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S.B. 121 Enrolled

             1     

WORKERS' COMPENSATION WAIVER AMENDMENTS

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Karen Mayne

             5     
House Sponsor: Todd E. Kiser

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Utah Labor Code to correct language regarding the issuance of
             10      waivers.
             11      Highlighted Provisions:
             12          This bill:
             13          .    removes incorrect language regarding insurers issuing workers' compensation
             14      coverage waivers; and
             15          .    makes technical and conforming amendments.
             16      Money Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          34A-2-103, as last amended by Laws of Utah 2011, Third Special Session, Chapter 4
             23          34A-2-104, as last amended by Laws of Utah 2011, Chapter 328
             24     
             25      Be it enacted by the Legislature of the state of Utah:
             26          Section 1. Section 34A-2-103 is amended to read:
             27           34A-2-103. Employers enumerated and defined -- Regularly employed --
             28      Statutory employers.
             29          (1) (a) The state, and each county, city, town, and school district in the state are


             30      considered employers under this chapter and Chapter 3, Utah Occupational Disease Act.
             31          (b) For the purposes of the exclusive remedy in this chapter and Chapter 3, Utah
             32      Occupational Disease Act prescribed in Sections 34A-2-105 and 34A-3-102 , the state is
             33      considered to be a single employer and includes any office, department, agency, authority,
             34      commission, board, institution, hospital, college, university, or other instrumentality of the
             35      state.
             36          (2) (a) Except as provided in Subsection (4), each person, including each public utility
             37      and each independent contractor, who regularly employs one or more workers or operatives in
             38      the same business, or in or about the same establishment, under any contract of hire, express or
             39      implied, oral or written, is considered an employer under this chapter and Chapter 3, Utah
             40      Occupational Disease Act.
             41          (b) As used in this Subsection (2):
             42          (i) "Independent contractor" means any person engaged in the performance of any work
             43      for another who, while so engaged, is:
             44          (A) independent of the employer in all that pertains to the execution of the work;
             45          (B) not subject to the routine rule or control of the employer;
             46          (C) engaged only in the performance of a definite job or piece of work; and
             47          (D) subordinate to the employer only in effecting a result in accordance with the
             48      employer's design.
             49          (ii) "Regularly" includes all employments in the usual course of the trade, business,
             50      profession, or occupation of the employer, whether continuous throughout the year or for only a
             51      portion of the year.
             52          (3) (a) The client under a professional employer organization agreement regulated
             53      under Title 31A, Chapter 40, Professional Employer Organization Licensing Act:
             54          (i) is considered the employer of a covered employee; and
             55          (ii) subject to Section 31A-40-209 , shall secure workers' compensation benefits for a
             56      covered employee by complying with Subsection 34A-2-201 (1) or (2) and commission rules.
             57          (b) The division shall promptly inform the Insurance Department if the division has


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


             86          (b) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             87      agricultural employer is not considered an employer of a member of the employer's immediate
             88      family.
             89          (c) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             90      agricultural employer is not considered an employer of a nonimmediate family employee if:
             91          (i) for the previous calendar year the agricultural employer's total annual payroll for all
             92      nonimmediate family employees was less than $8,000; or
             93          (ii) (A) for the previous calendar year the agricultural employer's total annual payroll
             94      for all nonimmediate family employees was equal to or greater than $8,000 but less than
             95      $50,000; and
             96          (B) the agricultural employer maintains insurance that covers job-related injuries of the
             97      employer's nonimmediate family employees in at least the following amounts:
             98          (I) $300,000 liability insurance, as defined in Section 31A-1-301 ; and
             99          (II) $5,000 for health care benefits similar to benefits under health care insurance as
             100      defined in Section 31A-1-301 .
             101          (d) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             102      agricultural employer is considered an employer of a nonimmediate family employee if:
             103          (i) for the previous calendar year the agricultural employer's total annual payroll for all
             104      nonimmediate family employees is equal to or greater than $50,000; or
             105          (ii) (A) for the previous year the agricultural employer's total payroll for nonimmediate
             106      family employees was equal to or exceeds $8,000 but is less than $50,000; and
             107          (B) the agricultural employer fails to maintain the insurance required under Subsection
             108      (5)(c)(ii)(B).
             109          (6) An employer of agricultural laborers or domestic servants who is not considered an
             110      employer under this chapter and Chapter 3, Utah Occupational Disease Act, may come under
             111      this chapter and Chapter 3, Utah Occupational Disease Act, by complying with:
             112          (a) this chapter and Chapter 3, Utah Occupational Disease Act; and
             113          (b) the rules of the commission.


