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So what's the scoop about Corporate Officers and workers compensation insurance? In this video we'll tell you how corporate officers are treated in a workers comp policy, whether or not they are included under the policy coverage and how the premium is calculated if they are included. You'll learn some basic information about corporations and the proper way to show a corporation as the named insured on a work comp policy. Finally we'll provide you with some helpful tips that all business operating as a corporation will find helpful about their workers compensation insurance program.

Video Outline:

• Workers Compensation: Corporate Officers
  
  
• What is a corporation?
  
  
• Who are corporate officers?
  
  
• Are corporate officers included within coverage on a workers comp policy?
  
  
• How are corporate officers rated if included in coverage?
  
  
• Corporations as named insureds on a workers comp policy.
  
  
• Helpful tips for corporations with a workers comp policy.

Video Transcription:

Workers Compensation: Corporate Officers

Welcome to our video series on workers compensation business entities.

Hi! I'm Randy Sieberg and in this edition of Work Comp Consultants Video Network we'll talk about corporate officers, find out if they are included or excluded from work comp coverage, how they are rated and how operating a business as a corporation can effect your workers compensation policy.

A corporation is a legal entity, created under the laws of the state in which the corporation is formed. A corporation has its own privileges and liabilities which are separate from its members and acts as a separate legal entity.

Corporations, just like individuals, can have a workers compensation policy and as a separate legal entity have the same rights under a policy that an individual owner would have.

Corporations are owned by shareholders. Shareholders elect a board of directors who establish corporate management policies and make "big picture" decisions for the corporation. The board of directors appoints a management team consisting of the corporate officers.

Corporate officers are individuals given authority by the board of directors to carry out the management policies established by the board and who make daily business decisions for the corporation. The list of corporate officers can be short or very long depending on the size and complexity of the corporation.

Typical corporate officers are the CEO, chief executive officer, CFO, chief financial officer, COO, chief operating officer, the president and secretary and treasurer. However, corporate structure will dictate the positions and make up of corporate officers.

In smaller closely held corporations with one stockholder, you may find that single individual assumes the role of president, CEO, and secretary treasurer of the corporation.

In most states corporate officers, considered employees of the business entity, are included in some form within policy coverage, and when included in coverage, an insurance company will charge a premium.

Since a corporation is a separate legal entity, those who work for the corporation are considered employees, unlike a sole proprietor or partnership, where the business and the owner are one in the same. Following this line of thought, then corporate officers, even those who own 100% of the stock, are employees of the corporation. This can be pretty tricky and most states have very specific rules governing corporate officers and workers compensation coverage. You’ll find some states allow the exclusion from coverage of a corporate officer who owns 100% of the stock and has no employees. Some states provide that a corporation with only 2 corporate officers owning at least 10% stock, with no employees, are not required to have a workers comp policy.

So you can see, the rules vary and whether or not coverage is required is state specific. You must check with your individual state for requirements that may apply to your situation.

Typically the premium for corporate officers will be based on a "set" or "banded" payroll as established by the state. For example in Nebraska corporate officer payroll is banded between a minimum of $36,400 and a maximum of $145,600. So if the officers actual pay falls between this range then the actual pay is used. If it falls below the minimum, the minimum is used and if it is higher than the maximum, then the maximum is used. Remember, each state is different and these numbers change and must be checked annually for accuracy.

So in most states it doesn’t make a difference how much or how little a corporate officer is actually paid, it's the rating payroll as determined by the individual state that counts.

When a corporation is shown on a workers compensation policy as the Named Insured, then the name of the corporation should follow normal naming conventions, that is the name should show the business as a corporation by indicating after the name; incorporated, inc, corp., corporation etc. And as with any business entity it's important to get the name right on the policy. Because it's the named insured on the policy who’s protected under the workers comp policy.

So if you operate your business as a corporation with a workers compensation policy remember these things:

• Corporations are a separate legal business entity and must be correctly shown as the Named Insured on the policy.
  
  
• Corporate officers are considered employees of the corporation and in most states are included within coverage..but in some states may elect to be excluded from coverage.
  
  
• When included under the policy the premium for a corporate officer is determined by the rating payroll as determined by the state authority.
  
  
• Pay attention to your individual state rules! Corporate officers are treated different under various workers compensation systems, so check those rules for compliance!

Learn more about corporations, corporate officers and workers compensation policies and find information about your specific state at our website, WorkCompConsultant.com!

I hope this information is helpful and thanks for watching!