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S.B. 45 Enrolled

             1     

WORKERS' COMPENSATION AND DIRECTORS OR

             2     
OFFICERS

             3     
2013 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Evan J. Vickers

             6     
House Sponsor: Bradley G. Last

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Workers' Compensation Act to address excluding directors or
             11      officers of corporations from coverage as employees.
             12      Highlighted Provisions:
             13          This bill:
             14          .    provides that if a corporation does not have an insurance carrier, it can notify the
             15      commission that it elects to exclude certain directors and officers from coverage
             16      under workers' compensation as employees;
             17          .    grants rulemaking authority; and
             18          .    makes technical changes.
             19      Money Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          34A-2-104, as last amended by Laws of Utah 2012, Chapters 346 and 363
             26     
             27      Be it enacted by the Legislature of the state of Utah:
             28          Section 1. Section 34A-2-104 is amended to read:
             29           34A-2-104. "Employee," "worker," and "operative" defined -- Specific


             30      circumstances -- Exemptions.
             31          (1) As used in this chapter and Chapter 3, Utah Occupational Disease Act, "employee,"
             32      "worker," and "operative" mean:
             33          (a) (i) an elective or appointive officer and any other person:
             34          (A) in the service of:
             35          (I) the state;
             36          (II) a county, city, or town within the state; or
             37          (III) a school district within the state;
             38          (B) serving the state, or any county, city, town, or school district under:
             39          (I) an election;
             40          (II) appointment; or
             41          (III) any contract of hire, express or implied, written or oral; and
             42          (ii) including:
             43          (A) an officer or employee of the state institutions of learning; and
             44          (B) a member of the National Guard while on state active duty; and
             45          (b) a person in the service of any employer, as defined in Section 34A-2-103 , who
             46      employs one or more workers or operatives regularly in the same business, or in or about the
             47      same establishment:
             48          (i) under any contract of hire:
             49          (A) express or implied; and
             50          (B) oral or written;
             51          (ii) including aliens and minors, whether legally or illegally working for hire; and
             52          (iii) not including any person whose employment:
             53          (A) is casual; and
             54          (B) not in the usual course of the trade, business, or occupation of the employee's
             55      employer.
             56          (2) (a) Unless a lessee provides coverage as an employer under this chapter and
             57      Chapter 3, Utah Occupational Disease Act, any lessee in mines or of mining property and each


             58      employee and sublessee of the lessee shall be:
             59          (i) covered for compensation by the lessor under this chapter and Chapter 3, Utah
             60      Occupational Disease Act;
             61          (ii) subject to this chapter and Chapter 3, Utah Occupational Disease Act; and
             62          (iii) entitled to the benefits of this chapter and Chapter 3, Utah Occupational Disease
             63      Act, to the same extent as if the lessee, employee, or sublessee were employees of the lessor
             64      drawing the wages paid employees for substantially similar work.
             65          (b) The lessor may deduct from the proceeds of ores mined by the lessees an amount
             66      equal to the insurance premium for that type of work.
             67          (3) (a) A partnership or sole proprietorship may elect to include any partner of the
             68      partnership or owner of the sole proprietorship as an employee of the partnership or sole
             69      proprietorship under this chapter and Chapter 3, Utah Occupational Disease Act.
             70          (b) If a partnership or sole proprietorship makes an election under Subsection (3)(a),
             71      the partnership or sole proprietorship shall serve written notice upon its insurance carrier
             72      naming the persons to be covered.
             73          (c) A partner of a partnership or owner of a sole proprietorship may not be considered
             74      an employee of the partner's partnership or the owner's sole proprietorship under this chapter or
             75      Chapter 3, Utah Occupational Disease Act, until the notice described in Subsection (3)(b) is
             76      given.
             77          (d) For premium rate making, the insurance carrier shall assume the salary or wage of
             78      the partner or sole proprietor electing coverage under Subsection (3)(a) to be 100% of the
             79      state's average weekly wage.
             80          (4) (a) A corporation may elect not to include any director or officer of the corporation
             81      as an employee under this chapter and Chapter 3, Utah Occupational Disease Act.
             82          (b) If a corporation makes an election under Subsection (4)(a), the corporation shall
             83      serve written notice naming the individuals who are directors or officers to be excluded from
             84      coverage:
             85          (i) upon its insurance carrier [naming the persons to be excluded from coverage.], if


