Section 933.303 - Workers' compensation(a)Requirement for coverage of covered employees.-- (1)Both the PEO and the client shall be an employer of covered employees assigned to the client for purposes of this act and the act of June 2, 1915 (P.L. 736, No. 338), known as the Workers' Compensation Act. (2)The responsibility to provide workers' compensation coverage for the covered employees shall be specifically allocated in the professional employer agreement to either the client or the PEO. (3) When the responsibility to provide workers' compensation coverage is specifically allocated in the professional employer agreement to the PEO, the PEO must elect to provide coverage for all covered employees assigned to that client pursuant to subsection (b)(3), (4) or (5). (4) When the responsibility to provide workers' compensation coverage is specifically allocated in the professional employer agreement to the client, the client must provide coverage pursuant to subsection (b)(1) or (2).(b)Methods of coverage.--A client and a registered PEO that have entered into a professional employer agreement may meet their statutory obligation under the Workers' Compensation Act for coverage as employers for the covered employees by any of the following: (1)The client obtaining a standard workers' compensation policy from an insurer authorized to provide workers' compensation coverage covering the client's covered employees. Separate experience modification, risk classifications, merit rating adjustments, construction classification premium adjustments or certified safety committee program credits shall be applied to the exposures of the client covered by a policy obtained under this paragraph based on the client's entire Pennsylvania operations notwithstanding coverage provided under additional professional employer agreements pursuant to paragraphs (3), (4) and (5). (2) The client being approved by the department to self-insure or group self-insure its workers' compensation obligations for the client's covered employees(3) The PEO purchasing workers' compensation insurance on a multiple coordinated policy basis from an insurer authorized to provide workers' compensation coverage to the PEO and to the client with respect to the covered employees assigned to the client. Each policy written on a multiple coordinated policy basis shall be issued to the PEO as the primary named insured and must identify both the PEO and the client as insureds. At the written request of the client, a professional employer organization shall make available evidence of workers' compensation coverage, loss history and total wages paid for covered employees of the client. The following apply: (i)Separate experience data must be reported to the licensed rating organization for workers' compensation insurance for each multiple coordinated policy in a format complying with requirements of the approved statistical plan for workers' compensation coverage. (ii)Risk classifications shall be assigned to each client based on the totality of that client's Pennsylvania operations regardless of whether workers engaged therein are provided under one or more professional employer agreements or are direct hire employees of the client.(iii) If applicable, separate experience modification, merit rating adjustments, construction classification premium adjustment or certified safety committee program credits shall be applied to the exposures of each client covered by a multiple coordinated policy based on the client's entire Pennsylvania operations whether coverage is being provided for the client's exposures under the client's own policy or on a master policy basis or multiple coordinated policy basis under one or more professional employer agreements, or some combination thereof. (iv) Policies written in accordance with this paragraph by the same insurer with the PEO as named insured may be combinable for premium discount and other purposes including a retrospective rating program or any other approved pricing program. Such programs may be based on the combined total standard premium and losses of all such policies issued to the PEO as the primary named insured.(v) Nothing in this paragraph shall prohibit a professional employer organization from participating in a large deductible program, retrospective rating program or any other rating program approved for and written under a workers' compensation policy offered by an insurer. Further, nothing in this paragraph shall restrict an insurer from collecting workers' compensation premiums based on the totality of the exposure under these multiple coordinated policies and applying rates and discounts consistent with those approved for the insurer pursuant to the rating program. (4)The PEO being duly qualified and approved by the department to self-insure its workers' compensation obligations, including direct employees and covered employees. (5)The PEO purchasing workers' compensation insurance on a master policy basis from an insurer authorized to provide workers' compensation coverage. The insurer or licensed producer shall provide a certificate of insurance evidencing workers' compensation coverage to each client and to the PEO with respect to the covered employees of that client. The following apply:(i)When coverage is provided under a master policy, the insurer must report separate experience data to the licensed rating organization for workers' compensation insurance for each client insured within any master policy in a format complying with the requirements of the approved statistical plan for workers' compensation coverage.(ii)Risk classifications shall be assigned to each client based on the totality of that client's Pennsylvania operations regardless of whether workers engaged therein are provided under one or more professional employer agreements or are direct hire employees of the client.(iii) If applicable, separate experience modification, merit rating adjustments, construction classification premium adjustments or certified safety committee program credits shall be applied to the exposures of each client covered by a master policy based on the client's entire Pennsylvania operations whether coverage is being provided for the client's exposures under the client's own policy or on a master policy basis or multiple coordinated policy basis under one or more professional employer agreements, or some combination thereof. (iv)Nothing in this paragraph shall prohibit a professional employer organization from participating in a large deductible program, retrospective rating program or any other rating program approved for and written under a workers' compensation policy offered by an insurer. Further, nothing in this paragraph shall restrict an insurer from collecting workers' compensation premiums based on the totality of the exposure under the master policy and applying rates and discounts consistent with those approved for the insurer pursuant to the rating program.(c)Employee coverage.--Direct hire employees of and covered employees assigned to a client shall all be collectively covered either by the State Workers' Insurance Fund or by insurers authorized to transact workers' compensation insurance in the voluntary market. Covered employees insured by the State Workers' Insurance Fund may only be covered pursuant to a policy issued to the client under subsection (b)(1) or on a multiple coordinated policy basis issued pursuant to subsection (b)(3)(d)Client obligation.