First Substitute H.B. 61

This document includes Senate Committee Amendments incorporated into the bill on Wed, Mar 2, 2011 at 1:37 PM by rday. -->

Representative Roger E. Barrus proposes the following substitute bill:

1 HOME BUSINESS WORKERS' COMPENSATION
2 AMENDMENTS
3 2011 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Roger E. Barrus
6 Senate Sponsor: Stephen H. Urquhart
7
8 LONG TITLE
9 General Description:
10 This bill modifies the Workers' Compensation Act to exempt certain persons employed
11 by a home business from workers' compensation coverage.
12 Highlighted Provisions:
13 This bill:
14 . defines terms;
15 . provides that a home business is not considered an employer of an owner's
16 S. [ immediate family member ] spouse .S for purposes of workers' compensation if certain
17 conditions are met; and
18 . makes technical and conforming amendments.
19 Money Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 None
23 Utah Code Sections Affected:
24 AMENDS:
25 34A-2-103, as last amended by Laws of Utah 2008, Chapters 250, 263, and 318

26 34A-2-111, as last amended by Laws of Utah 2009, Chapter 220
27
28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 34A-2-103 is amended to read:
30 34A-2-103. Employers enumerated and defined -- Regularly employed --
31 Statutory employers.
32 (1) (a) The state, and each county, city, town, and school district in the state are
33 considered employers under this chapter and Chapter 3, Utah Occupational Disease Act.
34 (b) For the purposes of the exclusive remedy in this chapter and Chapter 3, Utah
35 Occupational Disease Act prescribed in Sections 34A-2-105 and 34A-3-102 , the state is
36 considered to be a single employer and includes any office, department, agency, authority,
37 commission, board, institution, hospital, college, university, or other instrumentality of the
38 state.
39 (2) (a) Except as provided in Subsection (4), each person, including each public utility
40 and each independent contractor, who regularly employs one or more workers or operatives in
41 the same business, or in or about the same establishment, under any contract of hire, express or
42 implied, oral or written, is considered an employer under this chapter and Chapter 3, Utah
43 Occupational Disease Act.
44 (b) As used in this Subsection (2):
45 (i) "Independent contractor" means any person engaged in the performance of any work
46 for another who, while so engaged, is:
47 (A) independent of the employer in all that pertains to the execution of the work;
48 (B) not subject to the routine rule or control of the employer;
49 (C) engaged only in the performance of a definite job or piece of work; and
50 (D) subordinate to the employer only in effecting a result in accordance with the
51 employer's design.
52 (ii) "Regularly" includes all employments in the usual course of the trade, business,
53 profession, or occupation of the employer, whether continuous throughout the year or for only a
54 portion of the year.
55 (3) (a) The client under a professional employer organization agreement regulated
56 under Title 31A, Chapter 40, Professional Employer Organization Licensing Act:

57 (i) is considered the employer of a covered employee; and
58 (ii) subject to Section 31A-40-209 , shall secure workers' compensation benefits for a
59 covered employee by complying with Subsection 34A-2-201 (1) or (2) and commission rules.
60 (b) The division shall promptly inform the Insurance Department if the division has
61 reason to believe that a professional employer organization is not in compliance with
62 Subsection 34A-2-201 (1) or (2) and commission rules.
63 (4) A domestic employer who does not employ one employee or more than one
64 employee at least 40 hours per week is not considered an employer under this chapter and
65 Chapter 3, Utah Occupational Disease Act.
66 (5) (a) As used in this Subsection (5):
67 (i) (A) "agricultural employer" means a person who employs agricultural labor as
68 defined in Subsections 35A-4-206 (1) and (2) and does not include employment as provided in
69 Subsection 35A-4-206 (3); and
70 (B) notwithstanding Subsection (5)(a)(i)(A), only for purposes of determining who is a
71 member of the employer's immediate family under Subsection (5)(a)(ii), if the agricultural
72 employer is a corporation, partnership, or other business entity, "agricultural employer" means
73 an officer, director, or partner of the business entity;
74 (ii) "employer's immediate family" means:
75 (A) an agricultural employer's:
76 (I) spouse;
77 (II) grandparent;
78 (III) parent;
79 (IV) sibling;
80 (V) child;
81 (VI) grandchild;
82 (VII) nephew; or
83 (VIII) niece;
84 (B) a spouse of any person provided in Subsection (5)(a)(ii)(A)(II) through (VIII); or
85 (C) an individual who is similar to those listed in Subsections (5)(a)(ii)(A) or (B) as
86 defined by rules of the commission; and
87 (iii) "nonimmediate family" means a person who is not a member of the employer's

