Policy Name:	Temporary Labor Services (Temp or Staffing) Agency
Policy #:	EP-20-04
Code/Rule Reference:	Ohio Revised Code (ORC) 4123.01 and Ohio Administrative Code (OAC) 4123-17-05, Appendix A, 4123-17-08, 4123-17-13; 4123-17-15
Effective Date:	December 5, 2015
Origin:	Employer Policy
Supersedes:	All policies and procedures regarding Temporary Labor Services that predate the effective date of this policy.
History:	Original Policy Effective Date: February 2007, Revised: March 12, 2008
Review Date:	December 4, 2020

 

I.       Policy Purpose

 

Temporary Labor Services (Temp Agencies) are classified using the same operational classifications of their client customers. BWC will ensure that Temp Agencies applying for workers’ compensation and conducting business in the State of Ohio do so in accordance with the applicable laws and rules.

II.     Applicability

This policy applies to Bureau of Workers’ Compensation (BWC) Policy Processing/Underwriting Department, NCCI Classification unit, Payroll Auditors, Field Services, Call Center, Temp agencies, public employer taxing districts (PEC) private employers (PA) and their authorized representatives.  

III.    Definitions

A.    Temporary Staffing Agency: An employer in the business of hiring individuals for the purpose of using their services for a short-term period to fill vacant position(s) at the customer (employer’s) location.  They may also place employees on a temporary basis with the intent of becoming full time employees with the customer.

B.    Industry Group: Used in calculating a company's premium rate and in some program participation, this is the main business pursuit of an individual employer (ex. Construction, Transportation, etc.).  By assigning one of ten Industry Groups, BWC can ensure employers rates are determined by using the claims cost and payroll of all similar companies.

C.    Professional Employee Organizations: A sole proprietor, partnership, association, limited liability company or corporation that enters into an agreement with one or more client employers for the purpose of co-employing all or part of the client employer’s workforce at the client employer’s work site. PEO does not include a temporary service agency. (4123-17-15(A) (1)).

IV.   Policy

A.    Temp agency application for coverage.

1.     Employers designated as a Temp Agency use the U-3 Application for Ohio Workers’ Compensation Coverage form and are processed the same as other business entities following the Application for Coverage policy.

2.     Temp agencies may request one policy per industry group for a total of ten policies.

a.     Temporary agencies are not permitted to establish separate policies based on location.

b.     When a policy is issued by Industry Group, only the classifications within that Industry Group will be assigned to that policy. Exception: NCCI classification 8810.

c.     Industry group policies cover the entire state for that particular Industry Group.

d.     Experience from existing policy(ies) will be segregated and transferred to the associated Industry Group policies. The historical payroll and claims information will be used to develop the experience modifier for the new policies.

e.     Temp agencies must report all payroll by Industry Group the same at both the federal and State level.

f.      BWC will include the Industry Group type in the employer’s entity name to effectively manage each policy.

3.     Existing Temp agencies may request one policy per industry group for a total of ten policies with no Grow Ohio discount available for these succeeding policies, unless;

a.     Grow Ohio eligibility is available to the original policy participating in Grow Ohio.

b.     Grow Ohio transfers for any period of remaining period of  eligibility

4.     Temp agencies, applying for initial coverage, may request one policy per industry group for a total of ten policies and they may have the Grow Ohio discount.

5.     Completed applications are forwarded to the Underwriting NCCI Classification unit, who will assign NCCI Classifications.  Each policy will be issued with every available NCCI classification for that Industry Group.

6.     Grow Ohio discount is applied to a new Temp agencies starting business in the state regardless if they choose one policy or up to ten policies.

B.    Temp Agency NCCI Coding assignment.

1.     Temp agencies, continuing with one policy for their entire operation, should contact BWC prior to any employees being assigned to employers for additional NCCI Classifications.

2.     BWC will require the following information from the Temp agency:

a.     Employer name.

b.     Policy number or FEIN (not always available.  Employer look up may be required to obtain the policy number.)

c.     Description of the employee’s job duties.

3.     NCCI classifications(s) will be added to the Temp agency’s policy number and documented.

a.     If the Temp agency has chosen the Industry Group policies, all NCCI Classifications will have already been assigned to each policy. 

i.       The Temp agency cannot add a classification from another industry group to industry group specific policies.

ii.     If this is being requested, the Temp agency may no longer be a good candidate for industry specific policies.

b.     BWC may contact the Temp agency and advise them to go back to one policy to cover all of their operations.

4.     Temp agencies are required to assign their employees to the same NCCI classification assigned to the employers operations. 

a.     An exception is when a Temp agency contracts with a Public entity.  

i.       Public entity (PEC or PES) classifications cannot be added to the Temp agencies policy. 

ii.     The jobs contracted with the PEC or PES will have to be classified based on private employer’s NCCI classification options and the appropriate payroll will be reported to that classification. 

iii.    Example:  The Temp agency contracts with a city for clerical employees.  The clerical employees for the city are classified to 9431 City Employees – All Employees & Clerical, Clerical Telecommuter, Salespersons, and Drivers.  However 9431 cannot be added to the Temp agencies policy.

b.     Since the employee is performing clerical duties the Temp agency must classify and report the employees to 8810 Clerical.

C.    Temp Agency payroll processing.

1.     The Temp agency will follow the guidelines outlined in Prospective Installment Payments policy for paying premiums.

2.     The Temp agency will follow the guidelines outlined in the Payroll True-up policy to reconcile estimated annual premium with actual premium. 

D.    Temp Agency Audit.

1.     BWC may verify that Temp agencies are properly reporting their employee payroll through periodic audits.

2.     Auditors will verify the wages being reported by the Temp agency are correct by policy, classification and that the proper classifications are assigned to their claims.

E.    Temp Agency Complaint Processing. 

1.     Employer complaints shall be processed under the General Employer Complaint Policy.

2.     BWC has not identified any employer-specific extenuating circumstances that apply to Temp agencies.