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Author Topic: Why only LLC Managing Members can be excluded  (Read 14007 times)
 
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beancounter
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« on: August 09, 2008, 10:01:22 PM »

We've just completed our first AuditBible Bulletin on the topic of Limited Liability Companies which briefly summarizes the pertinent issues surrounding LLC's as they relate to worker's comp coverage in California.
 
  • Ever wonder why only managing members of an LLC can be excluded? 
  • Who & what can be a managing member? 
  • Can there be more than one managing member?

Download our Bulletin and read all about it  Wink

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AB Bulletin LLC's.pdf
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bc
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« Reply #1 on: October 29, 2008, 01:24:37 PM »

Thank you for the clarification on the the LLC structure.  We also looked at the post regarding the exclusion of owners.  We have an interesting question that we did not see covered in any other posts.  We have an account that insists that the department "managers" HAVE to be subject to Min's & Max's since they are "managing managers".  Our request is for the articles of organization to verify that these persons are infact listed as SOMETHING - OR ANYTHING.  Any additional input you can provide would be greatly appreciated!
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The valetudinarian
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« Reply #2 on: October 30, 2008, 10:18:49 PM »

Please see Part 3 — Standard Classification System of the California USRP Section V — Payroll — Remuneration which lists the people subject to a minimum and maximum payroll starting with "Paragraph j. Executive Officers".

If you are still talking about LLC'S: m. Members of a Limited Liability Company (see above citation)
If the policy covers one or more members as employee(s) during the policy period, the
entire remuneration earned by such member(s) during such coverage (including the annual
amount of wages, salary, emoluments or profits of each such member) shall be included
in the payroll, subject to a minimum remuneration of $31,200 per annum and a
maximum remuneration of $84,500 per annum for each member so included. This provision
also applies to managers of a limited liability company when the limited liability
company is manager-managed.

When such persons are not members or managers during the entire policy period, the
payroll limitation shall be prorated based upon the number of weeks that such persons
were members or managers during the policy period.

The rules for excluding members of LLC'S are therefore different from the rules concerning the application of a minimum and maximum payroll.  One instance you have to be a "Managing" LLC member and the other applies to a simple "member."

Of course, there are limitations on payroll assigned to certain classifications (such as 9610, 7365, 9156, etc.). The classification wording will indicate if this situation exists and provide necessary details.

There should be some kind of documentation of the salaries earned by various managers which will help in identification of exact titles.
« Last Edit: October 31, 2008, 09:58:15 AM by auditor1, Reason: Formatting & example codes » Logged
The valetudinarian
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« Reply #3 on: October 30, 2008, 10:26:00 PM »

Please see Part 3 — Standard Classification System of the California USRP Section V — Payroll — Remuneration which lists the people subject to a minimum and maximum payroll starting with "Paragraph j. Executive Officers".

If you are still talking about LLC'S: m. Members of a Limited Liability Company (see above citation)
If the policy covers one or more members as employee(s) during the policy period, the
entire remuneration earned by such member(s) during such coverage (including the annual
amount of wages, salary, emoluments or profits of each such member) shall be included
in the payroll, subject to a minimum remuneration of $31,200 per annum and a
maximum remuneration of $84,500 per annum for each member so included. This provision
also applies to managers of a limited liability company when the limited liability
company is manager-managed.

When such persons are not members or managers during the entire policy period, the
payroll limitation shall be prorated based upon the number of weeks that such persons
were members or managers during the policy period.

The rules for excluding members of LLC'S are therefore different from the rules concerning the application of a minimum and maximum payroll.  One instance you have to be a "Managing" LLC member and the other applies to a simple "member."

Of course, there are limitations on payroll assigned to certain classifications (such as 9610, 7365, 9156, etc.). The classification wording will indicate if this situation exists and provide necessary details.

There should be some kind of documentation of the salaries earned by various managers which will help in identification of exact titles.

You will not see more than one or two "managing members" on each risk.
« Last Edit: October 31, 2008, 10:00:23 AM by auditor1 » Logged
auditor1
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« Reply #4 on: October 31, 2008, 10:29:02 AM »

Thank you for the clarification on the the LLC structure.  We also looked at the post regarding the exclusion of owners.  We have an interesting question that we did not see covered in any other posts.  We have an account that insists that the department "managers" HAVE to be subject to Min's & Max's since they are "managing managers".  Our request is for the articles of organization to verify that these persons are infact listed as SOMETHING - OR ANYTHING.  Any additional input you can provide would be greatly appreciated!

Good question: you could ask to see their You must login to view links.
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K-1's
or their You must login to view links.
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3832
(see page 43).
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Bracketman
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« Reply #5 on: January 15, 2009, 01:53:31 AM »

It's important to remember that coverage inclusion/exclusion is governed (in California) by the provisions of the California Insurance Code.  Payroll limitation is governed by the California Uniform Statistical Reporting Act - 1995

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beancounter
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« Reply #6 on: January 15, 2009, 06:58:57 AM »

Good point, Bracketman - thank you!

This helps explain Val's comment:
Quote
The rules for excluding members of LLC'S are therefore different from the rules concerning the application of a minimum and maximum payroll.  One instance you have to be a "Managing" LLC member and the other applies to a simple "member."

Welcome aboard  Wink
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bc
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« Reply #7 on: January 15, 2009, 01:18:46 PM »

Thanks Paul. Grin Now get back to remodeling your house. Cry Ok?
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auditor1
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« Reply #8 on: August 22, 2009, 05:08:45 PM »

It should be noted that the minimum and maximum payroll limitations cited in Valetudinarian's post were effective for policies incepting on or after 1-1-2005.  The minimum and maximum limits are adjusted annually:

Effective Date
1/1/2005
1/1/2006
1/1/2007
1/1/2008
1/1/2009

Minimum
$31,200
$32,500
$33,800
$35,100
$36,400

Maximum
$84,500
$87,100
$89,700
$92,300
$94,900

« Last Edit: August 22, 2009, 05:12:46 PM by auditor1, Reason: center the chart » Logged
beancounter
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« Reply #9 on: February 03, 2015, 03:45:09 PM »

Here's another good resource on the subject of LLC's from You must login to view links.
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Nolo Press
and You must login to view links.
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Richard G. Burt
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See also You must login to view links.
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California Labor Code Section 3351 (f)
.
« Last Edit: February 03, 2015, 03:48:53 PM by beancounter » Logged

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