Monday, July 16, 2007

Ohio-Does client owe workers' comp. premium if PEO fails to pay?

In a June 28, 2007 decision an Ohio Court of Appeals looked at whether the client of a PEO would be responsible for unpaid workers' compensation premiums if the PEO fails to pay its own workers' compensation insurance premium bill. State Ex Rel K.A.B.E. Ents, Inc. v. Mabe, 2007 WL 1847662 (Ohio App. 10th Dist. June 28, 2007).

Here, K.A.B.E. entered into a PEO arrangement with Reliance Resources, a PEO under Ohio law. Reliance held a workers' compensation insurance policy. Reliance Resources failed to pay the premiums due for the first six months of 2003. The Ohio Bureau of Workers' Compensation advised K.A.B.E. that it was required to report the employees as its own for this time period and that K.A.B.E. was required to pay the workers' compensation premiums for this time period.

The Court found that the PEO's failure to pay the workers' compensation premiums triggered a statutory obligation on the client company to report the employees as its own and to also pay the full amount of the unpaid workers' compensation premiums owed by the PEO on its employees. The court expressly rejected the client's argument that it should be responsible for the unpaid premiums only after it received notice that the PEO had failed to pay.