REPRESENTATIVES Daniels, Allen, C. Evans, Seitz, Setzer, Raga, Ujvagi, Young, McGregor, Barrett, Carano, Cates, Chandler, Cirelli, Clancy, DeBose, Domenick, Jolivette, Niehaus, Olman, T. Patton, Schaffer, Schlichter, Schmidt, Webster, Yates

To amend sections 4123.01 and 4123.291 and to enact

1

sections 4125.01 to 4125.08 and 4125.99 of the

2

Revised Code to register professional employer

3

organizations for purposes of enforcing compliance

4

with workers' compensation laws.

5

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 4123.01 and 4123.291 be amended and	6
sections 4125.01, 4125.02, 4125.03, 4125.04, 4125.05, 4125.06,	7
4125.07, 4125.08, and 4125.99 of the Revised Code be enacted to	8
read as follows:	9

Sec. 4123.01.  As used in this chapter:

10

(A)(1) "Employee" means:

11

(a) Every person in the service of the state, or of any	12
county, municipal corporation, township, or school district	13
therein, including regular members of lawfully constituted police	14
and fire departments of municipal corporations and townships,	15
whether paid or volunteer, and wherever serving within the state	16
or on temporary assignment outside thereof, and executive officers	17
of boards of education, under any appointment or contract of hire,	18
express or implied, oral or written, including any elected	19
official of the state, or of any county, municipal corporation, or	20
township, or members of boards of education.	21

As used in division (A)(1)(a) of this section, the term	22
"employee" includes the following persons when responding to an	23
inherently dangerous situation that calls for an immediate	24
response on the part of the person, regardless of whether the	25
person is within the limits of the jurisdiction of the person's	26
regular employment or voluntary service when responding, on the	27
condition that the person responds to the situation as the person	28
otherwise would if the person were on duty in the person's	29
jurisdiction:	30

(i) Off-duty peace officers. As used in division (A)(1)(a)(i)	31
of this section, "peace officer" has the same meaning as in	32
section 2935.01 of the Revised Code.	33

(ii) Off-duty firefighters, whether paid or volunteer, of a	34
lawfully constituted fire department.	35

(iii) Off-duty first responders, emergency medical	36
technicians-basic, emergency medical technicians-intermediate, or	37
emergency medical technicians-paramedic, whether paid or	38
volunteer, of an ambulance service organization or emergency	39
medical service organization pursuant to Chapter 4765. of the	40
Revised Code.	41

(b) Every person in the service of any person, firm, or	42
private corporation, including any public service corporation,	43
that (i) employs one or more persons regularly in the same	44
business or in or about the same establishment under any contract	45
of hire, express or implied, oral or written, including aliens and	46
minors, household workers who earn one hundred sixty dollars or	47
more in cash in any calendar quarter from a single household and	48
casual workers who earn one hundred sixty dollars or more in cash	49
in any calendar quarter from a single employer, or (ii) is bound	50
by any such contract of hire or by any other written contract, to	51
pay into the state insurance fund the premiums provided by this	52
chapter.	53

(c) Every person who performs labor or provides services	54
pursuant to a construction contract, as defined in section 4123.79	55
of the Revised Code, if at least ten of the following criteria	56
apply:	57

(i) The person is required to comply with instructions from	58
the other contracting party regarding the manner or method of	59
performing services;	60

(ii) The person is required by the other contracting party to	61
have particular training;	62

(iii) The person's services are integrated into the regular	63
functioning of the other contracting party;	64

(iv) The person is required to perform the work personally;

65

(v) The person is hired, supervised, or paid by the other	66
contracting party;	67

(vi) A continuing relationship exists between the person and	68
the other contracting party that contemplates continuing or	69
recurring work even if the work is not full time;	70

(vii) The person's hours of work are established by the other	71
contracting party;	72

(viii) The person is required to devote full time to the	73
business of the other contracting party;	74

(ix) The person is required to perform the work on the	75
premises of the other contracting party;	76

(x) The person is required to follow the order of work set by	77
the other contracting party;	78

(xi) The person is required to make oral or written reports	79
of progress to the other contracting party;	80

(xii) The person is paid for services on a regular basis such	81
as hourly, weekly, or monthly;	82

(xiii) The person's expenses are paid for by the other	83
contracting party;	84

(xiv) The person's tools and materials are furnished by the	85
other contracting party;	86

(xv) The person is provided with the facilities used to	87
perform services;	88

(xvi) The person does not realize a profit or suffer a loss	89
as a result of the services provided;	90