88 immediate family.
89 (b) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
90 agricultural employer is not considered an employer of a member of the employer's immediate
91 family.
92 (c) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
93 agricultural employer is not considered an employer of a nonimmediate family employee if:
94 (i) for the previous calendar year the agricultural employer's total annual payroll for all
95 nonimmediate family employees was less than $8,000; or
96 (ii) (A) for the previous calendar year the agricultural employer's total annual payroll
97 for all nonimmediate family employees was equal to or greater than $8,000 but less than
98 $50,000; and
99 (B) the agricultural employer maintains insurance that covers job-related injuries of the
100 employer's nonimmediate family employees in at least the following amounts:
101 (I) $300,000 liability insurance, as defined in Section 31A-1-301 ; and
102 (II) $5,000 for health care benefits similar to benefits under health care insurance as
103 defined in Section 31A-1-301 .
104 (d) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
105 agricultural employer is considered an employer of a nonimmediate family employee if:
106 (i) for the previous calendar year the agricultural employer's total annual payroll for all
107 nonimmediate family employees is equal to or greater than $50,000; or
108 (ii) (A) for the previous year the agricultural employer's total payroll for nonimmediate
109 family employees was equal to or exceeds $8,000 but is less than $50,000; and
110 (B) the agricultural employer fails to maintain the insurance required under Subsection
111 (5)(c)(ii)(B).
112 (6) (a) As used in this Subsection (6):
113 (i) "Hazardous work" means a hazardous occupation as defined in Section 34-23-103 .
114 (ii) "Home business" means a business that is primarily conducted at the primary
115 residence of an owner of the business.
116 S. [ (iii) "Immediate family member" means an individual's:
117 (A) spouse; or
118 (B) child who lives in the individual's primary residence and who is claimed by the ] .S

119 S. [ individual as a dependent under Section 151, Internal Revenue Code.
120 (iv) ] (iii) .S "Primary residence" means:
121 (A) a dwelling used by an individual as the home at which the individual regularly
122 resides, regardless of whether the dwelling is owned or rented, or is a single-family dwelling or
123 part of a multi-family dwelling;
124 (B) so much of the land surrounding the dwelling described in Subsection (6)(a) S. [ (iv) ]
124a (iii) .S (A)
125 as is reasonably necessary for use of the dwelling; and
126 (C) any improvement on the land described in Subsection (6)(a) S. [ (iv) ] (iii) .S (B).
127 (b) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, a home
128 business is not considered an employer of an individual who is:
129 (i) S. [ an immediate family member ] the spouse .S of an owner of the home business; and
130 (ii) employed by the home business to engage in business activities that:
131 (A) do not constitute hazardous work; and
132 (B) are primarily at the primary residence of the owner described in Subsection
133 (6)(b)(i).
134 [(6)] (7) An employer of [agricultural laborers or domestic servants] an agricultural
135 laborer, domestic servant, or home business owner's S. [ immediate family member ] spouse .S ,
135a who is not
136 considered an employer under this chapter and Chapter 3, Utah Occupational Disease Act, may
137 come under this chapter and Chapter 3, Utah Occupational Disease Act, by complying with:
138 (a) this chapter and Chapter 3, Utah Occupational Disease Act; and
139 (b) the rules of the commission.
140 [(7)] (8) (a) (i) As used in this Subsection [(7)] (8)(a), "employer" includes any of the
141 following persons that procures work to be done by a contractor notwithstanding whether or
142 not the person directly employs a person:
143 (A) a sole proprietorship;
144 (B) a corporation;
145 (C) a partnership;
146 (D) a limited liability company; or
147 (E) a person similar to one described in Subsections [(7)] (8)(a)(i)(A) through (D).
148 (ii) If an employer procures any work to be done wholly or in part for the employer by
149 a contractor over whose work the employer retains supervision or control, and this work is a

