Bulletin No. 1997-10

Issued by the Kansas Insurance Department, Kathleen Sebelius, Commissioner

June 30, 1997

TO:All companies and group-funded pools authorized to write workers compensation in Kansas

SUBJECT: 1997 House Bill 2011 (Self-Employed Subcontractors)

Effective July 1,1997, House Bill 2011 was enacted. Part of the new law extends coverage under the Workers Compensation Act to self-employed subcontractors performing work for a contractor.

The enforcement and interpretation of the Workers Compensation Act is subject to the jurisdiction of the Kansas Division of Workers Compensation and the courts of this state. Therefore, any questions regarding the definition or application of specific terms or provisions of the Act should be directed to the Division of Workers Compensation.

The new law appears to place the primary responsibility for obtaining workers compensation insurance, in most cases, on the subcontractor. The subcontractor will need to either purchase a workers compensation policy which covers the subcontractor or to take the necessary steps to include the subcontractor on a policy the subcontractor already has which may now cover only the subcontractor's employees in order to comply with the new law. If there is an employer-employee relationship between the contractor and the self-employed subcontractor, the principal contractor will need to purchase and provide the coverage for the subcontractor.

If the subcontractor needs to be covered, and has an in force workers compensation insurance policy, the subcontractor's payroll must be added to the policy as of July 1. The insurance company, in my opinion, should immediately notify the insured of why this change occurred and advise them of the premium charge. The insured should also be informed that the additional premium will be billed in accordance with the insurer's normal billing procedures. If the self-employed subcontractor was covered for a full year then the current payroll base of $24,900 is used. However, this payroll amount is prorated for coverage of less than a full year. Any questions regarding premium or rating should be directed to my office.

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