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Workers' Compensation Division (WCD)

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    Alice Barghini   
503-947-7544   

Worker Leasing Program
Questions & Answers
Temporary staffing provider questions:
1. Why is the Workers' Compensation Division (WCD) conducting these workshops? (answer)
2. How can a temporary staffing provider be responsible for claims of a worker the staffing provider has no knowledge of? (answer)
3. Did WCD make up the worker leasing rules to stick a staffing company with a claim when the employer is really the one who is noncomplying? (answer)
4. We have a community relationship with our clients and potential clients. When the client messes up and tries to get us to cover for them, what will happen to the employer when we can't cover for them? (answer)
5. Do you find that the biggest problem area involves construction? (answer)
6. Since construction is often accomplished during the spring, summer, or fall months, why can't that be considered seasonal employment? (answer)
7. In a "temp to hire" situation, do we follow the client's time schedule for the probationary period? (answer)
8. Can the staffing company simply write the type of "special need" on the job order? (answer)
9. We usually send a different worker to the same client each week, but I think the job is the same each time. Since the client uses different workers each time, isn't that "temporary?" (answer)
10. We have one client who usually works alone but uses the same worker intermittently all year long. Is that a temporary situation? (answer)
Worker Leasing questions:
11. I have an arrangement with a client to supplement the client's regular workforce. They have five regular workers and I provide three to ten more workers on a regular basis. The client has coverage and handles all claims for their workers. Now I am told that the client's insurer must cover my workers too. Why can't I cover the workers I send out? (answer)

12. What are the consequences if I get "stuck" with a claim due to WCD's finding of "worker leasing" status and I am not licensed for worker leasing? (answer)

Follow up question: What happens to the client employer since the staffing provider did not know about the client employer's subject worker(s)?
13. Can a worker leasing company (sometimes referred to as a PEO, or professional employer organization) offer its services to a staffing company? (answer)
 


 
 
 
 
 
 
 
 
 

Temporary staffing provider questions & answers:

top

Question

1. Why is the Workers' Compensation Division (WCD) conducting these workshops?

Answer

Our workshops offer staffing providers an opportunity to learn how to ensure that coverage and claims are properly addressed, to answer your questions, and to facilitate good staffing business practices that also comply with Oregon law.

In WCD investigations of potentially noncomplying employers, we find employer clients whose arrangements for workers through temporary staffing providers are actually arrangements for a regular workforce. Such arrangements are worker leasing and many times the staffing provider is not licensed to conduct worker leasing in Oregon. The consequences are that the client employer is "noncomplying" because the unlicensed staffing company cannot provide WCD a worker leasing notice establishing Oregon coverage for the client employer. Also, WCD must issue a "cease order" and impose sanctions for providing services the staffing provider is not licensed to do. In these cases, the staffing company is often responsible for claims for injuries of personnel they are not aware of.
 
 

Question

2. How can a temporary staffing provider be responsible for claims of a worker the staffing provider has no knowledge of?

Answer

In Oregon, when a client employer with a worker leasing arrangement does not have their own coverage, the worker leasing company is responsible for the claims of both the leased workers and any subject workers of the client. So, if a particular arrangement is actually worker leasing (rather than the workers being provided on a temporary basis), the client employer's claims are covered by the staffing provider's insurer. This is the case whether the provider knew about all of the affected workers or not.

Oregon law allows a staffing company to avoid responsibility for a client's claims if it provides workers only on a temporary basis. The key to avoiding responsibility for workers that the staffing company is unaware of is to have clear documentation of the reason for providing workers on a temporary basis. See Question #10 for documentation requirements.
 

Question

3. Did WCD make up the worker leasing rules to stick a staffing company with a claim when the employer is really the one who is noncomplying?

Answer

One of the Legislature's goals in enacting Oregon's worker leasing law (ORS 656.850) in 1993 was to identify the responsible parties for leased workers' injuries. The statute defines the instances in which workers can be considered temporary workers. It states that any arrangement that falls outside of those parameters is considered worker leasing. When a temporary staffing company provides workers only on a "temporary basis" and has the documentation in support of that placement, the staffing provider will not be responsible for claims of the subject workers of a noncomplying employer. Under that situation, the liability for the claims will fall to the noncomplying client employer.
 

