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 21 
 on: September 19, 2016, 12:40:07 PM 
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WCIRB E-Newsletters Archive
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 22 
 on: August 31, 2016, 06:08:30 PM 
Started by beancounter - Last post by beancounter
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According to the analyses of the bill:

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06/20/16- Senate Labor And Industrial Relations
:
Under current law, nearly all employees must be covered through either a workers’ compensation insurance policy or a recognized self-insurance certificate.  However, there are some limited exceptions to this rule.  One example is officers and members of a board of directors of a private corporation or managing partners or general partners of a LLC.  In those cases, the individual workers can elect to not be covered by the employer’s workers’ compensation policy. 

However, the existing election process to opt out of coverage is not very clear.  Beyond one limited statutory reference and very little regulatory guidance, insurers and LLCs are left to figure it out for themselves.  You must login to view links.
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The Association of California Insurance Companies (ACIC)
, one of the supporters of this bill, argues that this lack of clarity has led to abuses that have hurt injured workers and driven fraudulent activity. 

AB 2883 seeks to address this challenge by specifying, in the case of an officer or member of the board of directors, that he or she must own at least 15% of the stock of the corporation in order to opt out of workers’ compensation coverage, as well as sign a waiver stating that the individual is a qualifying officer or member.  Similarly, AB 2883 also requires a general partner of a partnership or a managing member of a LLC to execute a waiver to opt out of workers’ compensation coverage.

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08/12/16- Assembly Floor Analysis
:
The law allows officers and owners to opt out of workers' compensation coverage.  The premise is that as key personnel of the company, these people who meet the definition of employee are not necessarily in the class of employee who need the protection of the coverage mandate.  If it makes more sense for these employees to opt out, then they should have that discretion.  However, current law has resulted in abuses.  For example, after a policy period where no losses have occurred, some companies have claimed that numerous employees were not supposed to be covered, and thereby retroactively reduced the premium owed.  More perniciously, some employers were describing janitors as "vice president of sanitation services" or similar designations, thereby denying legitimate employees of workers' compensation protection.  This bill cures these issues.

Therefore, from 1/1/2017 forward, there can never be more than six people excluded.  To get around this, some might establish additional combinable entities to expand the number of employees to exclude.

 23 
 on: June 21, 2016, 02:51:26 PM 
Started by beancounter - Last post by beancounter
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The Bureau has it's own history and you can find it You must login to view links.
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here
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 24 
 on: June 06, 2016, 02:46:29 PM 
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Effective January 1, 2016, a new law affects the way California employers who pay piece-rate must compensate their workers, and document their records.  For further details, see the DIR's: You must login to view links.
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Piece-Rate Legislation (AB 1513) Fact Sheet
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FAQ's


An employer that elects to participate in the affirmative defense provisions of the statute, must provide You must login to view links.
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a written notice
to the Department of Industrial Relations, by no later than July 1, 2016, of the employer’s election to make payments to its current and former employees.  The Department will post on its website either a You must login to view links.
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list of the employers who have provided the required notice
or copies of the actual notices, and these materials will remain posted until March 31, 2017. 

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summary of the new law
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 25 
 on: May 25, 2016, 11:14:32 AM 
Started by beancounter - Last post by beancounter
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The Classification and Test Audit Insight e-newsletter highlights common classification and test audit issues of interest to auditors, underwriters and others.  Editions are issued bi-weekly and past editions are storedYou must login to view links.
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 26 
 on: May 08, 2016, 12:07:17 AM 
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James R. Urquhart III's Independent Contractor Report
for California.

 27 
 on: March 10, 2016, 04:21:18 PM 
Started by beancounter - Last post by beancounter
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I can hardly believe it's been eight years since I started Auditbible in 2008 Shocked

I originally started AuditBible to provide a tool for those in, and affected by, the workers' comp industry as a place for people to get answers and share their expertise regarding classifications and rules.  I imagined that, one day, many discussions would be taking place between people from all across the country helping each other understand the rules & regulations.

Due to lack of interest or need, it has essentially evolved into my personal online file cabinet where I store helpful resources.  After changing employers, computers, passwords, etc. AuditBible has become the one constant for me.  No matter what, I know my resources are safely stored here, able to be accessed no matter what the circumstance.

As long as my hosting costs remain affordable, it will continue to be here for all who wish to use it - free of charge.  So far, only the first year paid for itself via ad click revenues.  It hasn't earned anything since then.  If you find it useful and want to see AuditBible continue to exist, please check out some of our advertisers.

