and volunteer coverage is endorsed on the policy.

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Limited Liability Company (LLC)

Required:

  1. Provide the names and titles for all:
    • Members.
    • Managers.
    • Manager-Members.
  2. Provide the estimated annual payroll and a detailed description of job duties for all Members, Managers, or Manager-Members.

Exclusion Information:

  • Each Member is treated as though each owns an equal share of the entity.
  • Only LLC working Members who are Managers (Manager-Members) are eligible for exclusion from coverage. If they elect coverage, they are subject to executive minimum/maximum payroll requirements, and if exclusion is requested, they must sign LLC Managing Members – Waivers of Workers’ Compensation Coverage to endorse exclusion.

Limited Liability Partnership (LLP)

Required:

  1. List all Limited Liability Partners.
  2. Provide the estimated annual payroll and complete description of duties for all partners.

Exclusion Information:

  • California permits only licensed accountants, architects, attorneys, engineers (civil, electrical, or mechanical) and land surveyors to form and own limited liability partnerships (LLPs).
  • Limited Liability Partners can elect coverage or exclusion. If they elect coverage, they are subject to executive minimum/maximum payroll requirements, and if exclusion is requested, they must sign LLP General Partnership – Waivers of Workers’ Compensation Coverage to endorse exclusion.

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Trust

Required:

  1. Provide the names and titles for all:
    • Trustors.
    • Trustees.
    • Beneficiaries.
  2. Provide the type of Trust – Revocable or Irrevocable.
  3. Provide the full legal name of the Trust.
    • Example: John Jones Family Trust dated 1-1-2025.
    • Example: Janet Brown Living Trust.

Additionally:

  • Whoever holds control is considered to have ownership.
    • In a revocable trust, it is generally the Trustor.
    • In an irrevocable trust, it is the Trustee.

Association

  • No stock ownership.
  • All working persons are considered employees.
  • No officer information is required.
  • If incorporated, treat as a non-profit corporation.
  • For further information, please contact your underwriter.

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For further information, please reach out to our customer support at (888) 782-8338.