             114          (7) (a) (i) As used in this Subsection (7)(a), "employer" includes any of the following
             115      persons that procures work to be done by a contractor notwithstanding whether or not the
             116      person directly employs a person:
             117          (A) a sole proprietorship;
             118          (B) a corporation;
             119          (C) a partnership;
             120          (D) a limited liability company; or
             121          (E) a person similar to one described in Subsections (7)(a)(i)(A) through (D).
             122          (ii) If an employer procures any work to be done wholly or in part for the employer by
             123      a contractor over whose work the employer retains supervision or control, and this work is a
             124      part or process in the trade or business of the employer, the contractor, all persons employed by
             125      the contractor, all subcontractors under the contractor, and all persons employed by any of
             126      these subcontractors, are considered employees of the original employer for the purposes of
             127      this chapter and Chapter 3, Utah Occupational Disease Act.
             128          (b) Any person who is engaged in constructing, improving, repairing, or remodelling a
             129      residence that the person owns or is in the process of acquiring as the person's personal
             130      residence may not be considered an employee or employer solely by operation of Subsection
             131      (7)(a).
             132          (c) A partner in a partnership or an owner of a sole proprietorship is not considered an
             133      employee under Subsection (7)(a) if the employer who procures work to be done by the
             134      partnership or sole proprietorship obtains and relies on either:
             135          (i) a valid certification of the partnership's or sole proprietorship's compliance with
             136      Section 34A-2-201 indicating that the partnership or sole proprietorship secured the payment of
             137      workers' compensation benefits pursuant to Section 34A-2-201 ; or
             138          (ii) if a partnership or sole proprietorship with no employees other than a partner of the
             139      partnership or owner of the sole proprietorship, a workers' compensation coverage waiver
             140      issued [by an insurer] pursuant to Part 10, Workers' Compensation Coverage Waivers Act,
             141      stating that:


             142          (A) the partnership or sole proprietorship is customarily engaged in an independently
             143      established trade, occupation, profession, or business; and
             144          (B) the partner or owner personally waives the partner's or owner's entitlement to the
             145      benefits of this chapter and Chapter 3, Utah Occupational Disease Act, in the operation of the
             146      partnership or sole proprietorship.
             147          (d) A director or officer of a corporation is not considered an employee under
             148      Subsection (7)(a) if the director or officer is excluded from coverage under Subsection
             149      34A-2-104 (4).
             150          (e) A contractor or subcontractor is not an employee of the employer under Subsection
             151      (7)(a), if the employer who procures work to be done by the contractor or subcontractor obtains
             152      and relies on either:
             153          (i) a valid certification of the contractor's or subcontractor's compliance with Section
             154      34A-2-201 ; or
             155          (ii) if a partnership, corporation, or sole proprietorship with no employees other than a
             156      partner of the partnership, officer of the corporation, or owner of the sole proprietorship, a
             157      workers' compensation coverage waiver issued [by an insurer] pursuant to Part 10, Workers'
             158      Compensation Coverage Waivers Act, stating that:
             159          (A) the partnership, corporation, or sole proprietorship is customarily engaged in an
             160      independently established trade, occupation, profession, or business; and
             161          (B) the partner, corporate officer, or owner personally waives the partner's, corporate
             162      officer's, or owner's entitlement to the benefits of this chapter and Chapter 3, Utah
             163      Occupational Disease Act, in the operation of the partnership's, corporation's, or sole
             164      proprietorship's enterprise under a contract of hire for services.
             165          (f) (i) For purposes of this Subsection (7)(f), "eligible employer" means a person who:
             166          (A) is an employer; and
             167          (B) procures work to be done wholly or in part for the employer by a contractor,
             168      including:
             169          (I) all persons employed by the contractor;


