DAR File No. 38807

Labor Commission, Industrial Accidents

Section R612-400-4

Waivers

Notice of Proposed Rule

(Amendment)

DAR File No.: 38807
Filed: 08/22/2014 08:45:53 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Workers' Compensation Coverage Waivers Act authorizes the Labor Commission, through its Industrial Accidents Division, to issue workers' compensation coverage waivers to business entities that meet the statutory conditions for such waivers. The Labor Commission has previously promulgated Section R612-400-4 to establish the process for applying for such waivers, and other related matters. The proposed amendments to Section R612-400-4 clarify and simply the provisions of the existing rule and eliminate the unnecessary restatement of the prerequisites for coverage waivers, which are already specified by statute.

Summary of the rule or change:

The proposed amendments to Section R612-400-4 simplify and clarify the existing provisions of the rule. These changes do not result in any substantive change to existing coverage waiver requirements or procedures. The amendment also eliminates the existing rule's unnecessary reiteration of the statutory requirements for coverage waivers.

State statutory or constitutional authorization for this rule:

• Subsection 59-9-101(2)

Anticipated cost or savings to:

the state budget:

The proposed changes to Section R612-400-4 will not result in any additional administrative or enforcement costs to the Labor Commission or have any effect on the state's workers' compensation expenses as an employer.

local governments:

The proposed changes to Section R612-400-4, which simplify and clarify the existing rules for workers' compensation coverage waivers, will not result in any additional workers' compensation expense for local governments.

small businesses:

Workers' compensation coverage waivers are only available to very small business entities: sole proprietors, partnerships, etc. that have no employees. The proposed changes to Section R612-400-4 do not change the process or cost for such waivers and will not result in any additional expense for such small businesses.

persons other than small businesses, businesses, or local governmental entities:

The proposed changes to Section R612-400-4, which simply and clarify the existing rules for workers' compensation coverage waivers, will have no impact on other persons.

Compliance costs for affected persons:

The simplification and clarification of Section R612-400-4 should ease compliance by affected small businesses and will not result in any additional compliance costs.

Comments by the department head on the fiscal impact the rule may have on businesses:

The proposed changes to Section R612-400-4 are part of the Industrial Accidents Division's comprehensive review of all its workers' compensation rules. The proposed changes to Section R612-400-4 do not impose any additional requirements or burdens on those who use or rely upon workers' compensation compliance waivers but, rather, simplify and clarify existing requirements.

Sherrie Hayashi, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Labor Commission
Industrial Accidents
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Ron Dressler at the above address, by phone at 801-530-6841, by FAX at 801-530-6804, or by Internet E-mail at rdressler@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/15/2014

This rule may become effective on:

10/22/2014

Authorized by:

Sherrie Hayashi, Commissioner

R612. Labor Commission, Industrial Accidents.

R612-400. Workers' Compensation Insurance, Self-Insurance and Waivers.

R612-400-4. Waivers.

[4.1]A. Authority and Purpose.

[This rule is enacted under authority of 34A-1-104 of the Utah Labor Commission Act and]Pursuant to Title 34A, Chapter Two, Part [One]Ten, [the ]Workers' Compensation Coverage Waivers Act ("the Act")[. The purpose of], this rule [is to ]establishes procedures for applying for workers' compensation coverage waivers[("coverage waivers")]. The rule also addresses the effect of coverage waivers and [the adjudicative ]procedures to be followed by the Labor Commission's Industrial Accidents Division in granting, denying, or revoking coverage waivers.

[4.2. Administration by Industrial Accidents Division.

Except as otherwise provided, the Utah Labor Commission's Division of Industrial Accidents ("Division") shall administer the provisions of the Act and this rule.

4.3.]B. Procedure for Application, [and ]Issuance and Renewal of [Certificate]Coverage Waiver.

[A]1. A business entity may [apply for]obtain a coverage waiver by :

a. completing [a form provided by ]the application process, available either online at the Utah Labor Commission website or by written application also available at the Commission;[,]

b.  submitting the [required ]supporting documents required by 34A-2-1004 of the Act;[,] and

c.  paying a non-refundable application fee of $50[. The Division's determination of whether to grant or deny a request for coverage waiver shall be conducted as informal proceedings under the Utah Administrative Procedures Act.], used to defray the costs of processing and evaluating the application. Payment of the fee by check may delay issuance of a coverage waiver until the check has been honored.

