Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This rule ensures that an employer who
leases some or all of its employees properly obtains Workers' Compensation
insurance coverage for all of these employees, including those leased from
another entity, and that premium is paid commensurate with exposure and
anticipated claim experience. The rule is promulgated pursuant to section
374.045,
RSMo in order to implement section
287.282,
RSMo.
(1) Definitions.
(A) Employee leasing arrangement means any
arrangement, under contract or otherwise, where one (1) business or other
entity leases any of its workers from another business. Employee leasing
arrangements include, but are not limited to, full service employee leasing
arrangements, long-term temporary arrangements and any other arrangement which
involves the allocation of employment responsibilities among two (2) or more
entities. For purposes of this rule, the phrase employee leasing arrangements
does not include arrangements to provide temporary help service.
(B) Temporary help service means any service
where an organization hires its own employees and assigns them to clients for a
finite time period to support or supplement the client's work force in special
work situations such as employee absences, temporary skill shortages and
seasonal workloads.
(C) Client (or
lessee) means any entity which obtains all or part of its work force from
another entity through an employee leasing arrangement or which employs the
services of an entity through an employee leasing arrangement.
(D) Employee leasing company (or lessor)
means any entity that grants a written lease to a client through an employee
leasing arrangement.
(E) Leased
worker (or leased employee) means any person performing services for a client
under an employee leasing arrangement.
(F) Multiple coordinated policies basis
means-
1. A system of policies where a
client's leased and nonleased employees are treated as follows:
A. Each client shall have its own standard
Workers' Compensation insurance policy covering its leased workers who are
required to be covered pursuant to the Workers' Compensation laws of the state;
and
B. Nonleased workers of a
client shall not be included on the policy required by sub-paragraph
(1)(F)1.A.;
2. All
policies for clients of the same employee leasing company shall be assigned to
one (1) insurer in the state;
3.
The insurer shall arrange to have the same renewal dates for all the
policies;
4. The insurer shall
arrange to have all notices sent to the employee leasing company and to have a
single master invoice sent to the employee leasing company for all policies
covering the clients of the employee leasing company;
5. If a client leases employees from more
than one (1) employee leasing company, there shall be a separate policy for the
leased employees for each employee leasing company.
6. The insurer also shall issue a policy
covering the internal employees of the employee leasing company; and
7. Appropriate endorsements shall be used to
restrict the coverage to specific employees and to coordinate coverage between
clients and employee leasing company.
(G) Premium subject to dispute shall mean
those premiums for which the insured has provided a written notice of dispute
to the insurer or service carrier, has initiated any applicable proceeding for
resolving such disputes as prescribed by law or rating organization rule, or
has initiated litigation regarding the premium dispute. The insured must have
detailed the specific areas of dispute and provided an estimate of the premium
the insured believes to be correct. The insured must have paid any undisputed
portion of the bill.
(2)
Eligibility for Policy Issuance and Continuance.
(A) Basic Rules. Except as provided in
subsection (2)(B), a client shall fulfill its statutory responsibility to
secure benefits under Chapter 287, RSMo, by purchasing and maintaining a
standard Workers' Compensation policy approved by the director. The exposure
and experience of the client shall be used in determining the premium for
policy.
(B) Exceptions. An employee
leasing company which obtains coverage in the voluntary Workers' Compensation
market and is registered with the director may elect, with the voluntary market
insurer's knowledge and consent, to secure the coverage on leased employees
through a standard Workers' Compensation policy issued to the employee leasing
company. The insurer of the employee leasing company may take all reasonable
steps to ascertain exposure under the policy and collect the appropriate
premium through the following procedures:
1.
Complete description of employee leasing company's operations;
2. Periodic reporting of covered client's
payroll, classifications, experience rating modification factors and
jurisdictions with exposure. This reporting may be supplemented by a
requirement to submit to the carrier Internal Revenue Service Form 941 or its
equivalent on a quarterly basis;
3.
Audit of employee leasing company's operations; and
4. Any other reasonable measures to determine
the appropriate premium.
(C) Residual Market Coverage. An employee
leasing company which obtains coverage through the residual market, established
pursuant to section 287.330, RSMo, for leased employees, must secure coverage
on a multiple coordinated policies basis. To qualify for coverage on a multiple
coordinated policies basis, the employee leasing company shall meet each of the
following requirements at application and annual renewal:
1. Its officers or directors, or any person
with a five percent (5%) or greater interest, do not owe any premium to the
current or prior insurers, except premium subject to dispute;
2. It shall provide information as is
otherwise required by this rule; and
3. It shall be registered as an employee
leasing arrangement with the Department of Insurance.