Question

4. We have a community relationship with our clients and potential clients. When the client messes up and tries to get us to cover for them, what will happen to the employer when we can't cover for them?

Answer

WCD will work with the noncomplying employer to bring them into compliance. If the employer is cooperative, coverage can be put in place quickly. The employer can contract with a licensed worker leasing company to provide coverage for their workers. The employer can decide instead to obtain it's own workers' compensation insurance. If the employer is turned down in the voluntary insurance market, the employer can arrange for coverage under the Oregon Insurance Plan for assigned risks.

When there is a claim involved, WCD must issue a noncomplying employer order to get the claim processed. Penalties to the employer are initially two times what the insurance premium would have been, or a minimum assessment of $1,000. Once the employer is in compliance (by obtaining coverage), the penalty can be reduced to 105% of what the premium would have been or a minimum of $500. The employer is also responsible for all of the costs paid for processing the claim. If the employer's noncompliance is a repeat offense, WCD assesses a penalty of $250 per day for each day of noncompliance.

There are serious consequences for being a noncomplying employer. However, WCD works with the employer in every way we can to get their workers protected and their business into compliance.
 
Question 5. Do you find that the biggest problem area involves construction?
   
Answer The construction and restaurant industries present particular challenges for WCD in ensuring employer compliance with coverage requirements. Fluctuating staffing needs, varying work schedules, high turnover, and confusion about independent contractors can be contributing factors. These, when combined with the use of temporary staffing or leasing arrangements, can create some confusion for employers about how to comply with Oregon's requirements while meeting business needs.

This is a key reason that WCD is offering workshops and on-site education, and why we are putting this information on the WCD website (www.wcd.oregon.gov). Also, if you have questions about coverage requirements, temporary staffing, or worker leasing, you can e-mail us, call toll free 1-888-877-5670, or the Salem number directly at 503-947-7815.
 
Question 6. Since construction is often accomplished during the spring, summer, or fall months, why can't that be considered seasonal employment?
 
Answer An Administrative Law Judge put it this way: "although construction can be seasonal, a construction contractor's work does not equate to seasonal work". A construction contractor's work may be of short duration in a given year if the contractor concentrates on building in Government Camp and the surrounding Cascade Mountains. However, it is still their regular work and not necessarily seasonal.

For example, seasonal work may be a factor for a contractor who specializes in roofing. The contractor works all year long but has a seasonal increase in demand in August and September that requires additional staffing. As a supplement to the contractor's regular crew, the contractor could use temporary staff to meet the seasonal workload demand.

The special need of the employer and verifiable documentation in support of the duration and special situation is critical to demonstrate that the placement is temporary. Absent that reasoning and documentation, the law says that the assignment defaults to leased workers.
 
Question 7. In a "temp to hire" situation, do we follow the client's time schedule for the probationary period?
   
Answer Yes. The client must have a "temp to hire" policy or procedure in place, and there must be an expectation of the client hiring the worker at the end of the probationary period. The client should have their own workers' compensation insurance coverage unless they get all their workers from you under a worker leasing arrangement.
 
Question 8. Can the staffing company simply write the type of "special need" on the job order?
   
Answer Keeping the information on the job order is an acceptable approach. The documentation can be maintained by either the staffing company or the client, but it must establish the special need, duration of the assignment, be contemporaneous (readily available at the time the assignment is made), and be verifiable in support of the placement of workers on a temporary basis.
 
Question 9. We usually send a different worker to the same client each week, but I think the job is the same each time. Since the client uses different workers each time, isn't that "temporary?"
 
Answer The definition of providing workers on a temporary basis means you provide workers to a client for special situations. The emphasis in the law is on the "situation" and not the worker. To assure the client's need for the worker is on a temporary basis, the documentation must focus on the special situation rather than the worker. If there is no special situation, the labor provided is on a leased basis, even if many different workers are sent out to do the assignment.
 
Question 10. We have one client who usually works alone but uses the same worker intermittently all year long. Is that a temporary situation?
   
Answer It could be temporary if each time the client uses this worker there is a documented special situation. The documentation must establish the special need, duration of the assignment, be contemporaneous (readily available at the time the assignment is made), and be verifiable in support of the placement of workers on a temporary basis. The documentation can be maintained by the staffing company, the client, or a combination of both of those sources. If the same "special situation" comes up each time, that often begins to look like a regular workforce. You may need to move the worker placement to a licensed worker leasing company. There is no "magic number" of times for when a temporary arrangement becomes leasing. Based on the statute and rules, WCD considers the staffing provider's overall documentation and their clients' needs to determine whether a worker leasing license is required and worker leasing notices need to be filed for the clients.
 