150 part or process in the trade or business of the employer, the contractor, all persons employed by
151 the contractor, all subcontractors under the contractor, and all persons employed by any of
152 these subcontractors, are considered employees of the original employer for the purposes of
153 this chapter and Chapter 3, Utah Occupational Disease Act.
154 (b) Any person who is engaged in constructing, improving, repairing, or remodelling a
155 residence that the person owns or is in the process of acquiring as the person's personal
156 residence may not be considered an employee or employer solely by operation of Subsection
157 [(7)] (8)(a).
158 (c) A partner in a partnership or an owner of a sole proprietorship is not considered an
159 employee under Subsection [(7)] (8)(a) if the employer who procures work to be done by the
160 partnership or sole proprietorship obtains and relies on either:
161 (i) a valid certification of the partnership's or sole proprietorship's compliance with
162 Section 34A-2-201 indicating that the partnership or sole proprietorship secured the payment of
163 workers' compensation benefits pursuant to Section 34A-2-201 ; or
164 (ii) if a partnership or sole proprietorship with no employees other than a partner of the
165 partnership or owner of the sole proprietorship, a workers' compensation coverage waiver
166 issued by an insurer pursuant to Section 31A-22-1011 stating that:
167 (A) the partnership or sole proprietorship is customarily engaged in an independently
168 established trade, occupation, profession, or business; and
169 (B) the partner or owner personally waives the partner's or owner's entitlement to the
170 benefits of this chapter and Chapter 3, Utah Occupational Disease Act, in the operation of the
171 partnership or sole proprietorship.
172 (d) A director or officer of a corporation is not considered an employee under
173 Subsection [(7)] (8)(a) if the director or officer is excluded from coverage under Subsection
174 34A-2-104 (4).
175 (e) A contractor or subcontractor is not an employee of the employer under Subsection
176 [(7)] (8)(a), if the employer who procures work to be done by the contractor or subcontractor
177 obtains and relies on either:
178 (i) a valid certification of the contractor's or subcontractor's compliance with Section
179 34A-2-201 ; or
180 (ii) if a partnership, corporation, or sole proprietorship with no employees other than a

181 partner of the partnership, officer of the corporation, or owner of the sole proprietorship, a
182 workers' compensation coverage waiver issued by an insurer pursuant to Section 31A-22-1011
183 stating that:
184 (A) the partnership, corporation, or sole proprietorship is customarily engaged in an
185 independently established trade, occupation, profession, or business; and
186 (B) the partner, corporate officer, or owner personally waives the partner's, corporate
187 officer's, or owner's entitlement to the benefits of this chapter and Chapter 3, Utah
188 Occupational Disease Act, in the operation of the partnership's, corporation's, or sole
189 proprietorship's enterprise under a contract of hire for services.
190 (f) (i) For purposes of this Subsection [(7)] (8)(f), "eligible employer" means a person
191 who:
192 (A) is an employer; and
193 (B) procures work to be done wholly or in part for the employer by a contractor,
194 including:
195 (I) all persons employed by the contractor;
196 (II) all subcontractors under the contractor; and
197 (III) all persons employed by any of these subcontractors.
198 (ii) Notwithstanding the other provisions in this Subsection [(7)] (8), if the conditions
199 of Subsection [(7)] (8)(f)(iii) are met, an eligible employer is considered an employer for
200 purposes of Section 34A-2-105 of the contractor, subcontractor, and all persons employed by
201 the contractor or subcontractor described in Subsection [(7)] (8)(f)(i)(B).
202 (iii) Subsection [(7)] (8)(f)(ii) applies if the eligible employer:
203 (A) under Subsection [(7)] (8)(a) is liable for and pays workers' compensation benefits
204 as an original employer under Subsection [(7)] (8)(a) because the contractor or subcontractor
205 fails to comply with Section 34A-2-201 ;
206 (B) (I) secures the payment of workers' compensation benefits for the contractor or
207 subcontractor pursuant to Section 34A-2-201 ;
208 (II) procures work to be done that is part or process of the trade or business of the
209 eligible employer; and
210 (III) does the following with regard to a written workplace accident and injury
211 reduction program that meets the requirements of Subsection 34A-2-111 (3)(d):

