Note: Carriers have the option of using Sections (H)(2)(b) of this Rule in lieu of Rule specified below.

1. Definitions

   As defined in the New York State Professional Employer Act, Article 31, Section 916 of the New York State Labor Law.

   1. Client

      “Client” means a person who enters into a professional employer agreement with a professional employer organization.

   2. Person

      “Person” means an individual, an association, a company, a firm, a partnership, a corporation, or any form of legally recognized entity.

   3. Professional Employer Agreement

      “Professional Employer Agreement” means a written contract whereby:

      1. A professional employer organization expressly agrees to co-employ all or a majority of the employees providing services for the client;
      2. The contract is intended to be on-going rather than temporary in nature;
      3. Employer responsibilities for worksite employees, including those of hiring, firing and disciplining, are expressly allocated by and between the professional employer organization and the client in the agreement; and
      4. The professional employer organization expressly assumes the rights and responsibilities as required in Section 922 of Article 31 of the New York State Labor Law.
   4. Professional Employer Organization

      "Professional employer organization" means any person whose business is entering into professional employer agreements with clients and is registered to do so by the New York State Department of Labor. In determining whether the professional employer organization employs all or a majority of the employees of a client, any person employed pursuant to the terms of the professional employer agreement after the initial placement of client employees on the payroll of the professional employer organization shall be included. Temporary help firms and employment agencies, as defined in Article 11 of the New York State General Business Law, shall not be deemed to be professional employer organizations for purposes of Article 31 of the New York State Labor Law.

   5. Temporary Help Firm

      "Temporary help firm" means a business which recruits and hires its own employees, and assigns those employees to perform work at or services for other organizations, to support or supplement the other organization’s workforce, or to provide assistance in special work situations such as, but not limited to, employee absences, skill shortages, seasonal workloads, or to perform special assignments or projects. A temporary help firm shall not be deemed to be a professional employer organization for the purposes of Article 31 of the New York State Labor Law.

   6. Worksite Employee

      "Worksite employee" means a person having an employment relationship with both the professional employer organization and the client. Such term may also include the client’s officers, directors, shareholders or partners to the extent such persons act as operational managers or perform services for the client.

2. Registration

   In accordance with the New York Professional Employer Act, Article 31, Section 918 of the New York State Labor Law, professional employer organizations are required to be registered with the New York State Department of Labor.

   The PEO is statutorily required to provide workers’ compensation coverage for its client either in the name of the PEO or the client. Both the PEO and its client are deemed employers for Workers’ Compensation Law purposes and are both immunized from suit under the exclusive remedy provision. In event of a claim by an employee, the New York State Workers’ Compensation Board will determine the percentage of liability attributable to each employer (from 0% to 100%), as the PEO will be considered the general employer, and the client will be considered the special employer.

   Insurance carriers have the option of adopting Section (H)(2)(b) “Professional Employer Organization – Option 2: Leased Employee Only Policy” of this Rule in lieu of Section (H)(2)(a) “Professional Employer Organization – Option 1: Single Client Policy” as specified below:

   1. Professional Employer Organization – Option 1: Single Client Policy
      1. The professional employer organization must secure and provide required workers’ compensation coverage for its worksite employees in the client’s name in accordance with the New York State Labor Law Section 922(3)(c). The policy must cover the client’s leased and non-leased workers. The policy must include the “New York Professional Employer Organization (PEO) Endorsement” (WC 31 03 17 A) in each of its client’s policies naming the professional employer organization as an additional insured employer on such policies.
      2. The professional employer organization must obtain a standard workers’ compensation insurance policy to cover only its non-leased workers and such policy must include the “New York Professional Employer Organization (PEO) Exclusion Endorsement” (WC 31 03 18 A).
   2. Professional Employer Organization – Option 2: Leased Employee Only Policy
      1. Professional Employer Organization /Client Policy

         All insurance companies affording workers’ compensation coverage for a professional employer organization must issue a separate policy for each client to cover the client’s leased workers. If the policy is in the PEO’s name, the client is to be named as an additional named insured with respect to employees leased from the professional employer organization. Item 1. of the Information Page must include the name of the professional employer organization as the insured and identify the client as follows:

         ABC Leasing Company P/E/O for XYZ Machine Shop
         (where P/E/O stands for “Professional Employer Organization”)

         Each policy shall expire on the same date. Such policy shall not include coverage for non-leased workers of the client or direct employees of the professional employer organization. Each policy shall include the “New York Optional Professional Employer Organization (PEO) Endorsement” (WC 31 03 20 A).

         Each policy will be sent to the professional employer organization as the named insured.

      2. Separate Policy for Client

         The client is obligated to provide a separate policy for any non-leased workers. Such policy shall include the “New York Optional Client Exclusion Endorsement” (WC 31 03 22 A).

      3. Separate Policy for the Professional Employer Organization

         A separate policy shall be issued in the name of the professional employer organization to provide coverage for their direct employees. The policy shall include the “New York Optional Professional Employer Organization (PEO) Exclusion Endorsement” (WC 31 03 21 A).

   3. Premium for Leased Workers

      1. Professional Employer Organization – Single Client Policy
         1. Client’s Policy

            Premium shall be charged on the client’s policy for the workers that are leased from each professional employer organization and its non-leased workers. 