 
Worker Leasing questions & answers:
Question 11. I have an arrangement with a client to supplement the client's regular workforce. They have five regular workers and I provide three to ten more workers on a regular basis. The client has coverage and handles all claims for their workers. Now I am told that the client's insurer must cover my workers too. Why can't I cover the workers I send out?
 
Answer If the workers were provided on a temporary basis for a client's special situation, the temporary staffing provider would cover the temporary workers. However, you described an arrangement where you are providing part of the regular work crew, although that crew varies in size. This is not a temporary staffing situation. Under Oregon law, when a client employer has coverage and is using leased workers, the client's insurer must process the claims for all workers. This approach assures prompt processing of injured workers' claims and avoids the situation other states struggle with when multiple insurers deny responsibility by pointing to coverage elsewhere.

The question of claim responsibility often comes up when there is more than one potential insurer. Oregon law provides that only one insurer at a time can be responsible for injury claims of the client employer. When the client has their own coverage, the client's insurer gets the claims.

Also, an employer's premium is based on the employer's loss experience. When the claims of the leased workers are handled by another insurer and not tied to the correct employer, the experience rating for that employer cannot be accurately calculated. When the worker leasing company provides the coverage, the claims and loss experience are tracked through the worker leasing company's insurer but still tied to the client employer for experience rating purposes.

Remember, under a worker leasing arrangement for a client employer's regular workforce, there can be only one insurer at a time responsible for the client employer's work injury claims.
 
Question 12. What are the consequences if I get "stuck" with a claim due to WCD's finding of "worker leasing" status and I am not licensed for worker leasing?

Follow up question:
What happens to the client employer since the staffing provider did not know about the client employer's subject worker(s)?
 
Answer WCD will issue an order to the staffing provider to cease all leasing activity and will investigate further to identify other possible worker leasing activity. This may lead to a civil penalty order for violation of the worker leasing law. The staffing provider must cease worker leasing activities until licensed to do so. This may mean dropping some clients and referring them to licensed worker leasing companies in the interim. A list of the licensed worker leasing companies can be viewed on the WCD website, link for active worker leasing companies.

Follow up answer:
Since WCD has no proof that the client employer has its own workers' compensation coverage, and the unlicensed staffing provider cannot provide a worker leasing notice on the employer's behalf, we will determine that the employer is noncomplying and issue an order assessing a penalty. However, at a hearing the employer may allege that coverage exists under a worker leasing arrangement. Past cases have shown that client employers tend to prevail on this issue and do not have to pay the penalty. If that occurs, the staffing provider and its insurer end up paying the client employer's attorney fees.
 
Question 13. Can a worker leasing company (sometimes referred to as a PEO, or professional employer organization) offer its services to a staffing company?
   
Answer Yes, but doing so is difficult because Oregon does not allow a worker leasing company (PEO) to provide workers for another worker leasing company. This practice is commonly referred to as "piggy-backing".

The placement of workers on a temporary basis must be well documented. The placement cannot constitute the client's regular workforce. WCD sees many instances where a staffing provider places workers intermittently with a client, but it is actually the client's regular workforce just spaced out over time. This arrangement is worker leasing.

Another example is a staffing provider sending a different worker to a client each day. The job is the same and is more likely part of the regular work of the client, rather than qualifying as a special situation that allows temporary workers under ORS 656.850. This, too, is worker leasing.

The documentation must establish the duration of the special assignment and the reason that makes the assignment a temporary one. The documentation must be verifiable and supported by the facts of the assignment. Absent the documentation or absent a client's special situation, the workers are leased and the staffing provider is a worker leasing company, whether licensed or not.

We have several examples in the state where a staffing provider, working closely with a licensed worker leasing company, successfully assures proper assignments with appropriate distinctions between temporary and leased workers. Then, when the client's need is not for temporary staff, the staffing provider can refer the potential client to the licensed worker leasing company.
 
 
 

If you have questions about this webpage, please contact Alice Barghini, 503-947-7544.