(D) Application Data Required for Residual
Market. An employee leasing company which applies for coverage through the
residual market shall furnish the following information with the application
for coverage:
1. A list by jurisdiction of
every name that the employee leasing company has operated under in the
preceding five (5) years (including any alternative names and names of
predecessors, and successor business entities) along with the policy number and
carrier for each Workers' Compensation insurance policy issued to the employee
leasing company under every name in the preceding five (5) years and a copy of
the most recent Form 941 or its equivalent filed with the United States
Internal Revenue Service by the employee leasing company;
2. A list of every person or entity who owns
a five percent (5%) or greater interest in the employee leasing company at the
time of application and a list of every person or entity who formerly owned a
five percent (5%) or greater interest in the employee leasing company or its
predecessors, successors or alter egos in the preceding five (5)
years;
3. For each person or entity
identified in the preceding subsection, a list of all other employee leasing
companies in which each person or entity owns or owned a five percent (5%) or
greater interest and a list of all other businesses in which each person or
entity or combination of two (2) or more persons or entities owns or owned a
fifty percent (50%) or greater interest at the time application is made and in
the preceding twelve (12) months;
4. A list of jurisdiction for each client,
along with any other name(s) a client has operated under in the preceding (5)
years and the Internal Revenue Service Form 941 or its equivalent most recently
filed with the service with respect to each client and a copy of the most
recent Form 941 or its equivalent filed with the United States Internal Revenue
Service by each client;
5. A sworn
written statement signed by the owner, partner or officer authorized to bind
the client legally, that states the policy number and carrier for each Workers'
Compensation insurance policy issued to the client under every name in the
preceding five (5) years;
6. The
employee leasing company must also furnish for each client at the time of
application or renewal, a listing of all leased employees along with their
Social Security numbers, classification codes and wages; and
7. A sworn written statement signed by the
owner, partner or officer authorized to bind the client legally that states
that all of the client's nonleased employees are covered by a Workers'
Compensation insurance policy. In addition, the sworn written statement must
provide the policy number, carrier, a listing of the number of nonleased
employees, and the aggregate payroll applicable to each classification
code.
(E) Other Data
Required. An employee leasing company which applies for coverage or is covered
through either the voluntary market or the residual market mechanism also shall
maintain and furnish to the insurer or to the principal rating organization
through the residual market servicing carrier, sufficient information to permit
the calculation of an experience modification factor for each client. This
information shall include:
1. The client's
corporate name;
2. The client's
taxpayer or employer identification number;
3. The client's risk identification
number;
4. A listing of all leased
employees associated with each client, the applicable classification code and
payroll; and
5. Claims information
grouped by client and any other information necessary to permit the calculation
of an experience modification factor for each client.
(3) Premium for Leased Workers.
Premium shall be charged on the policy of the party to an employee leasing
arrangement which is securing coverage for the leased workers as indicated in
this section. The party to an employee leasing arrangement which is not
securing coverage for the leased workers shall furnish satisfactory evidence
that the other party to the employee leasing arrangement had Workers'
Compensation insurance in force covering the leased workers. For each employee
leasing arrangement for which the evidence is not furnished, additional premium
shall be charged on the policy of the party to the employee leasing arrangement
which originally did not intend to secure coverage for the leased workers as
follows:
(A) The risk shall provide a
complete payroll record of the leased workers. Premium on this payroll shall be
based on the classifications and rates which would have applied if the leased
workers had been direct employees of the client;.
(B) If the payroll records of the leased
workers are not provided, ten percent (10%) of the full employee leasing
arrangement price shall be established as the payroll of the leased workers.
The premium shall be charged on that amount as payroll. However, if
investigation on a specific employee leasing arrangement contract discloses
that a definite amount of the contract price represents payroll, this amount,
if deemed reasonable, shall be the payroll for the premium computation;
and
(C) If an experience
modification has been established for the risk, this experience modification
shall be applied to the premium developed for the leased workers.
(4) Multiple Coordinated Policies.
