Worker's Compensation Advisory Council - PEO Committee

Professional Employee Organization Committee
May 9, 2006
10:00 p.m. - 3:00 p.m.
Howard Johnson (formerly
3841 E. Washington Ave.
Madison, WI 53713

Members present:James O’Malley-Chair, James Furley, Randy Blumer, Fred Nepple, James Buchen, Michael Gotzler, Todd Cohn, Tom Detmer, Ralph Hermann, Paul Riegel, Brian Krueger, and John Conway



Staff present: Frances Huntley-Cooper and Kathy Froehlich

Public Attendees: John Metcalf, Bob Oyler, Paul Blume and Scott Stenger

All in attendance at the meeting introduced themselves.

The agenda was reviewed.

The Committee reviewed the mandate of the Worker’s Compensation Advisory Council (WCAC) from the July 29, 2005 meeting of the Advisory Council. The mandate states specifically that:

“A study committee will be established to review issues relating to PEOs including the definition of PEO, the process for experience rating PEOs and their clients, the employer status of PEOs and insurance policies covering PEOs and their clients.”

102.01(2)(f), Wis. Stats., currently defines PEOs and employee leasing companies the same as temporary help agencies in that they are considered the employer for worker compensation purposes. Co-employment considerations do not exist in Wisconsin.

James Buchen stressed the fact that PEOs have greatly increased in the last 5-10 years and help with managing human resources. It may be time that the WC law addresses PEOs.

The working draft of proposed legislation that will be reviewed is a result of multiple meetings and agreements with members of the respective industries. (Reflective of this committee.) A method of policy cancellation from PEOs is needed. Currently the Division is not notified and does not have a listing of identified PEOs. The UEF fund received additional claims a result of this lack of notification.

Review of Working Draft 102.31 (2m), Wis. Stats., (handed out at the meeting).

Paragraph (a) was agreed to by the Committee.

Paragraph (b) was agreed to by the Committee.

Paragraph (c) was agreed to by the Committee.

Paragraph (d) generated much discussion. There was major concern over the language of the last sentence. It was brought up that it isn’t common for a policy be written to 2 companies. Usually, one would be listed as primary and the other listed as secondary (add’l. insured). It was indicated that the last sentence does not reflect that and infers that the PEO cover all employees (those leased and permanent employees of the client). Some members believed this should not be the case.

Todd Cohn requested clarification of this point. Bringing to the attention of the committee that while PEOs are the employers of the leased employees that they provide a policy covering their employees. Insurance companies do not issue policies naming two unrelated businesses on one policy.

Fred Nepple wanted to concentrate on the operations of the PEOs not the definition of the question of being the employer. He did not see a problem with the last paragraph.

During this discussion there were some other subjects covered. Bob Oyler, owner of the Employer Group, explained that they have contracted and temporary help. Their temporary help are covered under the company’s insurance policy. One of Wisconsin’s major insurers notified the Employer Group that they will no longer be issuing an insurance policy for their employees at the smaller business locations. (This comprises a large number of the Employer Group’s clients). They stated that it was because of the administrative costs associated with these policies. Mr. Oyler distributed copies of the letter they received.

Ralph Hermann discussed the assigned risk pool and that it will be utilized more if insurance companies do not insure the smaller risks. Other topics of short discussion were:

After much discussion, the different parties conceded to agree. The last sentence of paragraph (d) will be stricken and Brian Krueger will reword it to address that the PEO policy cover all leased employees and existing employees of client be covered by their own company’s policy. Insurance to be voluntary and they will not be allowed to dump into the assigned risk pool.

Paragraph (e) was agreed to by the Committee. There was discussion on the role of the insurer giving notice. It was again discussed that there can always be changes and amendments.

Paragraph (f) will be revisited as it very well may be stricken after (d) is rewritten. Also, it was brought up that administrative code can not be referenced.

Paragraph (g) was agreed to by the Committee.

Paragraph (h) was agreed to by the Committee.

Paragraph (i) was ultimately agreed to. But did spark additional commenting on if the insurer deleted the PEO from policy, or PEO requested to be terminated. What happens to coverage of PEO employees? Does Client remain on policy?

John Conway moved forward to the report style.

Can have a consensus and then forward to the Advisory Council.

There will be another meeting to revisit the language changes and discuss AB1056 (As it relates to administration of 102 and workload of WC) and preparation of the report.

John Conway will clarify with the Advisory Council exactly what they want the committee to review.

Posted on June 1, 2006