(xvii) The person is not performing services for a number of	91
employers at the same time;	92

(xviii) The person does not make the same services available	93
to the general public;	94

(xix) The other contracting party has a right to discharge	95
the person;	96

(xx) The person has the right to end the relationship with	97
the other contracting party without incurring liability pursuant	98
to an employment contract or agreement.	99

Every person in the service of any independent contractor or	100
subcontractor who has failed to pay into the state insurance fund	101
the amount of premium determined and fixed by the administrator of	102
workers' compensation for the person's employment or occupation or	103
if a self-insuring employer has failed to pay compensation and	104
benefits directly to the employer's injured and to the dependents	105
of the employer's killed employees as required by section 4123.35	106
of the Revised Code, shall be considered as the employee of the	107
person who has entered into a contract, whether written or verbal,	108
with such independent contractor unless such employees or their	109
legal representatives or beneficiaries elect, after injury or	110
death, to regard such independent contractor as the employer.	111

(2) "Employee" does not mean:

112

(a) A duly ordained, commissioned, or licensed minister or	113
assistant or associate minister of a church in the exercise of	114
ministry;	115

(b) Any officer of a family farm corporation; or

116

(c) An individual who otherwise is an employee of an employer	117
but who signs the waiver and affidavit specified in section	118
4123.15 of the Revised Code on the condition that the	119
administrator has granted a waiver and exception to the	120
individual's employer under section 4123.15 of the Revised Code.	121

Any employer may elect to include as an "employee" within	122
this chapter, any person excluded from the definition of	123
"employee" pursuant to division (A)(2) of this section. If an	124
employer is a partnership, sole proprietorship, or family farm	125
corporation, such employer may elect to include as an "employee"	126
within this chapter, any member of such partnership, the owner of	127
the sole proprietorship, or the officers of the family farm	128
corporation. In the event of an election, the employer shall serve	129
upon the bureau of workers' compensation written notice naming the	130
persons to be covered, include such employee's remuneration for	131
premium purposes in all future payroll reports, and no person	132
excluded from the definition of "employee" pursuant to division	133
(A)(2) of this section, proprietor, or partner shall be deemed an	134
employee within this division until the employer has served such	135
notice.	136

For informational purposes only, the bureau shall prescribe	137
such language as it considers appropriate, on such of its forms as	138
it considers appropriate, to advise employers of their right to	139
elect to include as an "employee" within this chapter a sole	140
proprietor, any member of a partnership, the officers of a family	141
farm corporation, or a person excluded from the definition of	142
"employee" under division (A)(2)(a) of this section, that they	143
should check any health and disability insurance policy, or other	144
form of health and disability plan or contract, presently covering	145
them, or the purchase of which they may be considering, to	146
determine whether such policy, plan, or contract excludes benefits	147
for illness or injury that they might have elected to have covered	148
by workers' compensation.	149

(B) "Employer" means:

150

(1) The state, including state hospitals, each county,	151
municipal corporation, township, school district, and hospital	152
owned by a political subdivision or subdivisions other than the	153
state;	154

(2) Every person, firm, professional employer organization as	155
defined in section 4125.01 of the Revised Code, and private	156
corporation, including any public service corporation, that (a)	157
has in service one or more employees or shared employees regularly	158
in the same business or in or about the same establishment under	159
any contract of hire, express or implied, oral or written, or (b)	160
is bound by any such contract of hire or by any other written	161
contract, to pay into the insurance fund the premiums provided by	162
this chapter.	163

All such employers are subject to this chapter. Any member of	164
a firm or association, who regularly performs manual labor in or	165
about a mine, factory, or other establishment, including a	166
household establishment, shall be considered an employee in	167
determining whether such person, firm, or private corporation, or	168
public service corporation, has in its service, one or more	169
employees and the employer shall report the income derived from	170
such labor to the bureau as part of the payroll of such employer,	171
and such member shall thereupon be entitled to all the benefits of	172
an employee.	173

(C) "Injury" includes any injury, whether caused by external	174
accidental means or accidental in character and result, received	175
in the course of, and arising out of, the injured employee's	176
employment. "Injury" does not include:	177

(1) Psychiatric conditions except where the conditions have	178
arisen from an injury or occupational disease;	179

(2) Injury or disability caused primarily by the natural	180
deterioration of tissue, an organ, or part of the body;	181