212 (Aa) adopts the workplace accident and injury reduction program;
213 (Bb) posts the workplace accident and injury reduction program at the work site at
214 which the eligible employer procures work; and
215 (Cc) enforces the workplace accident and injury reduction program according to the
216 terms of the workplace accident and injury reduction program; or
217 (C) (I) obtains and relies on:
218 (Aa) a valid certification described in Subsection [(7)] (8)(c)(i) or [(7)] (8)(e)(i);
219 (Bb) a workers' compensation coverage waiver described in Subsection [(7)] (8)(c)(ii)
220 or [(7)] (8)(e)(ii); or
221 (Cc) proof that a director or officer is excluded from coverage under Subsection
222 34A-2-104 (4);
223 (II) is liable under Subsection [(7)] (8)(a) for the payment of workers' compensation
224 benefits if the contractor or subcontractor fails to comply with Section 34A-2-201 ;
225 (III) procures work to be done that is part or process in the trade or business of the
226 eligible employer; and
227 (IV) does the following with regard to a written workplace accident and injury
228 reduction program that meets the requirements of Subsection 34A-2-111 (3)(d):
229 (Aa) adopts the workplace accident and injury reduction program;
230 (Bb) posts the workplace accident and injury reduction program at the work site at
231 which the eligible employer procures work; and
232 (Cc) enforces the workplace accident and injury reduction program according to the
233 terms of the workplace accident and injury reduction program.
234 Section 2. Section 34A-2-111 is amended to read:
235 34A-2-111. Managed health care programs -- Other safety programs.
236 (1) As used in this section:
237 (a) (i) "Health care provider" means a person who furnishes treatment or care to
238 persons who have suffered bodily injury.
239 (ii) "Health care provider" includes:
240 (A) a hospital;
241 (B) a clinic;
242 (C) an emergency care center;

243 (D) a physician;
244 (E) a nurse;
245 (F) a nurse practitioner;
246 (G) a physician's assistant;
247 (H) a paramedic; or
248 (I) an emergency medical technician.
249 (b) "Physician" means any health care provider licensed under:
250 (i) Title 58, Chapter 5a, Podiatric Physician Licensing Act;
251 (ii) Title 58, Chapter 24b, Physical Therapy Practice Act;
252 (iii) Title 58, Chapter 67, Utah Medical Practice Act;
253 (iv) Title 58, Chapter 68, Utah Osteopathic Medical Practice Act;
254 (v) Title 58, Chapter 69, Dentist and Dental Hygienist Practice Act;
255 (vi) Title 58, Chapter 70a, Physician Assistant Act;
256 (vii) Title 58, Chapter 71, Naturopathic Physician Practice Act;
257 (viii) Title 58, Chapter 72, Acupuncture Licensing Act; and
258 (ix) Title 58, Chapter 73, Chiropractic Physician Practice Act.
259 (c) "Preferred health care facility" means a facility:
260 (i) that is a health care facility as defined in Section 26-21-2 ; and
261 (ii) designated under a managed health care program.
262 (d) "Preferred provider physician" means a physician designated under a managed
263 health care program.
264 (e) "Self-insured employer" is as defined in Section 34A-2-201.5 .
265 (2) (a) A self-insured employer and insurance carrier may adopt a managed health care
266 program to provide employees the benefits of this chapter or Chapter 3, Utah Occupational
267 Disease Act, beginning January 1, 1993. The plan shall comply with this Subsection (2).
268 (b) (i) A preferred provider program may be developed if the preferred provider
269 program allows a selection by the employee of more than one physician in the health care
270 specialty required for treating the specific problem of an industrial patient.
271 (ii) (A) Subject to the requirements of this section, if a preferred provider program is
272 developed by an insurance carrier or self-insured employer, an employee is required to use:
273 (I) preferred provider physicians; and

274 (II) preferred health care facilities.
275 (B) If a preferred provider program is not developed, an employee may have free
276 choice of health care providers.
277 (iii) The failure to do the following may, if the employee has been notified of the
278 preferred provider program, result in the employee being obligated for any charges in excess of
279 the preferred provider allowances:
280 (A) use a preferred health care facility; or
281 (B) initially receive treatment from a preferred provider physician.
282 (iv) Notwithstanding the requirements of Subsections (2)(b)(i) through (iii), a
283 self-insured employer or other employer may:
284 (A) (I) (Aa) have its own health care facility on or near its worksite or premises; and
285 (Bb) continue to contract with other health care providers; or
286 (II) operate a health care facility; and
287 (B) require employees to first seek treatment at the provided health care or contracted
288 facility.
289 (v) An employee subject to a preferred provider program or employed by an employer
290 having its own health care facility may procure the services of any qualified health care
291 provider:
292 (A) for emergency treatment, if a physician employed in the preferred provider
293 program or at the health care facility is not available for any reason;
294 (B) for conditions the employee in good faith believes are nonindustrial; or
295 (C) when an employee living in a rural area would be unduly burdened by traveling to:
296 (I) a preferred provider physician; or
297 (II) preferred health care facility.
298 (c) (i) (A) An employer, insurance carrier, or self-insured employer may enter into
299 contracts with the following for the purposes listed in Subsection (2)(c)(i)(B):
300 (I) health care providers;
301 (II) medical review organizations; or
302 (III) vendors of medical goods, services, and supplies including medicines.
303 (B) A contract described in Subsection [(1)] (2)(c)(i)(A) may be made for the following
304 purposes:

