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Determining Ownership

Because experience rating is based upon ownership, it is necessary to understand how an entity's ownership is determined. The explicit directions for determining ownership for the purposes of workers' compensation experience rating can be found in Section II, Rule 9 of the California Workers' Compensation Experience Rating Plan - 1995.  It is important to note that determining ownership for experience rating purposes may differ from ownership determinations made for other reasons.

Ownership is determined for experience rating purposes based upon the legal nature of the insured entity as follows:

  • Individual

    The named sole proprietor, or individual, is 100% owner of the insured entity.

  • Partnership

    Ownership is determined as though each general partner owns an equal share. Limited partners are not included in ownership determinations. For experience rating purposes, an entity owned by a husband and wife is treated as a partnership.

  • Limited Liability Company (LLC)

    Ownership is determined as though each member owns an equal share of the LLC.

  • Joint Venture

    Ownership is determined as though each joint venturer owns an equal share of the joint venture.

  • Corporations and Association

    1. If voting stock has been issued, the number of voting shares owned by each person determines ownership.
    2. If voting stock has not been issued, ownership is determined as though each member owns an equal share.
    3. If voting stock has not been issued and there are no members, ownership is determined as though each member of the board of directors (or similar governing body) owns an equal share.
  • Trust

    Ownership is determined as though each trustee owns an equal share. If the grantor retains complete authority over the trust, however, the grantor is considered the owner.

  • Entity in Bankruptcy or Receivership

    Ownership is determined as though each trustee/receiver owns an equal share of the insured entity. If the entity is a "debtor in possession," meaning the owners are still in control of the entity, ownership is determined as though the entity is not operated under a trust or receivership.

  • Entity Owned by Another Entity

    Ownership is determined as though it is owned by the same person or persons, in the same proportion, as those that own the parent entity or entities.

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