(3) Injury or disability incurred in voluntary participation	182
in an employer-sponsored recreation or fitness activity if the	183
employee signs a waiver of the employee's right to compensation or	184
benefits under this chapter prior to engaging in the recreation or	185
fitness activity.	186

(D) "Child" includes a posthumous child and a child legally	187
adopted prior to the injury.	188

(E) "Family farm corporation" means a corporation founded for	189
the purpose of farming agricultural land in which the majority of	190
the voting stock is held by and the majority of the stockholders	191
are persons or the spouse of persons related to each other within	192
the fourth degree of kinship, according to the rules of the civil	193
law, and at least one of the related persons is residing on or	194
actively operating the farm, and none of whose stockholders are a	195
corporation. A family farm corporation does not cease to qualify	196
under this division where, by reason of any devise, bequest, or	197
the operation of the laws of descent or distribution, the	198
ownership of shares of voting stock is transferred to another	199
person, as long as that person is within the degree of kinship	200
stipulated in this division.	201

(F) "Occupational disease" means a disease contracted in the	202
course of employment, which by its causes and the characteristics	203
of its manifestation or the condition of the employment results in	204
a hazard which distinguishes the employment in character from	205
employment generally, and the employment creates a risk of	206
contracting the disease in greater degree and in a different	207
manner from the public in general.	208

(G) "Self-insuring employer" means an employer who is granted	209
the privilege of paying compensation and benefits directly under	210
section 4123.35 of the Revised Code, including a board of county	211
commissioners for the sole purpose of constructing a sports	212
facility as defined in section 307.696 of the Revised Code,	213
provided that the electors of the county in which the sports	214
facility is to be built have approved construction of a sports	215
facility by ballot election no later than November 6, 1997.	216

(H) "Public employer" means an employer as defined in	217
division (B)(1) of this section.	218

Sec. 4123.291.  (A) An adjudicating committee appointed by	219
the administrator of workers' compensation to hear any matter	220
specified in divisions (B)(1) to (6)(7) of this section shall hear	221
the matter within sixty days of the date on which an employer	222
files the request, protest, or petition. An employer desiring to	223
file a request, protest, or petition regarding any matter	224
specified in divisions (B)(1) to (6)(7) of this section shall file	225
the request, protest, or petition to the adjudicating committee on	226
or before twenty-four months after the administrator sends notice	227
of the determination about which the employer is filing the	228
request, protest, or petition.	229

(B) An employer who is adversely affected by a decision of an	230
adjudicating committee appointed by the administrator may appeal	231
the decision of the committee to the administrator or the	232
administrator's designee. The employer shall file the appeal in	233
writing within thirty days after the employer receives the	234
decision of the adjudicating committee. The administrator or the	235
designee shall hear the appeal and hold a hearing, provided that	236
the decision of the adjudicating committee relates to one of the	237
following:	238

(1) An employer request for a waiver of a default in the	239
payment of premiums pursuant to section 4123.37 of the Revised	240
Code;	241

(2) An employer request for the settlement of liability as a	242
noncomplying employer under section 4123.75 of the Revised Code;	243

(3) An employer petition objecting to the assessment of a	244
premium pursuant to section 4123.37 of the Revised Code and the	245
rules adopted pursuant to that section;	246

(4) An employer request for the abatement of penalties	247
assessed pursuant to section 4123.32 of the Revised Code and the	248
rules adopted pursuant to that section;	249

(5) An employer protest relating to an audit finding or a	250
determination of a manual classification, experience rating, or	251
transfer or combination of risk experience;	252

(6) Any decision relating to any other risk premium matter	253
under Chapters 4121., 4123., and 4131. of the Revised Code;	254

(7) An employer petition objecting to the amount of security	255
required under division (C) of section 4125.05 of the Revised Code	256
and the rules adopted pursuant to that section.	257

Sec. 4125.01. As used in this chapter:

258

(A) "Client employer" means a sole proprietor, partnership,	259
association, limited liability company, or corporation that enters	260
into a professional employer organization agreement and is	261
assigned shared employees by the professional employer	262
organization.	263

(B) "Coemploy" means the sharing of the responsibilities and	264
liabilities of being an employer.	265

(C) "Professional employer organization" means a sole	266
proprietor, partnership, association, limited liability company,	267
or corporation that enters into an agreement with one or more	268
client employers for the purpose of coemploying all or part of the	269
client employer's workforce at the client employer's work site.	270

(D) "Professional employer organization agreement" means a	271
written contract between a professional employer organization and	272
a client employer to coemploy employees for a duration of not less	273
than twelve months in accordance with the requirements of this	274
chapter.	275

