REPRESENTATIVES Daniels, Allen, C. Evans, Seitz, Setzer, Raga, Ujvagi, Young, McGregor

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; or	115

(b) Any officer of a family farm corporation.

116

Any employer may elect to include as an "employee" within	117
this chapter, any person excluded from the definition of	118
"employee" pursuant to division (A)(2) of this section. If an	119
employer is a partnership, sole proprietorship, or family farm	120
corporation, such employer may elect to include as an "employee"	121
within this chapter, any member of such partnership, the owner of	122
the sole proprietorship, or the officers of the family farm	123
corporation. In the event of an election, the employer shall serve	124
upon the bureau of workers' compensation written notice naming the	125
persons to be covered, include such employee's remuneration for	126
premium purposes in all future payroll reports, and no person	127
excluded from the definition of "employee" pursuant to division	128
(A)(2) of this section, proprietor, or partner shall be deemed an	129
employee within this division until the employer has served such	130
notice.	131

For informational purposes only, the bureau shall prescribe	132
such language as it considers appropriate, on such of its forms as	133
it considers appropriate, to advise employers of their right to	134
elect to include as an "employee" within this chapter a sole	135
proprietor, any member of a partnership, the officers of a family	136
farm corporation, or a person excluded from the definition of	137
"employee" under division (A)(2)(a) of this section, that they	138
should check any health and disability insurance policy, or other	139
form of health and disability plan or contract, presently covering	140
them, or the purchase of which they may be considering, to	141
determine whether such policy, plan, or contract excludes benefits	142
for illness or injury that they might have elected to have covered	143
by workers' compensation.	144

(B) "Employer" means:

145

(1) The state, including state hospitals, each county,	146
municipal corporation, township, school district, and hospital	147
owned by a political subdivision or subdivisions other than the	148
state;	149

(2) Every person, firm, professional employer organization as	150
defined in section 4125.01 of the Revised Code, and private	151
corporation, including any public service corporation, that (a)	152
has in service one or more employees or shared employees regularly	153
in the same business or in or about the same establishment under	154
any contract of hire, express or implied, oral or written, or (b)	155
is bound by any such contract of hire or by any other written	156
contract, to pay into the insurance fund the premiums provided by	157
this chapter.	158

All such employers are subject to this chapter. Any member of	159
a firm or association, who regularly performs manual labor in or	160
about a mine, factory, or other establishment, including a	161
household establishment, shall be considered an employee in	162
determining whether such person, firm, or private corporation, or	163
public service corporation, has in its service, one or more	164
employees and the employer shall report the income derived from	165
such labor to the bureau as part of the payroll of such employer,	166
and such member shall thereupon be entitled to all the benefits of	167
an employee.	168

(C) "Injury" includes any injury, whether caused by external	169
accidental means or accidental in character and result, received	170
in the course of, and arising out of, the injured employee's	171
employment. "Injury" does not include:	172

(1) Psychiatric conditions except where the conditions have	173
arisen from an injury or occupational disease;	174

(2) Injury or disability caused primarily by the natural	175
deterioration of tissue, an organ, or part of the body;	176

(3) Injury or disability incurred in voluntary participation	177
in an employer-sponsored recreation or fitness activity if the	178
employee signs a waiver of the employee's right to compensation or	179
benefits under this chapter prior to engaging in the recreation or	180
fitness activity.	181

(D) "Child" includes a posthumous child and a child legally	182
adopted prior to the injury.	183

(E) "Family farm corporation" means a corporation founded for	184
the purpose of farming agricultural land in which the majority of	185
the voting stock is held by and the majority of the stockholders	186
are persons or the spouse of persons related to each other within	187
the fourth degree of kinship, according to the rules of the civil	188
law, and at least one of the related persons is residing on or	189
actively operating the farm, and none of whose stockholders are a	190
corporation. A family farm corporation does not cease to qualify	191
under this division where, by reason of any devise, bequest, or	192
the operation of the laws of descent or distribution, the	193
ownership of shares of voting stock is transferred to another	194
person, as long as that person is within the degree of kinship	195
stipulated in this division.	196