             170          (II) all subcontractors under the contractor; and
             171          (III) all persons employed by any of these subcontractors.
             172          (ii) Notwithstanding the other provisions in this Subsection (7), if the conditions of
             173      Subsection (7)(f)(iii) are met, an eligible employer is considered an employer for purposes of
             174      Section 34A-2-105 of the contractor, subcontractor, and all persons employed by the contractor
             175      or subcontractor described in Subsection (7)(f)(i)(B).
             176          (iii) Subsection (7)(f)(ii) applies if the eligible employer:
             177          (A) under Subsection (7)(a) is liable for and pays workers' compensation benefits as an
             178      original employer under Subsection (7)(a) because the contractor or subcontractor fails to
             179      comply with Section 34A-2-201 ;
             180          (B) (I) secures the payment of workers' compensation benefits for the contractor or
             181      subcontractor pursuant to Section 34A-2-201 ;
             182          (II) procures work to be done that is part or process of the trade or business of the
             183      eligible employer; and
             184          (III) does the following with regard to a written workplace accident and injury
             185      reduction program that meets the requirements of Subsection 34A-2-111 (3)(d):
             186          (Aa) adopts the workplace accident and injury reduction program;
             187          (Bb) posts the workplace accident and injury reduction program at the work site at
             188      which the eligible employer procures work; and
             189          (Cc) enforces the workplace accident and injury reduction program according to the
             190      terms of the workplace accident and injury reduction program; or
             191          (C) (I) obtains and relies on:
             192          (Aa) a valid certification described in Subsection (7)(c)(i) or (7)(e)(i);
             193          (Bb) a workers' compensation coverage waiver described in Subsection (7)(c)(ii) or
             194      (7)(e)(ii); or
             195          (Cc) proof that a director or officer is excluded from coverage under Subsection
             196      34A-2-104 (4);
             197          (II) is liable under Subsection (7)(a) for the payment of workers' compensation benefits


             198      if the contractor or subcontractor fails to comply with Section 34A-2-201 ;
             199          (III) procures work to be done that is part or process in the trade or business of the
             200      eligible employer; and
             201          (IV) does the following with regard to a written workplace accident and injury
             202      reduction program that meets the requirements of Subsection 34A-2-111 (3)(d):
             203          (Aa) adopts the workplace accident and injury reduction program;
             204          (Bb) posts the workplace accident and injury reduction program at the work site at
             205      which the eligible employer procures work; and
             206          (Cc) enforces the workplace accident and injury reduction program according to the
             207      terms of the workplace accident and injury reduction program.
             208          (8) (a) For purposes of this Subsection (8), "unincorporated entity" means an entity
             209      organized or doing business in the state that is not:
             210          (i) an individual;
             211          (ii) a corporation; or
             212          (iii) publicly traded.
             213          (b) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             214      unincorporated entity that is required to be licensed under Title 58, Chapter 55, Utah
             215      Construction Trades Licensing Act, is presumed to be the employer of each individual who
             216      holds, directly or indirectly, an ownership interest in the unincorporated entity.
             217      Notwithstanding Subsection (7)(c) and Subsection 34A-2-104 (3), the unincorporated entity
             218      shall provide the individual who holds the ownership interest workers' compensation coverage
             219      under this chapter and Chapter 3, Utah Occupational Disease Act, unless the presumption is
             220      rebutted under Subsection (8)(c).
             221          (c) Pursuant to rules made by the commission in accordance with Title 63G, Chapter 3,
             222      Utah Administrative Rulemaking Act, an unincorporated entity may rebut the presumption
             223      under Subsection (8)(b) for an individual by establishing by clear and convincing evidence that
             224      the individual:
             225          (i) is an active manager of the unincorporated entity;