             86      any; or
             87          (ii) upon the commission if the corporation is self-insured or has no employee other
             88      than the one or more directors or officers being excluded.
             89          (c) A corporation may exclude no more than five individuals who are directors or
             90      officers under Subsection (4)(b)(ii).
             91          (d) An exclusion under this Subsection (4) is subject to Subsection 34A-2-103 (7)(d).
             92          [(c)] (e) A director or officer of a corporation is considered an employee under this
             93      chapter and Chapter 3, Utah Occupational Disease Act, until the notice described in Subsection
             94      (4)(b) is given.
             95          (f) The commission may make rules, in accordance with Title 63G, Chapter 3, Utah
             96      Administrative Rulemaking Act, regarding the form of the notice described in Subsection
             97      (4)(b)(ii), including a requirement to provide documentation, if any.
             98          (5) As used in this chapter and Chapter 3, Utah Occupational Disease Act, "employee,"
             99      "worker," and "operative" do not include:
             100          (a) a sales agent or associate broker, as defined in Section 61-2f-102 , who performs
             101      services in that capacity for a principal broker if:
             102          (i) substantially all of the sales agent's or associate broker's income for services is from
             103      real estate commissions; and
             104          (ii) the sales agent's or associate broker's services are performed under a written
             105      contract that provides that:
             106          (A) the real estate agent is an independent contractor; and
             107          (B) the sales agent or associate broker is not to be treated as an employee for federal
             108      income tax purposes;
             109          (b) an offender performing labor under Section 64-13-16 or 64-13-19 , except as
             110      required by federal statute or regulation;
             111          (c) an individual who for an insurance producer, as defined in Section 31A-1-301 ,
             112      solicits, negotiates, places, or procures insurance if:
             113          (i) substantially all of the individual's income from those services is from insurance


             114      commissions; and
             115          (ii) the services of the individual are performed under a written contract that states that
             116      the individual:
             117          (A) is an independent contractor;
             118          (B) is not to be treated as an employee for federal income tax purposes; and
             119          (C) can derive income from more than one insurance company;
             120          (d) notwithstanding Subsection 34A-2-103 (4), an individual who provides domestic
             121      work for a person if:
             122          (i) the person for whom the domestic work is being provided receives or is eligible to
             123      receive the domestic work under a state or federal program designed to pay the costs of
             124      domestic work to prevent the person from being placed in:
             125          (A) an institution; or
             126          (B) a more restrictive placement than where that person resides at the time the person
             127      receives the domestic work;
             128          (ii) the individual is paid by a person designated by the Secretary of the Treasury in
             129      accordance with Section 3504, Internal Revenue Code, as a fiduciary, agent, or other person
             130      that has the control, receipt, custody, or disposal of, or pays the wages of the individual; and
             131          (iii) the domestic work is performed under a written contract that notifies the
             132      individual that the individual is not an employee under this chapter or Chapter 3, Utah
             133      Occupational Disease Act; or
             134          (e) subject to Subsections (6), (7), and (8), an individual who:
             135          (i) (A) owns a motor vehicle; or
             136          (B) leases a motor vehicle to a motor carrier;
             137          (ii) personally operates the motor vehicle described in Subsection (5)(e)(i);
             138          (iii) operates the motor vehicle described in Subsection (5)(e)(i) under a written
             139      agreement with the motor carrier that states that the individual operates the motor vehicle as an
             140      independent contractor; and
             141          (iv) (A) provides to the motor carrier at the time the written agreement described in


             142      Subsection (5)(e)(iii) is executed or as soon after the execution as provided by the commission,
             143      a copy of a workers' compensation coverage waiver issued pursuant to Part 10, Workers'
             144      Compensation Coverage Waivers Act, to the individual; and
             145          (B) provides to the motor carrier at the time the written agreement described in
             146      Subsection (5)(e)(iii) is executed or as soon after the execution as provided by an insurer, proof
             147      that the individual is covered by occupational accident related insurance with the coverage and
             148      benefit limits listed in Subsection (7)(c).
             149          (6) An individual described in Subsection (5)(d) or (e) may become an employee under
             150      this chapter and Chapter 3, Utah Occupational Disease Act, if the employer of the individual
             151      complies with:
             152          (a) this chapter and Chapter 3, Utah Occupational Disease Act; and
             153          (b) commission rules.
             154          (7) For purposes of Subsection (5)(e):
             155          (a) "Motor carrier" means a person engaged in the business of transporting freight,
             156      merchandise, or other property by a commercial vehicle on a highway within this state.
             157          (b) "Motor vehicle" means a self-propelled vehicle intended primarily for use and
             158      operation on the highways, including a trailer or semitrailer designed for use with another
             159      motorized vehicle.
             160          (c) "Occupational accident related insurance" means insurance that provides the
             161      following coverage at a minimum aggregate policy limit of $1,000,000 for all benefits paid,
             162      including medical expense benefits, for an injury sustained in the course of working under a
             163      written agreement described in Subsection (5)(e)(iii):
             164          (i) disability benefits;
             165          (ii) death benefits; and
             166          (iii) medical expense benefits, which include:
             167          (A) hospital coverage;
             168          (B) surgical coverage;
             169          (C) prescription drug coverage; and


             170          (D) dental coverage.
             171          (8) For an individual described in Subsection (5)(e), the commission shall verify the
             172      existence of occupational accident insurance coverage with the coverage and benefit limits
             173      listed in Subsection (7)(c) before the commission may issue a workers' compensation coverage
             174      waiver to the individual pursuant to Part 10, Workers' Compensation Coverage Waivers Act.


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