(F) "Occupational disease" means a disease contracted in the	197
course of employment, which by its causes and the characteristics	198
of its manifestation or the condition of the employment results in	199
a hazard which distinguishes the employment in character from	200
employment generally, and the employment creates a risk of	201
contracting the disease in greater degree and in a different	202
manner from the public in general.	203

(G) "Self-insuring employer" means an employer who is granted	204
the privilege of paying compensation and benefits directly under	205
section 4123.35 of the Revised Code, including a board of county	206
commissioners for the sole purpose of constructing a sports	207
facility as defined in section 307.696 of the Revised Code,	208
provided that the electors of the county in which the sports	209
facility is to be built have approved construction of a sports	210
facility by ballot election no later than November 6, 1997.	211

(H) "Public employer" means an employer as defined in	212
division (B)(1) of this section.	213

Sec. 4123.291.  (A) An adjudicating committee appointed by	214
the administrator of workers' compensation to hear any matter	215
specified in divisions (B)(1) to (6)(7) of this section shall hear	216
the matter within sixty days of the date on which an employer	217
files the request, protest, or petition. An employer desiring to	218
file a request, protest, or petition regarding any matter	219
specified in divisions (B)(1) to (6)(7) of this section shall file	220
the request, protest, or petition to the adjudicating committee on	221
or before twenty-four months after the administrator sends notice	222
of the determination about which the employer is filing the	223
request, protest, or petition.	224

(B) An employer who is adversely affected by a decision of an	225
adjudicating committee appointed by the administrator may appeal	226
the decision of the committee to the administrator or the	227
administrator's designee. The employer shall file the appeal in	228
writing within thirty days after the employer receives the	229
decision of the adjudicating committee. The administrator or the	230
designee shall hear the appeal and hold a hearing, provided that	231
the decision of the adjudicating committee relates to one of the	232
following:	233

(1) An employer request for a waiver of a default in the	234
payment of premiums pursuant to section 4123.37 of the Revised	235
Code;	236

(2) An employer request for the settlement of liability as a	237
noncomplying employer under section 4123.75 of the Revised Code;	238

(3) An employer petition objecting to the assessment of a	239
premium pursuant to section 4123.37 of the Revised Code and the	240
rules adopted pursuant to that section;	241

(4) An employer request for the abatement of penalties	242
assessed pursuant to section 4123.32 of the Revised Code and the	243
rules adopted pursuant to that section;	244

(5) An employer protest relating to an audit finding or a	245
determination of a manual classification, experience rating, or	246
transfer or combination of risk experience;	247

(6) Any decision relating to any other risk premium matter	248
under Chapters 4121., 4123., and 4131. of the Revised Code;	249

(7) An employer petition objecting to the amount of security	250
required under division (C) of section 4125.05 of the Revised Code	251
and the rules adopted pursuant to that section.	252

Sec. 4125.01. As used in this chapter:

253

(A) "Client employer" means a sole proprietor, partnership,	254
association, limited liability company, or corporation that enters	255
into a professional employer organization agreement and is	256
assigned shared employees by the professional employer	257
organization.	258

(B) "Coemploy" means the sharing of the responsibilities and	259
liabilities of being an employer.	260

(C) "Professional employer organization" means a sole	261
proprietor, partnership, association, limited liability company,	262
or corporation that enters into an agreement with one or more	263
client employers for the purpose of coemploying all or part of the	264
client employer's workforce at the client employer's work site.	265

(D) "Professional employer organization agreement" means a	266
written contract between a professional employer organization and	267
a client employer to coemploy employees for a duration of not less	268
than twelve months in accordance with the requirements of this	269
chapter.	270

(E) "Shared employee" means an individual intended to be	271
assigned to a client employer on a permanent basis, not as a	272
temporary supplement to the client employer's workforce, who is	273
coemployed by a professional employer organization and a client	274
employer pursuant to a professional employer organization	275
agreement.	276

Sec. 4125.02. The administrator of the bureau of workers'	277
compensation shall adopt rules in accordance with Chapter 119. of	278
the Revised Code to administer and enforce this chapter.	279

Sec. 4125.03. (A) The professional employer organization with	280
whom a shared employee is coemployed shall do all of the	281
following:	282