(E) "Shared employee" means an individual intended to be	276
assigned to a client employer on a permanent basis, not as a	277
temporary supplement to the client employer's workforce, who is	278
coemployed by a professional employer organization and a client	279
employer pursuant to a professional employer organization	280
agreement.	281

Sec. 4125.02. The administrator of the bureau of workers'	282
compensation shall adopt rules in accordance with Chapter 119. of	283
the Revised Code to administer and enforce this chapter.	284

Sec. 4125.03. (A) The professional employer organization with	285
whom a shared employee is coemployed shall do all of the	286
following:	287

(1) Pay wages associated with a shared employee pursuant to	288
the terms and conditions of compensation in the professional	289
employer organization agreement between the professional employer	290
organization and the client employer;	291

(2) Pay all related payroll taxes associated with a shared	292
employee independent of the terms and conditions contained in the	293
professional employer organization agreement between the	294
professional employer organization and the client employer;	295

(3) Maintain workers' compensation coverage, pay all workers'	296
compensation premiums and manage all workers' compensation claims,	297
filings, and related procedures associated with a shared employee	298
in compliance with Chapters 4121. and 4123. of the Revised Code,	299
except that when shared employees include family farm officers,	300
ordained ministers, or corporate officers of the client employer,	301
payroll reports shall include the entire amount of payroll	302
associated with those persons;	303

(4) Provide written notice to each shared employee it assigns	304
to perform services to a client employer of the relationship	305
between and the responsibilities of the professional employer	306
organization and the client employer;	307

(5) Maintain complete records separately listing the manual	308
classifications of each client employer and the payroll reported	309
to each manual classification for each client employer for each	310
payroll reporting period during the time period covered in the	311
professional employer organization agreement;	312

(6) Maintain a record of workers' compensation claims for	313
each client employer.	314

(B) The professional employer organization with whom a shared	315
employee is coemployed has a right of direction and control over	316
each shared employee assigned to a client employer's location.	317

(C) Notwithstanding division (B) of this section, a client	318
employer may retain sufficient direction and control over a shared	319
employee as is necessary to conduct the client employer's business	320
and to discharge any fiduciary responsibility that it may have, or	321
to comply with any applicable licensure, regulatory, or statutory	322
requirement of the client employer.	323

Sec. 4125.04. (A) When a client employer enters into a	324
professional employer organization agreement with a professional	325
employer organization, the professional employer organization is	326
the employer of record and the succeeding employer for the	327
purposes of determining a workers' compensation experience rating	328
pursuant to Chapter 4123. of the Revised Code.	329

(B) Pursuant to Section 35 of Article II, Ohio Constitution	330
and section 4123.74 of the Revised Code, the exclusive remedy for	331
a shared employee to recover for injuries, diseases, or death	332
incurred in the course of and arising out of the employment	333
relationship against either the professional employer organization	334
or the client employer are those benefits provided under Chapters	335
4121. and 4123. of the Revised Code.	336

Sec. 4125.05. (A) Not later than thirty days after the	337
effective date of this section or not later than thirty days after	338
the formation of a professional employer organization, whichever	339
date occurs later, a professional employer organization operating	340
in this state shall register with the administrator of the bureau	341
of workers' compensation on forms provided by the administrator.	342
Following initial registration, each professional employer	343
organization shall register with the administrator annually on or	344
before the thirty-first day of December.	345

(B) Initial registration and each annual registration renewal	346
shall include all of the following:	347

(1) A list of each of the professional employer	348
organization's client employers current as of the date of	349
registration for purposes of initial registration or current as of	350
the date of annual registration renewal, or within fourteen days	351
of adding or releasing a client that includes the client	352
employer's name, address, federal tax identification number, and	353
bureau of workers' compensation risk number;	354

(2) A fee as determined by the administrator;

355

(3) Any other information required by the administrator.

