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; andB. 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; and7. 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; and4. 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; and3. 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; and7. 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; and5. 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; and4. 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; or3. 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 Address2. State Where Work Performed4. 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 Address2. State Where Work Performed AUTHORITY: sections 287.282, RSMo (Cum. Supp. 1992) and 374.045, RSMo (1986).* Original rule filed Dec. 1, 1992, effective Aug. 9, 1993. *Original authority: 287.282, RSMo (1992) and 374.045, RSMo (1967).