1     
WORKERS' COMPENSATION REVISIONS

2     
2021 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Timothy D. Hawkes

5     
Senate Sponsor: Kirk A. Cullimore

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions of the Workers' Compensation Act.
10     Highlighted Provisions:
11          This bill:
12          ▸     amends provisions related to an eligible employer;
13          ▸     amends third parties against whom an action may be brought for the injury or death
14     of an employee; and
15          ▸     makes technical and conforming changes.
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 2017, Chapter 363
23          34A-2-106, as last amended by Laws of Utah 2008, Chapter 3
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 -- Exceptions.

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) Subject to the other provisions of this section, each person, including each
37     public utility and each independent contractor, who regularly employs one or more workers or
38     operatives in the same business, or in or about the same establishment, under any contract of
39     hire, express or implied, oral or written, is considered an employer under this chapter and
40     Chapter 3, Utah 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) 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) 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).
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 Subsections (5)(a)(ii)(A)(II) through (VIII); or
82          (C) an individual who is similar to those listed in Subsection (5)(a)(ii)(A) or (B) as

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

164          (f) (i) For purposes of this Subsection (7)(f), "eligible employer" means a person who:
165          (A) is an employer; and
166          (B) procures work to be done wholly or in part for the employer by a contractor,
167     including:
168          (I) all persons employed by the contractor;
169          (II) all subcontractors under the contractor; and
170          (III) all persons employed by any of these subcontractors.
171          (ii) Notwithstanding the other provisions in this Subsection (7), if the conditions of
172     Subsection (7)(f)(iii) are met, an eligible employer is considered an employer for purposes of
173     Section 34A-2-105 of the contractor, subcontractor, and all persons employed by the contractor
174     or subcontractor described in Subsection (7)(f)(i)(B).
175          (iii) Subsection (7)(f)(ii) applies if the eligible employer:
176          (A) under Subsection (7)(a) is liable for and pays workers' compensation benefits as an
177     original employer under Subsection (7)(a) because the contractor or subcontractor fails to
178     comply with Section 34A-2-201;
179          (B) (I) secures, in accordance with Section 34A-2-201, the payment of workers'
180     compensation [benefits] coverage for the contractor or subcontractor [pursuant to Section
181     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          (9) (a) As used in this Subsection (9), "home and community based services" means
236     one or more of the following services provided to an individual with a disability or to the
237     individual's family that helps prevent the individual with a disability from being placed in a
238     more restrictive setting:
239          (i) respite care;
240          (ii) skilled nursing;
241          (iii) nursing assistant services;
242          (iv) home health aide services;
243          (v) personal care and attendant services;
244          (vi) other in-home care, such as support for the daily activities of the individual with a

245     disability;
246          (vii) specialized in-home training for the individual with a disability or a family
247     member of the individual with a disability;
248          (viii) specialized in-home support, coordination, and other supported living services;
249     and
250          (ix) other home and community based services unique to the individual with a
251     disability or the family of the individual with a disability that help prevent the individual with a
252     disability from being placed in a more restrictive setting.
253          (b) Notwithstanding Subsection (4) and subject to Subsection (9)(c), an individual with
254     a disability or designated representative of the individual with a disability is considered an
255     employer under this chapter and Chapter 3, Utah Occupational Disease Act, of an individual
256     who provides home and community based services if the individual with a disability or
257     designated representative of the individual with a disability:
258          (i) employs the individual to provide home and community based services for seven
259     hours per week or more; and
260          (ii) pays the individual providing the home and community based services from state or
261     federal money received by the individual with a disability or designated representative of the
262     individual with a disability to fund home and community based services, including through a
263     person designated by the Secretary of the Treasury in accordance with Section 3504, Internal
264     Revenue Code, as a fiduciary, agent, or other person who has the control, receipt, custody, or
265     disposal of, or pays the wages of, the individual providing the home and community based
266     services.
267          (c) The state and federal money received by an individual with a disability or
268     designated representative of an individual with a disability shall include the cost of the workers'
269     compensation coverage required by this Subsection (9) in addition to the money necessary to
270     fund the home and community based services that the individual with a disability or family of
271     the individual with a disability is eligible to receive so that the home and community based

272     services are not reduced in order to pay for the workers' compensation coverage required by
273     this Subsection (9).
274          (10) (a) For purposes of this Subsection (10), "federal executive agency" means an
275     executive agency, as defined in 5 U.S.C. Sec. 105, of the federal government.
276          (b) For purposes of determining whether two or more persons are considered joint
277     employers under this chapter or Chapter 3, Utah Occupational Disease Act, an administrative
278     ruling of a federal executive agency may not be considered a generally applicable law unless
279     that administrative ruling is determined to be generally applicable by a court of law, or adopted
280     by statute or rule .
281          (11) (a) As used in this Subsection (11):
282          (i) "Franchise" means the same as that term is defined in 16 C.F.R. Sec. 436.1.
283          (ii) "Franchisee" means the same as that term is defined in 16 C.F.R. Sec. 436.1.
284          (iii) "Franchisor" means the same as that term is defined in 16 C.F.R. Sec. 436.1.
285          (b) For purposes of this chapter, a franchisor is not considered to be an employer of:
286          (i) a franchisee; or
287          (ii) a franchisee's employee.
288          (c) With respect to a specific claim for relief under this chapter made by a franchisee or
289     a franchisee's employee, this Subsection (11) does not apply to a franchisor under a franchise
290     that exercises a type or degree of control over the franchisee or the franchisee's employee not
291     customarily exercised by a franchisor for the purpose of protecting the franchisor's trademarks
292     and brand.
293          Section 2. Section 34A-2-106 is amended to read:
294          34A-2-106. Injuries or death caused by wrongful acts of persons other than
295     employer, officer, agent, or employee of employer -- Rights of employer or insurance
296     carrier in cause of action -- Maintenance of action -- Notice of intention to proceed
297     against third party -- Right to maintain action not involving employee-employer
298     relationship -- Disbursement of proceeds of recovery -- Exclusive remedy.

