Summary of s. 102.315, Wis. Stats., Worker's compensation insurance; employee leasing companies

Effective April 1, 2008, under s. 102.315, Wis. Stats., multiple coordinated policies will be required for clients of employee leasing companies except for small clients whose premium is not large enough for experience rating who may continue to be insured under a master policy.

New Required DWD Forms

Employee Leasing Company

Under s. 102.315(5)(b), Wis. Stats., employee leasing companies are required to file the following form with the Department:

  1. Form WKC-15784-E,  Employee Leasing Company Notification of a client covered under a master policy for small clients under s. 102.315(5)(b), Wis. Stats.

Insurance carrier

Under s. 102.315(5)(c), Wis. Stats., insurance carries are required to file the following form with the Department:

  1. Form WKC-15785-E,  Wisconsin Proof of Coverage Notice under a master policy for small clients under s. 102.315(5)(c), Wis. Stats.

Client that has a divided workforce

Under s. 102.315(6)(b)&(e) Wis. Stats., clients with a divided workforce,(Divided workforce means a workforce in which some of the employees of a client are leased employees and some of the employees of the client are not leased employees.) are required to file the following forms with the Department:

  1. Form WKC-15783-E,  Employer Notice of Divided-Workforce under s. 102.315(6)(b), Wis. Stats.
  2. Form WKC-15782-E,  Termination Notice of Divided-Workforce under s. 102.315(6)(e), Wis. Stats.

New Law Summary

Under s. 102.315 (2), Wis. Stats., a person that contracts to provide the nontemporary, ongoing employee workforce of a client under an employee leasing agreement (employee leasing company) is liable for any worker's compensation payable to the leased employee and may not seek or receive reimbursement from the client for any payments made as a result of that liability.

Subject to certain exceptions, s. 102.315 (3), Wis. Stats requires an employee leasing company to insure its worker's compensation liability by obtaining a contract of insurance under which the insurer issues separate worker's compensation policies to the employee leasing company for each of its clients that are insured by the insurer (multiple coordinated policy).  A multiple coordinated policy must name both the employee leasing company and the client as named insureds and must designate either the employee leasing company or the client, but not both, as the first named insured.  An insurer may issue a multiple coordinated policy for a client only if all of the employees of the client are leased employees and are covered under the policy, except that an insurer may issue a multiple coordinated policy for a client that has a workforce in which some of the employees are leased employees and some are not leased employees (divided workforce) if the client notifies the Department of Workforce Development (DWD) of its intent to have a plan under which two policies are issued to cover the employees of the client, one covering the leased employees of the client and the other covering the employees of the client who are not leased employees (divided workforce plan).

Under section 102.315 (4), Wis. Stats., an employee leasing company may also insure its worker's compensation liability by obtaining a single policy in its name covering more than one client of the employee leasing company (master policy) that has been approved by the commissioner of insurance (commissioner).  The commissioner may approve the issuance of a master policy if the insurer shows that it has the technological capacity and operational capability to provide to the Wisconsin Compensation Rating Bureau (bureau) certain information at the client level, including unit statistical data, information concerning proof of coverage and cancellation termination, and nonrenewal of coverage, and any other information that the bureau may require.  A master policy must also establish rules governing the issuance of an insurance policy covering the leased employees of a divided workforce and the cancellation, termination, and nonrenewal of policies.

Under s. 102.315 (5), Wis. Stats., regardless of whether the commissioner has approved the issuance of a master policy, the new law permits an employee leasing company to insure its worker's compensation liability with respect to a group of clients, each of which has an unmodified annual premium that is equal to or less than the threshold below which employers are not experience rated under the standards and criteria of the bureau (small clients) by obtaining a master policy in the voluntary market (as opposed to under the state mandatory risk sharing plan, which is a plan established or approved by the commissioner under which risks that are unable to obtain coverage in the voluntary market may obtain coverage) insuring that liability.  An insurer may issue a master policy covering a group of small clients regardless of whether any of those small clients has a divided workforce.  If at any time the unmodified annual premium of a small client that is covered under a master policy exceeds the threshold below which employers are not experience rated, the employee leasing company must notify the insurer and obtain coverage for the small client under a multiple coordinated policy or a master policy that has been approved by the commissioner.  The premium threshold for experience rating eligibility in effect on April 1, 2008 is $6,000 annually.

In addition, s. 102.315 (6), Wis. Stats., permits an insurer to issue a policy covering only the leased employees of a client that has a divided workforce if the client notifies DWD of its intent to have a divided workforce.  Under the law, a client that has a divided workforce must insure its employees who are not leased employees in the voluntary market and may not insure those employees under the state mandatory risk sharing plan, unless the leased employees of the client are covered under that mandatory plan.  A client that has a divided workforce must also agree to assume full responsibility to immediately pay any worker's compensation payable as may be required by DWD should a dispute arise between two or more insurers as to liability for an injury sustained while a divided workforce plan is in effect, pending final resolution of the dispute.