--(1)A client retains the statutory obligation to provide workers' compensation coverage for employees that are not covered employees pursuant to the professional employer agreement. Nothing in this paragraph shall preclude a client from purchasing a workers' compensation policy insuring both its covered employees and its direct hire employees. (2) If a client's insurer or the client, if self-insured, has issued coverage for direct hire employees and an injured employee is entitled to workers' compensation benefits but there is a dispute as to whether the employee is a direct hire employee of the client or a covered employee of the PEO, the client's insurer or the client, if self-insured, shall pay the benefits, subject to reimbursement of claims costs and loss adjustment expenses by the PEO's insurer or the PEO, if self-insured, if it is determined that the claimant is a covered employee of the PEO.(3) If the client does not have coverage for direct hire employees, either through an insurer or by self-insurance, and an injured employee is entitled to workers' compensation benefits but there is a dispute as to whether the employee is a direct hire employee of the client or a covered employee of the PEO, the PEO's insurer or the PEO, if self-insured, shall pay the benefits, subject to reimbursement of claims costs and loss adjustment expenses by the client, if it is determined that the claimant is not a covered employee of the PEO. (e)Policy issuance permitted.--Subject to subsection (b), and notwithstanding the provisions of section 653 of the act of May 17, 1921 (P.L. 682, No. 284), known as The Insurance Company Law of 1921, insurers may issue standard workers' compensation policies under subsection (b)(1), multiple coordinated policies under subsection (b)(3) or master policies under subsection (b)(5) covering fewer than all of a client's employees. (f) Notice of coverage to the client.-- (1)If coverage is provided under a policy issued to the PEO for covered employees of the PEO, the PEO shall give clear and conspicuous written notice to the client that: (i)The client of the PEO has a continuing obligation to provide coverage under the Workers' Compensation Act for any direct hire employees of the client who are not covered employees and not otherwise covered under a policy described in this section. (ii)While coverage provided under a policy issued to the PEO is in force, the PEO will be responsible for paying all premium obligations, including any audit adjustments and policyholder assessments, and will be entitled to any premium refunds. The written notice to the client shall further explain that, although the PEO will charge the client amounts that reflect or include the cost of coverage, these charges are not considered insurance premium obligations of the client. If there is a policy deductible, the written notice to the client shall further explain that the PEO is responsible for reimbursing the insurer for the deductible and may not seek recovery from the client.(2) The written notice to the client shall explicitly state that:(i)If the professional employer organization terminates the professional employment agreement with the client, termination of workers' compensation coverage by the insurer shall be effective the sooner of:(A)Sixty days after notice of intent to terminate workers' compensation coverage by the insurer has been given by the professional employer organization to the client.(B)Fifteen days after notice of intent to terminate workers' compensation coverage by the insurer for nonpayment has been given by the professional employer organization to the client. (C)The date on which workers' compensation coverage for the covered employees is transferred to the client's workers' compensation policy or other coverage.(ii)The requirements under paragraph (1) shall continue to apply to workers' compensation coverage provided by the insurer after the notice is given pursuant to subparagraph (i). (iii)The client shall pay for all workers' compensation coverage provided by the insurer, including reasonable administrative expenses, subsequent to the termination of the professional employer agreement by the professional employer organization.(iv) If workers' compensation coverage is provided through a workers' compensation insurance policy issued to the professional employer organization on behalf of the client who has been given notice pursuant to subparagraph (i), the professional employer organization shall notify the affected insurer of the notice.(g)Notice to department.--If the professional employer agreement provides for the PEO to provide workers' compensation insurance for covered employees, the PEO shall: (1) Notify the department that it has insured covered employees assigned to a client for workers' compensation on a multiple coordinated policy basis pursuant to subsection (b)(3) or through self-insurance in accordance with subsection (b)(4) or on a master policy basis pursuant to subsection (b)(5) within 15 days after the effective date of the professional employer agreement. (2)Notify the department of any cancellation or termination of a professional employer agreement under which the PEO has assumed the obligation to provide workers' compensation insurance for covered employees within ten days following the date the notification of cancellation or termination of the professional employer agreement is issued to the client. (3)Notify the department of any cancellation or termination of workers' compensation coverage for covered employees by the PEO's insurer, or any change in insurers for covered employees, within ten days of the effective date of cancellation, termination or change of insurers. (h)Notice by insurer or licensed producer.--The insurer or licensed producer of a workers' compensation policy sponsored by a PEO for covered employees shall provide the department with copies of all notices of coverage, cancellation or nonrenewal related to that policy. The PEO shall notify the insurer or licensed producer of the requirement under this subsection.(i)Exclusive remedy.--(1)The Workers' Compensation Act shall provide the exclusive remedy for injuries suffered by direct hire and covered employees in the course and scope of their employment or coemployment with the PEO and client where the PEO or client has secured workers' compensation insurance or self-insured their workers' compensation obligations as required by the Workers' Compensation Act, this act and the professional employer agreement. Both the PEO and the client shall be entitled to the exclusiveness of remedy under section 303 of the Workers' Compensation Actregardless of which provided such coverage.(2)Nothing in this act may include within the coverage of the Workers' Compensation Act individuals, services or remuneration that are otherwise excluded from the Workers' Compensation Act.(j)Record confidentiality.--Upon request, a PEO or PEO group shall make available personal identifying information, employer identification numbers, a Federal employment identification number, provisions of the professional employer agreements and client lists to a rating organization licensed under section 712(a) of the Workers' Compensation Act, as required to comply with the rating organization's statutory obligations. Information obtained under this subsection shall only be used by the rating organization to comply with those statutory duties either prescribed under the Workers' Compensation Act or as required by the act of May 17, 1921 (P.L. 789, No. 28), known as The Insurance Department Act of 1921, or the Insurance Company Law of 1921 and shall not be considered public records under the act of February 14, 2008 (P.L. 6, No. 3), known as the Right-to-Know Law. (k)Applicability.--This section shall apply to new and renewal workers' compensation policies issued to professional employer organizations on or after the effective date of this act.Added by P.L. 946 2012 No. 102, § 303, eff. 1/1/2013.