299          (1) When any injury or death for which compensation is payable under this chapter or
300     Chapter 3, Utah Occupational Disease Act is caused by the wrongful act or neglect of a person
301     other than an employer, officer, agent, or employee of the employer:
302          (a) the injured employee, or in case of death, the employee's dependents, may claim
303     compensation; and
304          (b) the injured employee or the employee's heirs or personal representative may have
305     an action for damages against the third person.
306          (2) (a) If compensation is claimed and the employer or insurance carrier becomes
307     obligated to pay compensation, the employer or insurance carrier:
308          (i) shall become trustee of the cause of action against the third party; and
309          (ii) may bring and maintain the action either in [its] the employer or insurance carrier's
310     own name or in the name of the injured employee, or the employee's heirs or the personal
311     representative of the deceased.
312          (b) Notwithstanding Subsection (2)(a), an employer or insurance carrier may not settle
313     and release a cause of action of which [it] the employer or insurance carrier is a trustee under
314     Subsection (2)(a) without the consent of the commission.
315          (3) (a) Before proceeding against a third party, to give a person described in
316     Subsections (3)(a)(i) and (ii) a reasonable opportunity to enter an appearance in the proceeding,
317     the injured employee or, in case of death, the employee's heirs, shall give written notice of the
318     intention to bring an action against the third party to:
319          (i) the carrier; and
320          (ii) any other person obligated for the compensation payments.
321          (b) The injured employee, or, in case of death, the employee's heirs, shall give written
322     notice to the carrier and other person obligated for the compensation payments of any known
323     attempt to attribute fault to the employer, officer, agent, or employee of the employer:
324          (i) by way of settlement; or
325          (ii) in a proceeding brought by the injured employee, or, in case of death, the

326     employee's heirs.
327          (4) For the purposes of this section and [notwithstanding] subject to Section
328     34A-2-103, the injured employee or the employee's heirs or personal representative may also
329     maintain an action for damages against any of the following persons who do not occupy an
330     employee-employer relationship with the injured or deceased employee at the time of the
331     employee's injury or death and who are not considered eligible employers under Section
332     34A-2-103:
333          (a) a subcontractor;
334          (b) a general contractor;
335          (c) an independent contractor;
336          (d) a property owner; or
337          (e) a lessee or assignee of a property owner.
338          (5) If any recovery is obtained against a third person, it shall be disbursed in
339     accordance with Subsections (5)(a) through (c).
340          (a) (i) The reasonable expense of the action, including attorney fees, shall be paid and
341     charged proportionately against the parties as their interests may appear.
342          (ii) Any fee chargeable to the employer or carrier is to be a credit upon any fee payable
343     by the injured employee or, in the case of death, by the dependents, for any recovery had
344     against the third party.
345          (b) The person liable for compensation payments shall be reimbursed, less the
346     proportionate share of costs and attorney fees provided for in Subsection (5)(a), for the
347     payments made as follows:
348          (i) without reduction based on fault attributed to the employer, officer, agent, or
349     employee of the employer in the action against the third party if the combined percentage of
350     fault attributed to persons immune from suit is determined to be less than 40% prior to any
351     reallocation of fault under Subsection 78B-5-819(2); or
352          (ii) less the amount of payments made multiplied by the percentage of fault attributed

353     to the employer, officer, agent, or employee of the employer in the action against the third party
354     if the combined percentage of fault attributed to persons immune from suit is determined to be
355     40% or more prior to any reallocation of fault under Subsection 78B-5-819(2).
356          (c) The balance shall be paid to the injured employee, or the employee's heirs in case of
357     death, to be applied to reduce or satisfy in full any obligation thereafter accruing against the
358     person liable for compensation.
359          (6) (a) The apportionment of fault to the employer in a civil action against a third party
360     is not an action at law and does not impose any liability on the employer.
361          (b) The apportionment of fault does not alter or diminish the exclusiveness of the
362     remedy provided to [employees, their] an employee, the employee's heirs, or the employee's
363     personal representatives, or the immunity provided [employers] an employer pursuant to
364     Section 34A-2-105 or 34A-3-102 for injuries sustained by an employee, whether resulting in
365     death or not.
366          (c) Any court in which a civil action is pending shall issue a partial summary judgment
367     to an employer with respect to the employer's immunity as provided in Section 34A-2-105 or
368     34A-3-102, even though the conduct of the employer may be considered in allocating fault to
369     the employer in a [third party] third-party action in the manner provided in Sections 78B-5-817
370     through 78B-5-823.