Some corporate officers are exempt from mandatory coverage. Officers of public corporations, non-public corporations, and family corporations may be exempt.

Types of corporations:

Public corporations - a public company is a corporation that has a class of shares that are publicly traded as defined in RCW 23B.01.400(28)

Non-public corporations - a corporation that has shares that are not publicly traded

Family corporations - a non-public corporation where all of the officers are related within the third degree. Third degree refers to: parents, children, grandchildren, brothers, sisters, grandparents, great-grandchildren, nephews, nieces, uncles, aunts, and great-grandparents

Public corporations

When determining corporate officer coverage, substance is more important than form. All workers are covered by workers’ compensation insurance unless they meet strict exemption rules. Employees who are named as officers and don’t meet the criteria for exemption must be covered by workers’ compensation insurance.

To be exempt, officers of a public corporation must meet all of the following criteria:

  1. They must be a bona fide officer and a bona fide director. To be considered a bona fide officer and director:
    1. The individual must be voluntarily elected, or appointed to the position, of their own free will and with their express knowledge, and
    2. The election or appointment must be made in accordance with the corporate articles and bylaws.
  2. They must be a shareholder in the corporation with stock issued in their name.
  3. They must exercise substantial control in the daily management of the corporation. This means the individual makes managerial decisions over a business function or functions that have some effect on the entire corporation.
  4. They cannot perform manual labor as part of their duties.
Non-public corporations

When determining corporate officer coverage, substance is more important than form. All workers are covered by workers’ compensation insurance unless they meet strict exemption rules. Workers who are named as officers and don’t meet the criteria for exemption must be covered by workers’ compensation insurance.

To be exempt, officers of a non-public corporation must meet all of the following criteria:

  1. They must be a bona fide officer. To be considered a bona fide officer:
    1. The individual must be voluntarily elected, or appointed to the position, of their own free will and with their express knowledge, and
    2. The election or appointment must be made in accordance with the corporate articles and bylaws.
  2. They must be a shareholder in the corporation with stock issued in their name.
  3. They must exercise substantial control in the daily management of the corporation. This means the individual makes managerial decisions over a business function or functions that have some effect on the entire corporation.
  4. The corporation can up to 8 officers. If the corporation has more than 8 officers at any time, the corporation may choose which 8 officers, who meet the above criteria, are exempt. All other officers are covered by workers’ compensation insurance.
Family corporations

If any of the officers are not related within the third degree as defined below, then only apply the criteria outlined in Non-Public Corporations tab. For example, if a non-public corporation has several related officers and 1 officer who is not related, they can’t apply the exemption criteria from the Family Corporations tab.

To be exempt, all of the officers of the corporation must meet the following criteria:

  1. They must be a bona fide officer. To be considered a bona fide officer:
    1. The individual must be voluntarily elected, or appointed to the position, of their own free will and with their express knowledge, and
    2. The election or appointment must be made in accordance with the corporate articles and bylaws.
  2. They must be related within the third degree by blood or by marriage. Third degree refers to:
    • Parents
    • Children
    • Grandchildren
    • Brothers
    • Sisters
    • Grandparents
    • Great-grandchildren
    • Nephews
    • Nieces
    • Uncles
    • Aunts
    • Great-grandparents

There is no limit to the number of bona fide, related officers who are exempt.

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