(A) Eligibility. The employee leasing company
shall meet each of the following requirements at application and after that to
qualify for securing coverage on a multiple coordinated policies basis:
1. It is in good faith entitled to insurance
required under the Workers' Compensation laws, state and federal, and has been
unable to secure this insurance in a regular manner.
2. Its officers, directors, and any person
with a five percent (5%) or greater interest do not owe any undisputed Workers'
Compensation premium to the current or prior insurers;
3. It provides all information required under
each policy in accordance with this rule; and
4. It is in compliance with all state laws
applicable to employee leasing arrangements.
(B) In order for the employee leasing company
to secure the coverage for the workers leased to a client, the client must be
in good faith eligible to receive the insurance. The client is not in good
faith entitled to insurance if any of the following circumstances exist, at the
time of the application or after that, or other evidence exists that the client
is not in good faith entitled to insurance:
1. If, at the time of application, a
self-insured client is aware of pending bankruptcy proceedings, insolvency,
cessation of operations or conditions that would probably result in
occupational disease or cumulative injury claims from exposures incurred while
the client was self-insured;
2. If
the client, while insurance is in force, knowingly refuses to meet reasonable
health and safety requirements; or
3. If the client, or an enterprise with a
common managing interest, has an outstanding obligation for Workers'
Compensation premium on previous insurance which is not the subject of a bona
fide dispute.
(C) Policy
Issuance. Each policy issued to cover the leased workers of a specific employee
leasing arrangement on a multiple coordinated policies basis shall be issued in
the name of the client and in accordance with this rule and all other rules
governing the issuance of a standard Workers' Compensation insurance policy for
assigned risk business. A policy issued to cover the direct employees of the
employee leasing company under a multiple coordinated policies basis shall be
issued in the name of the employee leasing company and in accordance with this
rule and all other rules governing the issuance of a standard Workers'
Compensation insurance policy for assigned risk business.
(D) Deposit Premium. The multiple coordinated
policies of a single employee leasing company may be combined for the purpose
of computing deposit premiums. A deposit premium is payable at the time of
application and at the time of renewal.
(E) Endorsements.
1. Employee leasing company policy. The
Employee Leasing Company Exclusion Endorsement (Exhibit A) shall be attached to
the employee leasing company's policy to exclude coverage for workers leased to
specified clients.
2. Client
policy. To each client's policy, the Multiple Coordinated Policy Endorsement
(Exhibit B) shall be attached to provide coverage for workers leased from the
specified employee leasing company and the Employee Leasing Company Endorsement
(Exhibit C) shall be attached to extend coverage to the employee leasing
company.
(5)
Policy Cancellation or Nonrenewal.
(A) Grounds
for Cancellation and Nonrenewal. In addition to any statutory grounds that may
exist, any violation of this rule is grounds for cancellation or nonrenewal
provided that the employee leasing company has been provided a reasonable
opportunity to cure the violation.
(B) Notice to Clients. If an employee leasing
company has received notice that its Workers' Compensation insurance policy
will be canceled or nonrenewed, the leasing company shall notify by certified
mail, within fifteen (15) days of the receipt of the notice, all of the clients
for which there is an employee leasing arrangement covered under the
to-be-canceled policy.
(C)
Experience Modification Factor Following Termination.
1. Client covered by multiple coordinated
policies basis. In the event that the employee leasing arrangement with a
client is terminated, the client shall be assigned an experience modification
factor which reflects its experience during the experience period specified by
the approved experience rating plan, including, if applicable, experience
incurred for leased employees under the employee leasing
arrangements.
2. Client covered by
master policy. In the event that the employee leasing arrangement with the
client is terminated and the experience of the client is commingled with that
of other clients on the employee leasing company's master policy, then the
experience of the client shall be developed and reported by the insurer, to the
extent possible, for use in development of an experience modification for the
client. If suitable payroll and loss experience is not reported, then the
employee leasing company's experience modification factor will apply to the
client for up to three (3) years or until the client qualifies for development
of its own experience modification. The employee leasing company shall notify
the insurer or the service carrier thirty (30) days prior to the effective date
of termination or immediately upon notification of cancellation by the client
of an employee leasing arrangement with a client in order to allow sufficient
time to calculate an experience modification factor for the client.
(6) Client's
Obligation.
(A) Nothing in this rule shall
have any effect on the statutory obligation, if any, of a client to secure
Workers' Compensation coverage for employees not provided, supplied or
maintained by an employee leasing company pursuant to an employee leasing
arrangement.
