HB 0491 Relating to Contractor Liability Under Workers' Compensation
Sponsor:BARNES Handling House Bill:
Committee:WOCO LR Number:L1246.01I
Last Action:02/23/95 - Reported Do Pass H Workers' Compensation Comm.
Effective Date:
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Current Bill Summary

HB0491 Barnes, James et al




COMMITTEE ACTION: Voted "do pass" by the Committee on Workers' Compensation and Employment Security by a vote of 11 to 2.

This bill requires business owners deemed subject to chapter 287 (because they have work performed under contract on their business premises which is in the normal operation of the business) to secure a valid certificate of workers' compensation insurance or self-insurance from each contractor, subcontractor, and their employees, if those workers are otherwise required to cover their liability under chapter 287.

Such business owners will be liable for injuries to the qualified employees of such contractors and subcontractors. Qualified employees are defined as employees other than the owners of the contracting or subcontracting entities.

The bill also removes liability from contractors for the injuries to the employees of their subcontractors if the contractors maintain on file a copy of a current certificate of insurance documenting that each of the subcontractors had coverage at the time of the accident. Fraud by the contractor in such certification renders such protection void, and is a class A misdemeanor. Any contractor potentially liable for a subcontractor must receive from the subcontractor's insurer a certificate of insurance which states that the insurer must provide 10 days written notice before cancelling the insurance of the subcontractor. In the case of self-insurance, the Division of Workers' Compensation is required to give 10 days notice of revocation of such status.

The bill also changes the provision that requires cities or counties which issue occupational or business licenses to secure from those license applicants a certificate of insurance for workers' compensation coverage. Currently, anyone requesting such a license must supply a certificate of insurance. This bill limits that provision so as to apply only to contractors in the construction industry.

FISCAL NOTE: Estimated Net Cost to Workers' Compensation of $26,727 in FY 96, $12,078 in FY 97, & $12,398 in FY 98.

PROPONENTS: Supporters say that the good contractors already require proof of workers' compensation insurance. This bill mandates this upon all the rest. The intent is merely to ensure that those who are supposed to have coverage do, indeed, have it. Because fraud will void an exemption, the bill will prevent employers from skirting workers' compensation requirements through sham arrangements, where employees are called independent sub-contractors. Also, requiring cities to secure workers' compensation insurance certificates from everyone applying for a business license has proven to be unnecessary. Making that provision apply only to contractors will save the cities and business a lot of paperwork.

Testifying for the bill were Representative Barnes; Missouri Home Builders Association; Kansas City Home Builders Association; Missouri Municipal League; AFL-CIO; Associated General Contractors; and Russell Still, attorney.

OPPONENTS: There was no opposition voiced to the committee.

Richard Smreker, Research Analyst