305 (I) insurance carriers or self-insured employers may form groups in contracting for
306 managed health care services with health care providers;
307 (II) peer review;
308 (III) methods of utilization review;
309 (IV) use of case management;
310 (V) bill audit;
311 (VI) discounted purchasing; and
312 (VII) the establishment of a reasonable health care treatment protocol program
313 including the implementation of medical treatment and quality care guidelines that are:
314 (Aa) scientifically based;
315 (Bb) peer reviewed; and
316 (Cc) consistent with standards for health care treatment protocol programs that the
317 commission shall establish by rules made in accordance with Title 63G, Chapter 3, Utah
318 Administrative Rulemaking Act, including the authority of the commission to approve a health
319 care treatment protocol program before it is used or disapprove a health care treatment protocol
320 program that does not comply with this Subsection (2)(c)(i)(B)(VII).
321 (ii) An insurance carrier may make any or all of the factors in Subsection (2)(c)(i) a
322 condition of insuring an entity in its insurance contract.
323 (3) (a) In addition to a managed health care program, an insurance carrier may require
324 an employer to establish a work place safety program if the employer:
325 (i) has an experience modification factor of 1.00 or higher, as determined by the
326 National Council on Compensation Insurance; or
327 (ii) is determined by the insurance carrier to have a three-year loss ratio of 100% or
328 higher.
329 (b) A workplace safety program may include:
330 (i) a written workplace accident and injury reduction program that:
331 (A) promotes safe and healthful working conditions; and
332 (B) is based on clearly stated goals and objectives for meeting those goals; and
333 (ii) a documented review of the workplace accident and injury reduction program each
334 calendar year delineating how procedures set forth in the program are met.
335 (c) A written workplace accident and injury reduction program permitted under

336 Subsection (3)(b)(i) should describe:
337 (i) how managers, supervisors, and employees are responsible for implementing the
338 program;
339 (ii) how continued participation of management will be established, measured, and
340 maintained;
341 (iii) the methods used to identify, analyze, and control new or existing hazards,
342 conditions, and operations;
343 (iv) how the program will be communicated to all employees so that the employees are
344 informed of work-related hazards and controls;
345 (v) how workplace accidents will be investigated and corrective action implemented;
346 and
347 (vi) how safe work practices and rules will be enforced.
348 (d) For the purposes of a workplace accident and injury reduction program of an
349 eligible employer described in Subsection 34A-2-103 [(7)](8)(f), the workplace accident and
350 injury reduction program shall:
351 (i) include the provisions described in Subsections (3)(b) and (c), except that the
352 employer shall conduct a documented review of the workplace accident and injury reduction
353 program at least semiannually delineating how procedures set forth in the workplace accident
354 and injury reduction program are met; and
355 (ii) require a written agreement between the employer and all contractors and
356 subcontractors on a project that states that:
357 (A) the employer has the right to control the manner or method by which the work is
358 executed;
359 (B) if a contractor, subcontractor, or any employee of a contractor or subcontractor
360 violates the workplace accident and injury reduction program, the employer maintains the right
361 to:
362 (I) terminate the contract with the contractor or subcontractor;
363 (II) remove the contractor or subcontractor from the work site; or
364 (III) require that the contractor or subcontractor not permit an employee that violates
365 the workplace accident and injury reduction program to work on the project for which the
366 employer is procuring work; and

367 (C) the contractor or subcontractor shall provide safe and appropriate equipment
368 subject to the right of the employer to:
369 (I) inspect on a regular basis the equipment of a contractor or subcontractor; and
370 (II) require that the contractor or subcontractor repair, replace, or remove equipment
371 the employer determines not to be safe or appropriate.
372 (4) The premiums charged to any employer who fails or refuses to establish a
373 workplace safety program pursuant to Subsection (3)(b)(i) or (ii) may be increased by 5% over
374 any existing current rates and premium modifications charged that employer.