(1) Pay wages associated with a shared employee pursuant to	283
the terms and conditions of compensation in the professional	284
employer organization agreement between the professional employer	285
organization and the client employer;	286

(2) Pay all related payroll taxes associated with a shared	287
employee independent of the terms and conditions contained in the	288
professional employer organization agreement between the	289
professional employer organization and the client employer;	290

(3) Maintain workers' compensation coverage, pay all workers'	291
compensation premiums and manage all workers' compensation claims,	292
filings, and related procedures associated with a shared employee	293
in compliance with Chapters 4121. and 4123. of the Revised Code,	294
except that when shared employees include family farm officers,	295
ordained ministers, or corporate officers of the client employer,	296
payroll reports shall include the entire amount of payroll	297
associated with those persons;	298

(4) Provide written notice to each shared employee it assigns	299
to perform services to a client employer of the relationship	300
between and the responsibilities of the professional employer	301
organization and the client employer;	302

(5) Maintain complete records separately listing the manual	303
classifications of each client employer and the payroll reported	304
to each manual classification for each client employer for each	305
payroll reporting period during the time period covered in the	306
professional employer organization agreement;	307

(6) Maintain a record of workers' compensation claims for	308
each client employer.	309

(B) The professional employer organization with whom a shared	310
employee is coemployed has a right of direction and control over	311
each shared employee assigned to a client employer's location.	312

(C) Notwithstanding division (B) of this section, a client	313
employer may retain sufficient direction and control over a shared	314
employee as is necessary to conduct the client employer's business	315
and to discharge any fiduciary responsibility that it may have, or	316
to comply with any applicable licensure, regulatory, or statutory	317
requirement of the client employer.	318

Sec. 4125.04. (A) When a client employer enters into a	319
professional employer organization agreement with a professional	320
employer organization, the professional employer organization is	321
the employer of record and the succeeding employer for the	322
purposes of determining a workers' compensation experience rating	323
pursuant to Chapter 4123. of the Revised Code.	324

(B) Pursuant to Section 35 of Article II, Ohio Constitution	325
and section 4123.74 of the Revised Code, the exclusive remedy for	326
a shared employee to recover for injuries, diseases, or death	327
incurred in the course of and arising out of the employment	328
relationship against either the professional employer organization	329
or the client employer are those benefits provided under Chapters	330
4121. and 4123. of the Revised Code.	331

Sec. 4125.05. (A) Not later than thirty days after the	332
effective date of this section or not later than thirty days after	333
the formation of a professional employer organization, whichever	334
date occurs later, a professional employer organization operating	335
in this state shall register with the administrator of the bureau	336
of workers' compensation on forms provided by the administrator.	337
Following initial registration, each professional employer	338
organization shall register with the administrator annually on or	339
before the thirty-first day of December.	340

(B) Initial registration and each annual registration renewal	341
shall include all of the following:	342

(1) A list of each of the professional employer	343
organization's client employers current as of the date of	344
registration for purposes of initial registration or current as of	345
the date of annual registration renewal, or within fourteen days	346
of adding or releasing a client that includes the client	347
employer's name, address, federal tax identification number, and	348
bureau of workers' compensation risk number;	349

(2) A fee as determined by the administrator;

350

(3) Any other information required by the administrator.

351

(C) The administrator, with the advice and consent of the	352
workers' compensation oversight commission, may adopt rules in	353
accordance with Chapter 119. of the Revised Code to require	354
professional employer organizations to provide security in the	355
form of a bond or letter of credit assignable to the Ohio bureau	356
of workers' compensation not to exceed an amount equal to the	357
premiums and assessments incurred for the most recent payroll	358
period, prior to any discounts or dividends, to meet the	359
financial obligations of the professional employer organizations	360
pursuant to this chapter and Chapters 4121. and 4123. of the	361
Revised Code. A professional employer organization may appeal the	362
amount of the security required under this section in accordance	363
with section 4123.291 of the Revised Code.	364

(D) Notwithstanding division (C) of this section, a	365
professional employer organization that qualifies for	366
self-insurance or retrospective rating under section 4123.29 or	367
4123.35 of the Revised Code shall abide by the financial	368
disclosure and security requirements pursuant to those sections	369
and the rules adopted under those sections in place of the	370
requirements set forth in division (C) of this section.	371

