Payroll reporting: A closer look

1
Payroll reportingA closer look
2
Jurisdictional determination

• Extraterritorial vs. other states exposure
• What is and is not reportable to Ohio? (statute,
  administrative rule, case law)
• Forms C-110 and C-112
• What do other states require?
• Contacts to confirm coverage requirements

3
Extraterritorial vs. other states coverage

• Extraterritorial Extension of Ohio coverage to
  other states when Ohio employees are working
  temporarily outside of Ohio
• Other States Refers to permanent workers
  compensation exposures outside of Ohio no Ohio
  coverage extension

4
Ohio Revised Code (ORC)

• ORC 4123.54 (H)
• Compensation in case of death or injury
• Possibility of conflict
• Location of contract of employment
• Location of the work to be performed
• Agreement between employer and employee to be
  bound by Ohio law or laws of another state
• Written agreement filed within 10 days of
  execution (C-110 C-112)

5
Ohio Administrative Code (OAC)

• 4123-17-23 Duties outside the state
• (A) The entire remuneration of employees, whose
  contracts of hire have been consummated within
  the borders of Ohio, whose employment involves
  activities both within and without the borders of
  Ohio, and where the supervising office of the
  employer is located in Ohio, shall be included in
  the payroll report.
• (B) The remuneration of employees of other than
  Ohio employers, who have entered into a contract
  of employment outside of Ohio to perform
  transitory services in interstate commerce only,
  both within and outside of the boundaries of
  Ohio, shall not be included in the payroll report.

6
OAC

• 4123-17-23 Duties outside the state (continued)
• (C) The bureau of workers' compensation respects
  the extra-territorial right of the workers'
  compensation insurance coverage of an
  out-of-state employer for his regular employees,
  whose contracts of hire have been consummated in
  some state other than Ohio, while performing work
  in the state of Ohio for a temporary period not
  to exceed ninety (90) days. Employees whose
  contracts of hire are consummated at a job site
  in Ohio or employees who have been hired to work
  specifically in Ohio must be protected for
  workers' compensation insurance under the Ohio
  fund.
• (D) Where there is possibility of conflict with
  respect to the application of the workers
  compensation law because the contract of
  employment is entered into and all or some
  portion of the work is or is to be performed in
  different states, the employer and his employees
  may mutually agree to be bound by the workers'
  compensation laws of the State of Ohio by
  executing Form C-110, or mutually agree to be
  bound by the workers compensation law of some
  other state by executing Form C-112, such forms
  to be obtained from and filed with the bureau of
  workers' compensation within ten (10) days after
  execution.

7
So what does it all mean?

• Employee hired in Ohio to work at an Ohio job
  site, or employee hired outside of Ohio to work
  specifically in this state Ohio coverage
  applies
• Employee hired in Ohio, working both in Ohio and
  other states, and the employer's supervising
  office is in Ohio Ohio coverage applies
• Ohio employee working temporarily outside of this
  state Ohio coverage generally applies

8
What else does it mean?

• Employment contract entered either in Ohio or
  another state and all work to be performed in the
  other state Ohio coverage does not apply
• Employee hired by an Ohio employer to perform
  transitory work in a number of states other than
  Ohio Ohio coverage may apply if the employee
  receives work instructions from, sends reports to
  and is paid from the employers facility in Ohio

9
and finally it means

• Employee hired by an Ohio employer to perform
  transitory work in a number of states other than
  Ohio Ohio coverage may apply if the employee
  receives work instructions from, sends reports to
  and is paid from the employers facility in Ohio
• Employee hired outside of Ohio by a non-Ohio
  employer, performing some work outside of Ohio,
  and entering Ohio to perform transitory services
  in interstate commerce Ohio coverage generally
  does not apply

10
Forms C-110 and C-112

• Agreement between employer and one employee
• Forms do not create jurisdiction
• All provisions must be met to be valid
• Filed timely within 10 days
• Completed and signed
• Conflict must exist

11
Coverage requirements and contact information
from other states

• West Virginia
• Laws similar to Ohio
• 90-day rule applies to any 365-day period
• Exemption application
• Contact West Virginia Insurance Commissioners
  Office at [phone]

12
Coverage requirements and contact information
from other states

• Kentucky
• Out-of-state employers required to have coverage
  for any work done in Kentucky
• Contact Kentucky Department of Labor, Office of
  Workers Claims at [phone]
• Indiana
• Will honor Ohio coverage and certify compliance
• Contact Workers Compensation Board of Indiana,
  Insurance/Certificate Division at [phone]

13
Independent contractors

• Basic rule
• Ohio law and the 20 questions
• Independent contractors and premium audits
• Responsibility for uninsured contractors

14
Basic rule for independence

• Separately engaged in the operation of a
  business
• Free from direction and control

15
The 20 questions of ORC 4123.01

• Applies to construction contracts
• Required to comply with instructions regarding
  manner and method of performing services
• Required to have particular training
• Services integrated into the regular functioning
  of employer
• Required to perform the work personally
• Hired, supervised or paid by other contracting
  party
• Continuing relationship contemplates recurring
  work
• Hours of work established by other contracting
  party
• Required to devote full time to the business of
  the other party

16
The 20 questions of ORC 4123.01

• Required to perform work on premises of
  contracting party
• Required to follow the order of work set by
  contracting party
• Required to make progress reports to the other
  contracting party
• Paid for services on a regular basis (hourly,
  weekly, monthly, etc.)
• Expenses paid by the other contracting party
• Tools and materials furnished by the other
  contracting party
• Provided with the facilities used to perform
  services
• Does not realize a profit or suffer a loss as a
  result of services
• Not performing services for a number of employers
  at the same time
• Does not make same services available to the
  general public
• Contracting party has a right to discharge
• Can end relationship with contracting party
  without incurring liability

17
Payroll reporting and premium audit

• Audit records attachment requests
• All 1099-Misc issued during the audit periods
• Copies of invoices
• Copies of contractor agreements
• BWC certificates of coverage
• Employer interview
• Review requested records
• Confirm nature of the relationship
• No single document is conclusive proof of status

18
Premium liability for subcontractors

• 4123.35 Payment of premiums by employers
• An employer defined in division (B) (2) of
  Section 4123.01 of the Revised Code who has
  contracted with a subcontractor is liable for the
  unpaid premium due from any subcontractor with
  respect to that part of the payroll of the
  subcontractor that is for work performed pursuant
  to the contract with the employer.
• Contractors found to be employees will have
  amounts paid added to the employers reportable
  payroll.

19
Questions?