452 CMR, § 8.06 - Exemption of Corporate Officers or Directors
(1) Pursuant to M.G.L. c. 152, § 1(4), a
corporate officer or director who owns at least 25% of the issued and
outstanding stock in a corporation may elect to be exempted from the provisions
of M.G.L. c. 152. Said exemption may only be exercised if the corporate
officer(s) or director(s) submits a waiver of his or her rights to any claim as
delineated in M.G.L. c. 152. This waiver shall be in the form of an affidavit
promulgated by the DIA and known as Form 153: Affidavit of Exemption
for Certain Corporate Officers and may be submitted
electronically.
(2) To be valid,
all corporate officers and directors who own 25% or more of the issued and
outstanding shares of the corporation must be named on the Form 153. There can
be no more than four corporate officers or directors named on the Form 153. All
corporate officers or directors named on the Form 153 must attach their
signatures to the document for it to be considered valid. The information
contained on the Form 153 provided by the corporate entity will be checked
against the articles of incorporation and the annual report on file with the
Secretary of the Commonwealth. Should the information contained in the Form 153
not match the information contained in the documents on file with the Secretary
of the Commonwealth, the Form 153 shall be rejected and the exemption will not
apply.
(3) Not all corporate
officers and directors need to exercise their right of exemption from the
provisions of M.G.L. c. 152 for the exemption to be valid. If one or more of
the corporate officers or directors who are eligible for the exemption decide
not to waive their rights to workers' compensation, they must do so by marking
the box located beneath their signature on the Form 153 which states "I wish
not to exercise my right of exemption." If any of the corporate officers or
directors have signed the Form 153 and indicated that they will not exercise
the right of exemption, then workers' compensation coverage must be in place
for those non-exempted corporate officers or directors per M.G.L. c. 152,
§ 25A. Failure to do so shall be deemed a violation of the statute and the
corporation will be subject to the fines and penalties delineated in M.G.L. c.
152, § 25C. Whether or not an eligible corporate officer or director
exercises their right of exemption, ALL eligible officers or directors must
attach their signatures to the Form 153 as a condition of the form being
approved by the DIA.
(4) Upon
review and approval of the Form 153 by the DIA, the corporate officer(s) or
director(s) named therein shall be deemed exempt from the provisions of M.G.L.
c. 152. If the corporation carries workers' compensation insurance, the
corporation must provide a copy of the approved Form 153 to the insurance
carrier as proof that the named corporate officer(s) or director(s) have been
properly exempted and that workers' compensation coverage is no longer required
for those persons. Where the Form 153 is submitted in paper form, the
corporation will be provided a copy of the approved Form 153; a self-addressed
stamped return envelope should be included with the Form 153 submission for
this purpose. An approved Form 153 will be marked as such in the upper right
hand corner of the form and will indicate the date of approval and the initials
of the Director of the DIA and/or his or her designee. Notwithstanding any
earlier date indicated on an approved Form 153, the effective date of the
requisite changes to any existing workers' compensation policy shall be either:
(a) the next policy effective date following
the carrier's receipt of the approved Form 153; or
(b) the day following the carrier's receipt
of the approved Form 153 along with a written request that the election be made
effective mid-term.
(5)
If, after an approved Form 153 has been submitted to a carrier, one or more
exempted officer(s) or director(s) chooses to be covered under the current
workers' compensation policy, he or she must submit a written, or electronic,
signed request on corporate letterhead to the carrier. Coverage will be made
effective for that officer(s) or director(s) as of the day after receipt of the
written request. Such coverage shall remain in effect until completion of the
current policy term. A new Form 153 must be submitted to the DIA and then sent
to the carrier.
(6) A copy of the
approved Form 153 must be submitted to the insurance carrier on an annual
basis, prior to the renewal of any existing policy, as affirmation that the
statements contained therein remain in effect. If the approved Form 153 is not
submitted to the carrier the corporate officers and directors shall be covered
under the renewal policy.
(7) If
the corporate officer(s) or director(s) who have exercised their right of
exemption are the only employees of the corporation, said corporation may
legally operate without workers' compensation insurance. However, should that
same corporation at any time employ persons other than the named corporate
officers or directors on the Form 153, workers' compensation coverage must be
in place for those employees per M.G.L. c. 152, § 25A. Workers'
compensation insurance coverage must also be in place if that same corporation
hires others (such as subcontractors) for whom it may be required to provide
coverage pursuant to M.G.L. c. 152, § 18. Failure to do so shall be deemed
a violation of the statute, and the corporation will be subject to the fines
and penalties delineated in M.G.L. c. 152, § 25C.
(8) Should the status of any or all of the
corporate officers or directors named on an approved Form 153 change, the
corporation must submit a new Form 153 to the DIA and notify the insurance
carrier in writing of the change in corporate status within ten calendar days
of said change. A change in corporate status shall include the reduction in
ownership share of any one exempted corporate officer or director to less than
25% of issued and outstanding stock; the resignation of any exempted corporate
officer or director; the addition of an eligible corporate officer or director;
or other changes that make a corporate officer or director ineligible for the
exemption under M.G.L. c. 152, § 1(4). If any corporate officer or
director has their interest in the corporation reduced to below 25%, but still
maintains a position in the corporation, workers' compensation coverage must be
obtained for that corporate officer or director as they would no longer be
eligible for the exemption. Failure to do so shall be deemed a violation of the
statute and the corporation will be subject to the fines and penalties
delineated in M.G.L. c. 152, § 25C.
(9) A corporate entity may employ persons
other than corporate officers or directors who have exercised his or her right
of exemption. If the corporate entity does so, valid workers' compensation
coverage must be in place to provide benefits to any employees in accordance
with M.G.L. c. 152.
Notes
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