House passes workers' compensation fix for LLC owners after debate over evidence standard

The Utah House unanimously passed House Bill 3,003 on Oct. 3, a technical amendment intended to correct an omission from prior legislation and to allow an 8 percent LLC-owner exemption from mandatory workers' compensation coverage for active managers.

Representative Morley, the sponsor, described HB3003 as a correction following last year's SB35, noting that the workers' compensation section had inadvertently omitted the 8 percent ownership exemption that appears elsewhere in the code. Morley said the omission caused some businesses and owners to be required to carry coverage despite expectations otherwise.

Representative Ivory questioned the bill's language requiring an individual to "establish by clear and convincing evidence" that they are an active manager who directly holds at least an 8 percent ownership interest. Ivory said that clear-and-convincing is an elevated standard—"something like a 70% standard of proof"—and argued it could impose an undue burden on lawful business owners. Representative Morley replied that the "clear and convincing" standard was adopted in SB35 and is consistent throughout the statute but said he had opened a bill file to consider changing the standard to a preponderance of the evidence during the upcoming general session.

Representative Ivory said he would support HB3003 on the condition that sponsors pursue lowering the evidentiary standard in a future general-session bill file. The House voted 72–0 to pass HB3003 and transmit it to the Senate.

The transcript records the sponsor's commitment to further review the standard in general session but does not show a completed statutory change; sponsors said the workers' compensation correction here is to fix the omitted exemption.

The next steps are Senate consideration and any follow-up legislative work on the evidentiary standard for ownership and management claims.