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 executive director to promulgate administrative regulations

necessary to implement the provisions of KRS Chapter 342. KRS 342.615 requires

the executive director to promulgate an administrative regulation to establish

the manner of registration for an employee leasing company with the executive

director. This administrative regulation establishes the manner in which an

employee leasing company shall register with the executive director.

 

      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 executive director 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 Office of Workers' Claims; and

      (c) Include:

      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 executive director 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 executive

director as to a change in the information provided pursuant to this section.

      (3) The executive director shall maintain

a list of those lessors who are satisfactorily registered with the executive

director.

      (4) A lessor which was doing business in

this state prior to effective date of this administrative regulation shall

register with the executive director 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 Office 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;

      (c) Lessor's taxpayer or employer

identification number;

      (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), Office of Workers' Claims; and

      (b) EL-2, "Lessee Information

Form" (April 1, 1997 edition), Office of Workers' Claims.

      (2) The material may be inspected,

copied, or obtained at the Office of Workers' Claims, Monday through Friday, 9

a.m. to 4 p.m., at the following locations:

      (a) Frankfort - Prevention Park,

657 Chamberlin Avenue, Frankfort, Kentucky 40601;

      (b) Paducah - 220 B North 8th Street, Paducah,

Kentucky 42001; and

      (c) Pikeville - 107 Coal Hollow Road, Pikeville,

Kentucky 41501. (23 Ky.R. 4026; Am. 24 Ky.R. 363; eff. 7-17-97; TAm eff.

8-9-2007.)