Under s. 102.315 (9), for a multiple coordinated policy in which an employee leasing company is the first named insured and for a master policy, the law permits an insurer to obligate only the employee leasing company to pay premiums due for a client's coverage and prohibits an insurer from recovering any unpaid premiums due for that coverage from the client.  The law, however, does not prohibit an insurer from collecting premiums and charges due with respect to a client by means of list billing through the employee leasing company; requiring an employee leasing company to maintain a letter of credit or other form of security to ensure payment of premiums; issuing policies that have a common renewal date to all, or a class of all, clients of an employee leasing company; grouping together the clients of an employee leasing company for the purpose of offering dividend eligibility and paying dividends to those clients; applying a discount to the premium charged with respect to a client; or applying a retrospective rating option for determining the premium charged with respect to a client.

Under s. 102.315 (10), Wis. Stats., provides as follows with respect to the cancellation, termination, or nonrenewal of a multiple coordinated policy or a master policy:[1]

  1. That the insureds under the policy may cancel the policy during the policy period only if both the employee leasing company and the client agree to the cancellation, the cancellation is confirmed by the employee leasing company promptly providing written confirmation of the cancellation to the client in writing or by the client agreeing to the cancellation in writing, and the insurer provides written notice of the cancellation to DWD.
  2. That the insurer may cancel, terminate, or nonrenew the policy by providing written notice of the cancellation, or nonrenewal to the insured employee leasing company, the insured client, and DWD. Cancellation or termination of a policy by an insurer during a policy period is not effective until 30 days after that notice is provided. Nonrenewal of a policy is not effective until 60 days after that notice is provided.
  3. That, if an employee leasing company that is the first named insured on the policy terminates the employee leasing agreement with a client in its entirety, the insurer may cancel or terminate the policy during the policy period by providing written notice of the cancellation or termination to the insured employee leasing company, the insured client, and DWD. Cancellation or termination of a policy by an insurer during a policy period for reason of termination of an employee leasing agreement is not effective until 30 days after that notice is provided.
  4. That, if an employee leasing agreement is terminated during the policy period of a policy in which the client is the first named insured, the insurer must cancel the employee leasing company’s coverage by an endorsement to the policy, and coverage of the client under the policy continues, unless the policy providing continued coverage is cancelled for failure of the client to pay premiums or for other grounds stated in the policy.

Under section 102.29 (6m) (a), Wis. Stats., prohibits a leased employee of an employee leasing company who makes a claim for worker's compensation against the employee leasing company from making a claim or bringing an action in tort against the client that accepted the services of the leased employee, against any other employee leasing company that provides the services of another leased employee to the client, or against any employee of the client or of that other employee leasing company.  Section 102.29 (6m) (b) Wis. Stats., similarly prohibits an employee who makes a claim for worker's compensation against a client of an employee leasing company from making a claim or bringing an action in tort against an employee leasing company that provides the services of a leased employee to the client or against any leased employee of that employee leasing company.

Finally, prior to April 1, 2008, under section 102.31 (2m), Wis. Stats., a professional employer organization or an employee leasing organization that entered into an employee leasing agreement with a client was required to submit to DWD, within ten working days after the effective date of the agreement, a report disclosing the identity of the client, the effective date of the agreement, and such other information as DWD prescribes and an employee leasing organization that intends to terminate an employee leasing agreement must notify DWD of that termination no later than 30 days prior to the termination date of the agreement. In addition, when an employee leasing agreement was terminated, termination of the client's coverage under the worker's compensation insurance policy of the employee leasing organization was not effective until 30 days after the employee leasing organization has given notice of the termination of that agreement to DWD. 

Effective April 1, 2008, s. 102.31 (2m), Wis. Stats., is repealed. 

Obsolete DWD forms effective April 1, 2008:

  1. WKC-15242-E, Wisconsin Employee Leasing Company Client Report under s. 102.31(2m)(a), Wis. Stats.
  2. WKC-15243-E, Wisconsin Employee Leasing Company Client Termination Notification under s. 102.31(2m)(b), Wis. Stats.

[1] Section 102.31(2)(a), Wis. Stats., provides that the department may provide by rule for notice of cancellation or termination of an insurance policy to be made directly to the Wisconsin compensation rating bureau.  See Rule DWD 80.65.

DWD 80.65 Notice of cancellation or termination. Notice of cancellation or termination of a policy under s. 102.31 (1) (a), Stats., shall be given to the Wisconsin compensation rating bureau, as defined in s. 626.02 (2), Stats., rather than to the department. The notice may be given by certified mail; personal service; facsimile machine transmission; electronic mail; or any electronic, magnetic, or other medium approved by the department. Whenever the Wisconsin compensation rating bureau receives notice of cancellation or termination pursuant to this section, it shall immediately notify the department of cancellation or termination.

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