To begin, I created three online memberships so I could track the various permission levels.  So, when you see Auditor1, AuditorBob, and Beancounter - they're all me.  One of these days maybe I'll consolidate.

 28 
 on: March 10, 2016, 03:50:58 PM 
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According to the March 15, 2016 Agenda Minutes of the C&R Committee, amendments to the USRP will be proposed to exclude Restricted Stock Units (RSU) as part of the January 1, 2017 Regulatory Filing to take effect with respect to policies with anniversary rating dates on or after January 1, 2018.   

RSUs are becoming an increasingly frequent form of compensation in certain industries in California.  Although the USRP contains provisions directing that some specific forms of equity compensation are excluded from reportable payroll, equity compensation in the form of RSUs is not specifically excluded in the USRP.  Other jurisdictions currently do not have rules that specifically address RSUs.

RSUs are not a reliable proxy for exposure for the policy in effect at the time of vesting as they are:

  • paid based on a structured agreement that usually spans multiple policy periods and
  • subject to fluctuations in valuation that are not directly controlled by the employer. As such,
    these forms of compensation do not directly correlate to exposure based on the employee’s work
    performed during the policy period in which the award vests.

RSUs are a type of equity compensation that has recently become popular to attract and retain employees, especially at start-up and technology companies in California. An RSU is a grant valued in terms of company stock, but company stock is not issued at the time of the grant. RSUs are a structured agreement to issue shares of stock to the employee at one or more points in the future upon the satisfaction of vesting requirements. After the recipient satisfies the vesting requirement, the company distributes shares or the cash equivalent of the number of shares used to value the unit. Most vesting requirements are time-based for the purpose of retaining employees. However, vesting requirements may also be defined in terms of company or individual performance. RSUs are currently included as reportable payroll/remuneration in California at the time the stock units vest, as there is no USRP provision specifically directing that RSUs be treated otherwise.

Prior to 2007, start-up and technology companies frequently used stock options as a tool to recruit and retain staff. Stock options are awarded as an option for the employee to purchase stock in the company at a specified price at a future date. Stock options have value to the extent that the option price is lower than the market price for the stock. Stock options can become worthless if the stock’s market price falls below the option price; these are often described as “underwater” stock options. Many employers, particularly those in technology-related industries, have shifted from stock options to RSUs.

There are limitations set by the Internal Revenue Service with regard to how the option price is set when stock options are issued; an option price that is too low relative to the stock’s current market price will result in taxes due when the option is issued. Until 2005, companies were able to set the stock purchase price for an option as low as 1/10 of the price per share most recently paid by outside investors without being taxed at the time of issuance. Section 409A, added to the Internal Revenue Code effective January 1, 2005, resulted in more conservative differentials between the option price and the most recent market valuation, such that options prices are required to be at least approximately 1/3 of the most recent market price to avoid incurring taxes at time of issuance.4 Although Section 409A imposed new restrictions on stock options, stock options continue to provide an attractive incentive to employees, unless outside investors have recently paid an above market price to acquire shares in the company.

RSUs became popular with many technology and start-up employers around 2007 as they avoid many of the issues that exist with stock options. RSUs are a documented agreement to issue shares of Common Stock to the employee at a future date, subject to the employee satisfying vesting requirements. RSU vesting schedules are typically5 multi-year agreements that may include numerous vesting dates. RSUs do not trigger taxation at time of issuance, but they are taxed as income when they vest.

Unlike stock options, which are granted as an option for the employee to purchase stock in the company at a specified price at a future date, RSUs do not require any optional purchase by the employee; they are simply awarded subject to vesting requirements. As such, a smaller number of RSUs may provide a similar value to the employee compared to a larger number of stock options; this ultimately permits the employer to issue fewer shares of stock, reducing per share earnings dilution. While stock options can become worthless if the stock’s market price falls below the option price, RSUs will always have some value unless the company stock itself has no value; RSUs cannot be “underwater”.

RSUs are not the same as restricted stock, in which actual shares of stock are reserved for the employee subject to vesting. With restricted stock, the stock must exist at the time the grant is issued, and the restricted shares may begin accruing dividends as of the award date. The shares of restricted stock havea known value at the time the grant is issued, and the employee has legal title to the stock, subject to the employer’s contractual right to repurchase, from the award date until the time of vesting. The issuance of the restricted shares can dilute the earnings per share for the company while the shares await vesting. Restricted stock will be addressed in Phase 2 of this study.

