A closely held corporation employes 10 people. 5 people are officers and shareholder of the corp. the other 5 people are family members who are employees but are not shareholders or officers. Are these family members exempt from workers comp insurance in California?
Non-employee directors or officers may or may not be covered by Workers' Comp, at your and your insurers, choice. All employees must be covered by Workers' Comp, even if there is only one employee.
Of course, there will be no problems unless sometime is injured or tired or unhappy and files a Workers' Comp claim. In rare cases this may be done by a hospital etc. who treats an injured employee and isn't paid promptly. Sooner or later, even a family member may be tempted to file a Workers' Comp claim or threaten to do so. If a claim is filed you are an uninsured employer and the corporation (and, most likely all officers and directors) are liable for all of the expenses and legal fees associated with that claim.
A simple claim easily costs $50,000. If there is hospitalization or a lengthy period of disability, several hundred thousand dollars is the norm.
So besides being illegal it is unwise to go without insurance. Instead, work with your insurer to make your workplace as safe as possible and lower future premiums by having no claims.
One uninsured claim will cost more than many years of Workers' Comp premiums.
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