356

(C) The administrator, with the advice and consent of the	357
workers' compensation oversight commission, may adopt rules in	358
accordance with Chapter 119. of the Revised Code to require	359
professional employer organizations to provide security in the	360
form of a bond or letter of credit assignable to the Ohio bureau	361
of workers' compensation not to exceed an amount equal to the	362
premiums and assessments incurred for the two most recent payroll	363
periods, prior to any discounts or dividends, to meet the	364
financial obligations of the professional employer organizations	365
pursuant to this chapter and Chapters 4121. and 4123. of the	366
Revised Code. A professional employer organization may appeal the	367
amount of the security required under this section in accordance	368
with section 4123.291 of the Revised Code.	369

(D) Notwithstanding division (C) of this section, a	370
professional employer organization that qualifies for	371
self-insurance or retrospective rating under section 4123.29 or	372
4123.35 of the Revised Code shall abide by the financial	373
disclosure and security requirements pursuant to those sections	374
and the rules adopted under those sections in place of the	375
requirements set forth in division (C) of this section.	376

(E) Except to the extent necessary for the administrator to	377
administer the statutory duties of the administrator and for	378
employees of the state to perform their official duties, all	379
records, reports, client lists, and other information obtained	380
from a professional employer organization under divisions (A) and	381
(B) of this section are confidential and shall not be published or	382
open to public inspection.	383

Sec. 4125.06. (A) In accordance with Chapter 119. of the	384
Revised Code, the administrator of the bureau of workers'	385
compensation may deny registration or revoke the registration of a	386
professional employer organization and rescind its status as a	387
coemployer upon reasonable belief that the professional employer	388
organization has done any of the following:	389

(1) Obtained or attempted to obtain registration through	390
misrepresentation, misstatement, or fraud;	391

(2) Misappropriated or converted to its own, or improperly	392
withheld, money required to be held in a fiduciary capacity in	393
accordance with Chapters 4121. and 4123. of the Revised Code;	394

(3) Used fraudulent, coercive, or dishonest practices or	395
demonstrated incompetence, untrustworthiness, or financial	396
irresponsibility;	397

(4) Failed to appear, without reasonable cause or excuse, in	398
response to a subpoena lawfully issued by the administrator of the	399
bureau of workers' compensation;	400

(5) Failed to comply with the requirements of this chapter.

401

(B) Upon revocation of the registration of a professional	402
employer organization, all client employers associated with that	403
professional employer organization shall file payroll reports and	404
pay workers' compensation premiums directly to the administrator	405
on its own behalf at a rate determined by the administrator based	406
solely on the claims experience of the client employer.	407

(C) Upon revocation of a professional employer organization's	408
registration, each client employer associated with that	409
professional employer organization shall file on its own behalf	410
the appropriate documents or data with all state and federal	411
agencies as required by law with respect to any shared employee	412
the client employer and the professional employer organization	413
shared.	414

Sec. 4125.07. Not later than fourteen calendar days after the	415
date on which a professional employer organization agreement is	416
terminated, the professional employer organization is adjudged	417
bankrupt, the professional employer organization ceases operations	418
within the state of Ohio, or the registration of the professional	419
employer organization is revoked, the professional employer	420
organization shall submit to the administrator of the bureau of	421
workers' compensation and each client employer associated with	422
that professional employer organization a completed workers'	423
compensation lease termination notice form provided by the	424
administrator. The completed form shall include all client payroll	425
and claim information listed in a format specified by the	426
administrator and notice of all workers' compensation claims that	427
have been reported to the professional employer organization in	428
accordance with its internal reporting policies.	429

Sec. 4125.08. Nothing in this chapter exempts a professional	430
employer organization, client employer, or shared employee from	431
any applicable federal, state, or local licensing, registration,	432
or certification statutes or regulations. An individual required	433
to obtain and maintain a license, registration, or certification	434
under law and who is a shared employee of a professional employer	435
organization and a client employer is an employee of the client	436
employer for purposes of obtaining and maintaining the appropriate	437
license, registration, or certification as required by law. A	438
professional employer organization does not engage in any	439
occupation, trade, or profession that requires a license,	440
certification, or registration solely by entering into a	441
professional employer agreement with a client employer or	442
coemploying a shared employee.	443

Sec. 4125.99. Whoever violates section 4125.05 of the Revised	444
Code is guilty of a minor misdemeanor. Whoever knowingly violates	445
section 4125.05 of the Revised Code is guilty of a misdemeanor of	446
the second degree.	447

Section 2. That existing sections 4123.01 and 4123.291 of the	448
Revised Code are hereby repealed.	449

Section 3.  Section 4123.01 of the Revised Code is presented	450
in this act as a composite of the section as amended by both H.B.	451
675 and Am. Sub. S.B. 223 of the 124th General Assembly. The	452
General Assembly, applying the principle stated in division (B) of	453
section 1.52 of the Revised Code that amendments are to be	454
harmonized if reasonably capable of simultaneous operation, finds	455
that the composite is the resulting version of the section in	456
effect prior to the effective date of the section as presented in	457
this act.	458