[B. Supporting documents. 34A-2-1004 of the Workers' Compensation Coverage Waivers Act requires a business entity to submit the following documentation to support its request for a coverage waiver:

(1) a copy of two or more of the following:

(a) the business entity's federal or state income tax return that shows business income for the complete taxable year that immediately precedes the day on which the business entity submits the information;

(b) a valid business license;

(c) a license to engage in an occupation or profession, including a license under Title 58, Occupations and Professions; or

(d) documentation of an active liability insurance policy that covers the business entity's activities; or

(2) a copy of one item listed in Subsection (1) and a copy of two or more of the following:

(a) proof of a bank account for the business entity;

(b) proof that for the business entity there is:

(i) a telephone number; and

(ii) a physical location; or

(c) an advertisement of services in a newspaper of general circulation or telephone directory showing the business entity's:

(i) name; and

(ii) contact information.

C. Fee. A business entity applying for a workers' compensation coverage waiver certificate shall submit payment of a fee of $50.00. Such fees are used to defray the costs of processing and evaluating the application and are nonrefundable. If payment of the fee is made by check, the Division may delay issuance of a coverage waiver until it has verified that the check will be honored.

D]2. [Issuance or Denial of Certificate. ]If the Division determines that a business entity has satisfied each requirement for a coverage waiver, the Division will issue the coverage waiver. If the Division determines that a business entity has not satisfied each requirement for a workers' compensation insurance waiver, the Division will issue a written denial to the business entity, stating the basis for denial and setting forth the business entity's appeal rights.

[4.4. Duration, Renewal and Revocation.

A]3. [Duration. ]Subject to revocation of a coverage waiver as provided by sub[paragraph]section C. of this section, a coverage waiver remains in effect for the following time periods:

[1]a. A coverage waiver issued by a licensed workers' compensation insurance company prior to July 1, 2011, the effective date of the [Workers' Compensation Coverage Waivers ]Act, shall remain effective for the period shown on the coverage waiver.

[2]b. A coverage waiver issued by the Division after July 1, 2011, shall be effective for one year from the date the coverage waiver is issued.

[B. Renewal. The Division will renew a business entity's coverage waiver if:

1. The business entity requests renewal; and

2. The business entity satisfies all requirements in effect at the time of the renewal request.

]4. A business entity may renew a coverage waiver by completing the on-line renewal application available at the Utah Labor Commission website and satisfying the requirements set forth in subsection B.1.b. and c. of this rule.

C. Revocation.

1.  If the Division has reason to believe that a business entity no longer qualifies for a coverage waiver, the Division shall institute proceedings to determine whether the business entity's coverage waiver should be revoked. Such proceedings shall be conducted as informal proceedings under the Utah Administrative Procedures Act.

2.  If the Division concludes that the business entity does not satisfy each requirement for a [workers' compensation insurance]coverage waiver, the Division will issue a written order revoking the waiver certificate[,]. The order shall state [stating] the basis for revocation[,] and [setting forth ]the business entity's appeal rights. The Division may also initiate other proceedings authorized by the Utah Workers' Compensation Act to compel the business entity to obtain workers' compensation coverage for its employees.

[4.5. Review of Division Decisions to Deny or Revoke Waiver Certificate.]D. Appeal Rights.

A business entity may challenge a Division decision to deny or revoke [the business entity's]a coverage waiver by filing an appeal of the decision with the [Commission's ]Adjudication Division. Such appeal proceedings shall be [assigned to an administrative law judge and ]conducted as de novo formal adjudicatory proceedings [pursuant to]under the Utah Administrative Procedures Act.

[4.6]E. Effect, Verification and Limitation of Coverage Waiver.

[A]1. Effect of coverage waiver. Subsection 34A-2-103 (7) (c) permits an employer contracting with a business entity to rely upon a valid coverage waiver issued by the Division as proof that the business entity is not required to have a workers' compensation insurance policy.

[B]2. Verification of coverage waiver. Before [A]an employer [seeking to]may rely upon a business entity's coverage waiver, the employer shall retain the following documents:

[1]a. A photocopy of the coverage waiver issued to the business entity by the Division; and

[2]b. A printout of the Division's waiver status verification web page showing that the business entity's coverage waiver had not been revoked as of the date on which the employer contracted with the business entity.

[C]3. Limitations to effect of coverage waiver. A coverage waiver does not excuse a business entity from obtaining and maintaining workers' compensation insurance coverage for employees who are entitled to such coverage under the Utah Workers' Compensation Act. If and when a business entity has such employees, any coverage waiver previously issued to that business entity becomes void and the business entity must immediately obtain workers' compensation coverage.

 

KEY: workers' compensation, insurance, rates, waivers

Date of Enactment or Last Substantive Amendment: [December 23, 2013]2014

Authorizing, and Implemented or Interpreted Law: 59-9-101(2)