             226          (ii) directly or indirectly holds at least an 8% ownership interest in the unincorporated
             227      entity; or
             228          (iii) is not subject to supervision or control in the performance of work by:
             229          (A) the unincorporated entity; or
             230          (B) a person with whom the unincorporated entity contracts.
             231          (d) As part of the rules made under Subsection (8)(c), the commission may define:
             232          (i) "active manager";
             233          (ii) "directly or indirectly holds at least an 8% ownership interest"; and
             234          (iii) "subject to supervision or control in the performance of work."
             235          Section 2. Section 34A-2-104 is amended to read:
             236           34A-2-104. "Employee," "worker," and "operative" defined -- Specific
             237      circumstances -- Exemptions.
             238          (1) As used in this chapter and Chapter 3, Utah Occupational Disease Act, "employee,"
             239      "worker," and "operative" mean:
             240          (a) (i) an elective or appointive officer and any other person:
             241          (A) in the service of:
             242          (I) the state;
             243          (II) a county, city, or town within the state; or
             244          (III) a school district within the state;
             245          (B) serving the state, or any county, city, town, or school district under:
             246          (I) an election;
             247          (II) appointment; or
             248          (III) any contract of hire, express or implied, written or oral; and
             249          (ii) including:
             250          (A) an officer or employee of the state institutions of learning; and
             251          (B) a member of the National Guard while on state active duty; and
             252          (b) a person in the service of any employer, as defined in Section 34A-2-103 , who
             253      employs one or more workers or operatives regularly in the same business, or in or about the


             254      same establishment:
             255          (i) under any contract of hire:
             256          (A) express or implied; and
             257          (B) oral or written;
             258          (ii) including aliens and minors, whether legally or illegally working for hire; and
             259          (iii) not including any person whose employment:
             260          (A) is casual; and
             261          (B) not in the usual course of the trade, business, or occupation of the employee's
             262      employer.
             263          (2) (a) Unless a lessee provides coverage as an employer under this chapter and
             264      Chapter 3, Utah Occupational Disease Act, any lessee in mines or of mining property and each
             265      employee and sublessee of the lessee shall be:
             266          (i) covered for compensation by the lessor under this chapter and Chapter 3, Utah
             267      Occupational Disease Act;
             268          (ii) subject to this chapter and Chapter 3, Utah Occupational Disease Act; and
             269          (iii) entitled to the benefits of this chapter and Chapter 3, Utah Occupational Disease
             270      Act, to the same extent as if the lessee, employee, or sublessee were employees of the lessor
             271      drawing the wages paid employees for substantially similar work.
             272          (b) The lessor may deduct from the proceeds of ores mined by the lessees an amount
             273      equal to the insurance premium for that type of work.
             274          (3) (a) A partnership or sole proprietorship may elect to include any partner of the
             275      partnership or owner of the sole proprietorship as an employee of the partnership or sole
             276      proprietorship under this chapter and Chapter 3, Utah Occupational Disease Act.
             277          (b) If a partnership or sole proprietorship makes an election under Subsection (3)(a),
             278      the partnership or sole proprietorship shall serve written notice upon its insurance carrier
             279      naming the persons to be covered.
             280          (c) A partner of a partnership or owner of a sole proprietorship may not be considered
             281      an employee of the partner's partnership or the owner's sole proprietorship under this chapter or


             282      Chapter 3, Utah Occupational Disease Act, until the notice described in Subsection (3)(b) is
             283      given.
             284          (d) For premium rate making, the insurance carrier shall assume the salary or wage of
             285      the partner or sole proprietor electing coverage under Subsection (3)(a) to be 100% of the
             286      state's average weekly wage.
             287          (4) (a) A corporation may elect not to include any director or officer of the corporation
             288      as an employee under this chapter and Chapter 3, Utah Occupational Disease Act.
             289          (b) If a corporation makes an election under Subsection (4)(a), the corporation shall
             290      serve written notice upon its insurance carrier naming the persons to be excluded from
             291      coverage.
             292          (c) A director or officer of a corporation is considered an employee under this chapter
             293      and Chapter 3, Utah Occupational Disease Act, until the notice described in Subsection (4)(b)
             294      is given.
             295          (5) As used in this chapter and Chapter 3, Utah Occupational Disease Act, "employee,"
             296      "worker," and "operative" do not include:
             297          (a) a sales agent or associate broker, as defined in Section 61-2f-102 , who performs
             298      services in that capacity for a principal broker if:
             299          (i) substantially all of the sales agent's or associate broker's income for services is from
             300      real estate commissions; and
             301          (ii) the sales agent's or associate broker's services are performed under a written
             302      contract that provides that:
             303          (A) the real estate agent is an independent contractor; and
             304          (B) the sales agent or associate broker is not to be treated as an employee for federal
             305      income tax purposes;
             306          (b) an offender performing labor under Section 64-13-16 or 64-13-19 , except as
             307      required by federal statute or regulation;
             308          (c) an individual who for an insurance producer, as defined in Section 31A-1-301 ,
             309      solicits, negotiates, places or procures insurance if:


             310          (i) substantially all of the individual's income from those services is from insurance
             311      commissions; and
             312          (ii) the services of the individual are performed under a written contract that states that
             313      the individual:
             314          (A) is an independent contractor;
             315          (B) is not to be treated as an employee for federal income tax purposes; and
             316          (C) can derive income from more than one insurance company;
             317          (d) notwithstanding Subsection 34A-2-103 (4), an individual who provides domestic
             318      work for a person if:
             319          (i) the person for whom the domestic work is being provided receives or is eligible to
             320      receive the domestic work under a state or federal program designed to pay the costs of
             321      domestic work to prevent the person from being placed in:
             322          (A) an institution; or
             323          (B) a more restrictive placement than where that person resides at the time the person
             324      receives the domestic work;
             325          (ii) the individual is paid by a person designated by the Secretary of the Treasury in
             326      accordance with Section 3504, Internal Revenue Code, as a fiduciary, agent, or other person
             327      that has the control, receipt, custody, or disposal of, or pays the wages of the individual; and
             328          (iii) the domestic work is performed under a written contract that notifies the
             329      individual that the individual is not an employee under this chapter or Chapter 3, Utah
             330      Occupational Disease Act; or
             331          (e) subject to Subsections (6) and (7), an individual who:
             332          (i) (A) owns a motor vehicle; or
             333          (B) leases a motor vehicle to a motor carrier;
             334          (ii) personally operates the motor vehicle described in Subsection (5)(e)(i);
             335          (iii) operates the motor vehicle described in Subsection (5)(e)(i) under a written
             336      agreement with the motor carrier that states that the individual operates the motor vehicle as an
             337      independent contractor; and


             338          (iv) (A) provides to the motor carrier at the time the written agreement described in
             339      Subsection (5)(e)(iii) is executed or as soon after the execution as provided by [an insurer: (A)]
             340      the commission, a copy of a workers' compensation coverage waiver issued pursuant to Part
             341      10, Workers' Compensation Coverage Waivers Act, [by an insurer] to the individual; and
             342          (B) provides to the motor carrier at the time the written agreement described in
             343      Subsection (5)(e)(iii) is executed or as soon after the execution as provided by an insurer, proof
             344      that the individual is covered by occupational accident related insurance.
             345          (6) An individual described in Subsection (5)(d) or (e) may become an employee under
             346      this chapter and Chapter 3, Utah Occupational Disease Act, if the employer of the individual
             347      complies with:
             348          (a) this chapter and Chapter 3, Utah Occupational Disease Act; and
             349          (b) commission rules.
             350          (7) For purposes of Subsection (5)(e):
             351          (a) "Motor carrier" means a person engaged in the business of transporting freight,
             352      merchandise, or other property by a commercial vehicle on a highway within this state.
             353          (b) "Motor vehicle" means a self-propelled vehicle intended primarily for use and
             354      operation on the highways, including a trailer or semitrailer designed for use with another
             355      motorized vehicle.
             356          (c) "Occupational accident related insurance" means insurance that provides the
             357      following coverage for an injury sustained in the course of working under a written agreement
             358      described in Subsection (5)(e)(iii):
             359          (i) disability benefits;
             360          (ii) death benefits;
             361          (iii) medical expense benefits, which include:
             362          (A) hospital coverage;
             363          (B) surgical coverage;
             364          (C) prescription drug coverage; and
             365          (D) dental coverage.


             366     


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