(E) Except to the extent necessary for the administrator to	372
administer the statutory duties of the administrator and for	373
employees of the state to perform their official duties, all	374
records, reports, client lists, and other information obtained	375
from a professional employer organization under divisions (A) and	376
(B) of this section are confidential and shall not be published or	377
open to public inspection.	378

Sec. 4125.06. (A) In accordance with Chapter 119. of the	379
Revised Code, the administrator of the bureau of workers'	380
compensation may deny registration or revoke the registration of a	381
professional employer organization and rescind its status as a	382
coemployer upon reasonable belief that the professional employer	383
organization has done any of the following:	384

(1) Obtained or attempted to obtain registration through	385
misrepresentation, misstatement, or fraud;	386

(2) Misappropriated or converted to its own, or improperly	387
withheld, money required to be held in a fiduciary capacity in	388
accordance with Chapters 4121. and 4123. of the Revised Code;	389

(3) Used fraudulent, coercive, or dishonest practices or	390
demonstrated incompetence, untrustworthiness, or financial	391
irresponsibility;	392

(4) Failed to appear, without reasonable cause or excuse, in	393
response to a subpoena lawfully issued by the administrator of the	394
bureau of workers' compensation;	395

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

396

(B) Upon revocation of the registration of a professional	397
employer organization, all client employers associated with that	398
professional employer organization shall file payroll reports and	399
pay workers' compensation premiums directly to the administrator	400
on its own behalf at a rate determined by the administrator based	401
solely on the claims experience of the client employer.	402

(C) Upon revocation of a professional employer organization's	403
registration, each client employer associated with that	404
professional employer organization shall file on its own behalf	405
the appropriate documents or data with all state and federal	406
agencies as required by law with respect to any shared employee	407
the client employer and the professional employer organization	408
shared.	409

Sec. 4125.07. Not later than fourteen calendar days after the	410
date on which a professional employer organization agreement is	411
terminated, the professional employer organization is adjudged	412
bankrupt, the professional employer organization ceases operations	413
within the state of Ohio, or the registration of the professional	414
employer organization is revoked, the professional employer	415
organization shall submit to the administrator of the bureau of	416
workers' compensation and each client employer associated with	417
that professional employer organization a completed workers'	418
compensation lease termination notice form provided by the	419
administrator. The completed form shall include all client payroll	420
and claim information listed in a format specified by the	421
administrator and notice of all workers' compensation claims that	422
have been reported to the professional employer organization in	423
accordance with its internal reporting policies.	424

Sec. 4125.08. Nothing in this chapter exempts a professional	425
employer organization, client employer, or shared employee from	426
any applicable federal, state, or local licensing, registration,	427
or certification statutes or regulations. An individual required	428
to obtain and maintain a license, registration, or certification	429
under law and who is a shared employee of a professional employer	430
organization and a client employer is an employee of the client	431
employer for purposes of obtaining and maintaining the appropriate	432
license, registration, or certification as required by law. A	433
professional employer organization does not engage in any	434
occupation, trade, or profession that requires a license,	435
certification, or registration solely by entering into a	436
professional employer agreement with a client employer or	437
coemploying a shared employee.	438

Sec. 4125.99. Whoever violates section 4125.05 of the Revised	439
Code is guilty of a minor misdemeanor. Whoever knowingly violates	440
section 4125.05 of the Revised Code is guilty of a misdemeanor of	441
the second degree.	442

Section 2. That existing section 4123.01 of the Revised Code	443
is hereby repealed.	444

Section 3.  Section 4123.01 of the Revised Code is presented	445
in this act as a composite of the section as amended by both H.B.	446
675 and Am. Sub. S.B. 223 of the 124th General Assembly. The	447
General Assembly, applying the principle stated in division (B) of	448
section 1.52 of the Revised Code that amendments are to be	449
harmonized if reasonably capable of simultaneous operation, finds	450
that the composite is the resulting version of the section in	451
effect prior to the effective date of the section as presented in	452
this act.	453