WCDefenseCA

Gather round, dear readers, as your humble blogger will relate to you the story of Pinky and the Brain.  As related in a 1990s cartoon with a hilarious premise and exceedingly witty dialogue, Pinky and the Brain were two laboratory mice who spent their evenings, without fail, desperately trying to take over the world.  Each brought to the [laboratory] table a different set of skills (“one is a genius, the other’s insane.”)

In each episode, Brain and Pinky came up with clever plots by which they would harness the masses of the world under their iron rule, only to have their plans fall to pieces at the last moment, often with serious injury as a result, although the signs of these distresses were often gone by the start of the next adventure.

Cartoon rodents and hilarious situations aside, do these two need workers’ compensation coverage?  After all, in our crazy world, it can just as easily be Brian and Mr. Pinkman trying to improve their lots in life.  Whether two maniacal rodents or desperate blue collar workers, does the existence of a joint venture into the marketplace prompt the need for workers’ compensation insurance (or self-insurance) in California?

Now, your humble blogger’s dear readers would be in for several blank pages if the answer to this question could be reached in Part 1 of 3.  The answer is, as always, “it depends.”

Let’s start with the basics.

California Labor Code section 3700 requires every employer within the state to secure payment of compensation by (1) getting insurance; or (2) self-insuring as a group or an individual employer.  Section 3300 includes in its definition of “employer” every person which has any natural person in service.  And, of course, an employee is defined as every person in the service of an employer. (Section 3351).

Now, pay close attention to section 3351 – it provides the basis for the exceptions invoked by so many partners and corporations for cutting overhead costs in their operations:  Subsection (f) allows all partnerships and limited liability companies to opt in to the workers’ compensation system, although they start out outside of it by default (“the partners or managers shall come under the compensation provisions of this division only by election”).

So, partners have to choose to be covered by workers’ compensation, and have to obtain coverage, while employees do not.  So the next question is: what is a partnership?