RSUs are not a form of bonus, which are specifically included as payroll/remuneration. Some bonuses are paid in company stock. Unlike a stock bonus, with RSUs, the employee does not instantly receive the stock as an awarded bonus but instead may receive stock according to a multi-year vesting plan and distribution schedule. Unlike a stock bonus where the employer is able to pay a bonus with a known cash value, RSUs are not assigned a fair market value until they vest and so their eventual value at vesting is unknown when the grant is awarded. Upon vesting, they are considered income for tax purposes and a portion of the shares may be withheld by the employer to pay income taxes. However, the employer has no control as to what the value of the RSUs will be when they vest, and whatever value they have to the employee upon vesting is not directly correlated to the work the employee performed during the then current policy period due to the multi-year vesting schedule. For this reason, RSUs are not a strong proxy for the insurer’s exposure in the year they vest and may in fact result in a sharp increase in payroll with no corresponding increase in loss exposure if the RSUs have a high value that is not necessarily related to an employee’s work in the current policy period.

In reviewing the Appendix II entry for employer contribution to a profit sharing stock purchase plan or fund that is held by the employer until the employee’s termination, the entry notes that such payments are not included as payroll/remuneration. In a stock purchase plan, employees contribute to the plan through payroll deductions, which accumulate until the stock purchase date. At the purchase date, the company uses the accumulated funds to purchase shares in the company on behalf of the participating employees, at a discounted price that is typically 10 to 15% below market price. The amount of the discount represents the employer’s contribution, which is excluded from reported payroll. Stock purchase plans are dissimilar from RSUs as RSUs do not include an employee contribution; the entire value is provided by the employer. Like RSUs, these contribution payments are distributed to the employee at a point in time that does not directly correlate to when they were earned or awarded, and could result in a sharp increase in payroll with no corresponding increase in loss exposure and fluctuation in year-to-year reported payrolls.

Appendix II also directs that stock options are not included as payroll/remuneration. As detailed above, RSUs have grown in popularity largely as an alternative to stock options, as both function as a financial incentive that is separate from an employee’s regular payroll earnings. To the extent that employers adopt RSUs to replace stock options as incentive equity-based compensation, the exclusion of RSUs from payroll/remuneration should not significantly erode or reduce reportable payroll/remuneration.

4 Private companies that do not have an established market price are required to obtain independent current valuation appraisals when issuing stock options, referred to as 409A appraisals.
5 Some RSU agreements include provisions for immediate or “cliff” vesting upon the occurrence of a specific event, such as the sale
of the company.

Based on its review of the characteristics of RSUs as equity-based incentive compensation, WCIRB staff makes the following conclusions:

1. RSUs are not a good proxy for a workers’ compensation insurer’s exposure as they are typically multi-year agreements and, at the time of vesting, have no direct correlation to operations performed by the employee during the then current policy period.
2. Employers cannot directly control the eventual value of the RSU stock at the time it vests. As a result, there is little potential for manipulation of reportable remuneration if RSUs are excluded from reportable payroll/remuneration.
3. RSUs share key characteristics with other forms of compensation including profit sharing stock purchase plans, stock options and retroactive wages awarded for time worked during a prior policy period that are currently excluded from reportable payroll/remuneration.
4. The inclusion of potentially large amounts of payroll for statistical reporting purposes as a result of including RSU amounts can result in volatility in reported payrolls from year to year without similar shifts in underlying loss exposure.
5. The exact impact of removing RSUs from reported payroll/remuneration cannot be established as these amounts have not been separately reported. However, an informal survey of certain large technology firms suggests that for certain classifications, the impact of excluding RSUs from reportable payroll may be significant.

 29 
 on: March 07, 2016, 04:16:36 PM 
Started by beancounter - Last post by beancounter
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Here's a good resource!  Access & download You must login to view links.
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questionnaires
to help regarding employment status of workers.

 30 
 on: February 11, 2016, 07:00:36 PM 
Started by auditor1 - Last post by auditor1
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Released: May 19, 2014, obtain a copy of the You must login to view links.
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Report on Leasing Agents in the Property Management Industry
here.

Good information on the Property Management Codes:

  • 8741, Real Estate Agencies
  • 8740(1), Apartment or Condominium Complex Operation – N.O.C.
  • 8740(2), Building Operation
  • 8740(3), Building Operation – N.O.C.
  • 8740(4), Mobile Home Park Operation
  • 8740(5), Warehouses
  • 8740(6), Apartment or Condominium Complex Operation for Seniors
  • 9011, Apartment or Condominium Complex Operation – N.O.C.
  • 9007, Apartment or Condominium Complex Operation for Seniors
  • 9015(1), Building Operation – N.O.C
  • 9009, Building Operation
  • 9010, Mobile Home Park Operation
  • 8290, Warehouses

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