CompEd Inc. Kentucky Workers Compensation Resource

803 KAR 25:230. Employee leasing.

RELATES TO: KRS 342.615

STATUTORY AUTHORITY: KRS 342.260, 342.615

NECESSITY, FUNCTION, AND CONFORMITY: KRS 342.260 requires the commissioner to promulgate administrative regulations necessary to implement the provisions of KRS Chapter 342. KRS 342.615 requires the commissioner to promulgate an administrative regulation to establish the manner of registration for an employee leasing company with the commissioner. This administrative regulation establishes the manner in which an employee leasing company shall register with the commissioner.

Section 1. Registration. (1) To be eligible to conduct business in Kentucky, a corporation, partnership, sole proprietorship, or other business entity which provides staff, personnel or an employee to be employed in this state to a business pursuant to a lease arrangement or agreement shall register with the commissioner in the manner established in this section of the administrative regulation. The registration shall:

(a) Be on form EL-1, Employee Leasing Company Registration Form;

(b) Be filed with the Division of Security and Compliance, Kentucky Department of Workers' Claims; and

1. The name of the lessor;

2. The address of the principal place of business of the lessor and the address of each office it maintains within this state;

3. The lessor's taxpayer or employer identification number;

4. A list by jurisdiction of each name that the lessor has operated under in the preceding five (5) years including an alternative name, name of a predecessor and, if known, name of successor business entity;

5. A list of each person or entity who owns a five (5) percent or greater interest in the employee leasing business at the time of application and a list of each person or entity who formerly owned a five (5) percent or greater interest in the employee leasing company or a predecessor, successor, or alter ego in the preceding five (5) years;

6.a. If coverage has been cancelled or nonrenewed, a list of each cancellation or nonrenewal of workers' compensation insurance which has been issued to the lessor or a predecessor in the preceding five (5) years. The list shall include the:

(i) Policy or certificate number;

(ii) Name of insurer or other provider of coverage;

(iii) Rate of cancellation; and

(iv) Reason for cancellation; or

b. If coverage has not been cancelled or nonrenewed, a sworn affidavit signed by the chief executive officer of the lessor attesting to that fact.

7. The name of the carrier of the current workers' compensation insurance, its policy number, policy period, and the name of the insured as it appears on the policy; and

8. A signed certification that states that the:

a. Person signing is the duly authorized agent for the employee leasing company;

b. Information contained in the registration form is true; and

c. Applicant shall:

(i) Notify the commissioner of a change in the information provided in the registration; and

(ii) Provide information regarding workers' compensation coverage of a leased employee within ninety (90) days of approval on Form EL-2.

(2) A person filing a registration statement pursuant to this section shall immediately notify the commissioner as to a change in the information provided pursuant to this section.

(3) The commissioner shall maintain a list of those lessors who are satisfactorily registered with the commissioner.

(4) A lessor which was doing business in this state prior to effective date of this administrative regulation shall register with the commissioner within thirty (30) days of the effective date of this administrative regulation.

Section 2. Lessee Information Form. An employee leasing company shall file a Lessee Information Form, Form EL-2, for each Kentucky lessee for whom the company or a related entity provides the workers' compensation insurance coverage. The form shall:

(1) Be:

(a) Filed within ninety (90) days of the initial registration of the employee leasing company;

(b) Updated every six (6) months; and

(c) Considered filed upon receipt of the form at the Division of Security and Compliance, Kentucky Department of Workers' Claims; and

(2) Include the:

(a) Name of the employee leasing company and the lessee;

(b) Address of the principal place of business of the lessor and the address of each office it maintains within this state;

(d) Effective date of the workers' compensation coverage, the policy number, and the name of the issuer of the policy; and

(e) Termination of coverage date.

Section 3. Advertising Prohibition. An organization registered under KRS 342.615 shall not reference the registration orally or in an advertisement, marketing material, or publication.

Section 4. Coverage. If the employee leasing company applies for coverage under the provisions of KRS 342.615(4), it shall maintain and furnish to the insurer sufficient information to permit the calculation of an experience modification factor for each lessee. The information shall include:

(1) The lessee's corporate name;

(2) The lessee's taxpayer or employer identification number;

(3) The lessee's risk identification number;

(4) A listing of the leased employees associated with each lessee, the applicable classification code and payroll;

(5) Claims information grouped by lessee; and

(6) Other information necessary to permit the calculation of an experience modification factor for each lessee.

Section 5. Experience Modification Factor Following Termination. (1) If the employee leasing arrangement with the lessee is terminated and the experience of the lessee is commingled with that of another client on the lessor's master policy, the experience of the lessee shall be developed and reported by the insurer for use in development of an experience modification for the lessee.

(2) The employee leasing company shall notify the insurer thirty (30) days prior to the effective date of termination or immediately upon notification of cancellation by the lessee of an employee leasing arrangement with a lessee in order to allow sufficient time to calculate an experience modification factor for the lessee.

Section 6. Incorporation by Reference. (1) The following material is incorporated by reference:

(a) EL-1, "Employee Leasing Company Registration Form" (April 1, 1997 edition), Department of Workers' Claims; and

(b) EL-2, "Lessee Information Form" (April 1, 1997 edition), Department of Workers' Claims.

(2) The material may be inspected, copied, or obtained at the Department of Workers' Claims, Monday through Friday, 9 a.m. to 4 p.m., at the following locations:

(a) Frankfort - Prevention Park, 657 To Be Announced Avenue, Frankfort, Kentucky 40601;

(b) Paducah - 220 B North 8th Street, Paducah, Kentucky 42001; and