(B) A client shall not
be eligible for coverage pursuant to a Workers' Compensation insurance-
1. Issued to a client in the voluntary market
if the employee leasing company in the voluntary market if the client owes its
current or prior insurer any premium for Workers' Compensation insurance,
except premium subject to dispute.
2. Under a multiple coordinated policy basis
in the residual market if the client owes its current or a prior insurer any
premium for Workers' Compensation insurance, except premium subject to dispute.
Exhibit A
WORKERS' COMPENSATION AND
EMPLOYERS LIABILITY INSURANCE
POLICY
Original Printing Effective
EMPLOYEE LEASING COMPANY EXCLUSION ENDORSEMENT
As used in this endorsement, employee leasing shall mean an
arrangement where an entity utilizes the services of a third party to provide
its workers for a fee or other compensation. The third party providing employee
leasing services shall be referred to as an employee leasing company. The
entity receiving the services shall be referred to as a client.
This endorsement applies only with respect to workers
provided by you to a client under an employee leasing arrangement to engage in
work for the client. Your policy does not provide coverage for workers you
lease to the clients listed as follows.-
Schedule
Client Address
Exhibit B
WORKERS' COMPENSATION AND
EMPLOYERS LIABILITY INSURANCE
POLICY
Original Printing Effective
MULTIPLE COORDINATED POLICY ENDORSEMENT
The multiple coordinated policy to which this endorsement is
attached provides coverage for the workers you lease from the employee leasing
company listed below and does not provide coverage for any other workers leased
or nonleased.
This endorsement may be used in jurisdictions where not
prohibited by single policy statutes or regulations, or both.
Schedule
1. Employee
Leasing Company Address
2. State
Where Work Performed
4. Employee Leasing Company
Policy Number
Exhibit C
WORKERS' COMPENSATION AND
EMPLOYERS LIABILITY INSURANCE
POLICY
1st Reprint Effective
EMPLOYEE LEASING COMPANY ENDORSEMENT
This endorsement applies only with respect to bodily injury
to your leased employees in the state named in Item 2 of the Schedule when
provided by an employee leasing company named in Item 1 of the Schedule. This
endorsement does not apply with respect to bodily injury to workers provided to
you on a temporary basis.
Certain words and phrases in this endorsement are defined as
follows:
Employee leasing company means the entity furnishing some or
all of the workers to another entity.
Client means the entity using the services of an employee
leasing company to obtain some or all of its workers.
Temporary worker means a worker who is furnished to an entity
to substitute for a permanent employee on leave or to meet seasonal or
short-term workload conditions.
Part One (Workers' Compensation Insurance) and Part Two
(Employer's Liability Insurance) will apply as though the employee leasing
company is an insured. If an entry is shown in Item 3 of the Schedule, the
insurance afforded by this endorsement applies only to work you perform under
the contract or at the project named in the Schedule.
Under Part One we will reimburse the employee leasing company
named in the Schedule for the benefits required by the Workers' Compensation
law if we are not permitted to pay the benefits directly to the persons
entitled to them.
The insurance afforded by this endorsement is not intended to
satisfy the employee leasing company's duty to secure its obligations under the
Workers' Compensation law. We will not file evidence of this insurance on
behalf of the employee leasing company with any government agency.
We will not ask any other insurer of the employee leasing
company to share with us a loss covered by this endorsement.
Premium will be charged for your leased employees while
provided by the employee leasing company. Yo u must obtain from the employee
leasing company and furnish to us a complete payroll record of your leased
employees provided by the employee leasing company to satisfy your obligations
under Part Five (Premium), C.2.
The policy may be canceled according to its terms or for
violation of rules applicable to employee leasing operations provided that the
employee leasing company has been provided a reasonable opportunity to cure the
violation. If the policy is canceled, we will send notice of the cancellation
to the employee leasing company.
Part Four (Your Duties If Injury Occurs) applies to you and
the employee leasing company. The employee leasing company will recognize our
right to defend under Parts One and Two and our right to inspect under Part Six
(Conditions).
This endorsement may be used in jurisdictions where not
prohibited by single policy statutes or regulations, or both.
Schedule
1. Employee
Leasing Company Address
2. State
Where Work Performed
*Original authority: 287.282, RSMo (1992) and 374.045, RSMo
(1967).