            The “New York Professional Employer Organization (PEO) Endorsement” (WC 31 03 17 A) is to be attached to the client’s policy.

            The following rules apply to premium:

            1. The client shall provide a complete payroll record of the workers leased to them from the professional employer organization in addition to the payroll record of its non-leased employees.
            2. If the client does not supply the payroll records of the workers leased to them from the professional employer organization, 100% of the full co-employer arrangement price shall be established as the payroll of the workers leased to the client. The premium will be charged at the carrier’s highest rate for the classifications that apply to the client’s operations.
         2. Professional Employer Organization as Policyholder

            Premium shall be charged on the professional employer organization’s policy for its direct employees.

            The “New York Professional Employer Organization (PEO) Exclusion Endorsement” (WC 31 03 18 A) must be attached to the professional employer organization’s policy.

3. Professional Employer Organization – Option 2

   Premium for all policies issued under Section (H)(2)(b)(i), (ii) and (iii) of this Rule, shall be calculated according to Rule VI of this Manual.

4. Policy Filing

   The carrier shall submit separate Information Pages to the Rating Board for each policy providing coverage in accordance with Section (H)(2)(b)(i) of this Rule. The carrier issuing the policy for the client’s leased employees must attach the “New York Optional Client Exclusion Endorsement” (WC 31 03 22 A). The effective date of the policy issued must coincide with endorsement WC 31 03 22 A issued by the carrier of the client’s non-leased employees. 

   Note: Master policies are not acceptable in New York State.

5. Audit

   The carrier shall conduct periodic audits to verify that all Rating Board authorized classifications, rates, experience modification factors and payrolls are appropriate.

6. Statistical Data

   Statistical information shall be filed separately for every policy written pursuant to this Section and in accordance with the rules of the New York Workers’ Compensation Statistical Plan.

7. Experience Rating Factor
   1. Separate factors will be promulgated for each qualifying client and professional employer organization.
   2. The experience rating rating factor, if any, shall apply to any policy issued to a professional employer organization under Section (H)(2)(b)(iii) of this Rule and in accordance with the New York Experience Rating Plan.
   3. The change of ownership rules, as contained under Rule 3 – Ownership Changes and Combination of Entities in the New York Experience Rating Plan Manual, shall be applied to the policies described in Section (H)(2)(a)(i) of this Rule as though the named insured is only that of the client.
8. Premium Discount

   All individual professional employer organization/client policies written in accordance with Section (H)(2)(b)(i) of this Rule by the same carrier, which reference the same professional employer organization, shall be combined for premium discount purposes in accordance with Rule VI of this Manual.

9. Retrospective Rating

   When individual professional employer organization/client policies issued in accordance with Section (H)(2)(b)(i) of this Rule are written by the same carrier, the carrier and the professional employer organization may agree to a retrospective rating program in accordance with the provisions of the New York Retrospective Rating Plan.

10. Cancelations/Non-Renewals by The Carrier

    Where a professional employer organization/client policy written in accordance with Section (H)(2)(b)(i) of this Rule, is canceled, the carrier shall provide individual notices to the professional employer organization and to each of the professional employer organization’s clients.

    Refer to the Cancelation Rules of this Manual.

The following algorithm provides an outline of the sequence and calculation procedures for determining New York workers’ compensation policy premiums.

1. Definition

   Executive officers of a corporation or unincorporated association are the president, vice president, secretary, treasurer, or any other officer appointed in accordance with the charter or bylaws of the corporation or unincorporated association.

2. Law and Status

   Executive officers of a corporation are mandatorily covered under the New York Workers’ Compensation Law and have the same status as employees under the policy.  Those executive officers who are specifically exempted from the law and those who may make an election not to be covered are described in Sections (A)(3) and (A)(4) of this Rule.

3. Exempt Executive Officers
   
   1. Executive officers of religious, charitable, educational, or municipal corporations, and officers of any post or chapter of organizations of veterans of any war of the United States are excluded from the policy coverage.  Such corporations and organizations may elect to provide coverage by filing a notice with the carrier, on a form prescribed by the New York State Workers’ Compensation Board, that the officers named in this form are to be voluntarily included under the policy.
   2. To include executive officers of such corporations, attach the “New York Non-Subject Executive Officers Coverage Endorsement” (WC 31 03 12).
4. Corporations with One or Two Executive Officers

   If a corporation has only one or two executive officers that:

   1. Hold all executive offices; and also
   2. Hold all of the issued and outstanding stock of the corporation, with each executive officer of a two-person corporation holding at least one share of stock in the corporation.

   The following statutory conditions apply with respect to the exclusion of such officer(s):

   1. Where Coverage is Required

      When a corporation employs one or more persons who are required to be covered under the law, the executive officers are statutorily covered.  However, the sole officer or, in the case of a corporation with two executive officers, one or both executive officers may be excluded if an election is made by the corporation, by filing a notice with the carrier on a form prescribed by the New York State Workers’ Compensation Board.

      Attach the “New York Exclusion of Executive Officer Endorsement” (WC 31 03 05 B) when the sole officer or one or both officers of a two-person corporation are to be excluded.

   2. Where Coverage is Not Required

      Officers of a corporation that does not employ any person who is required to be covered under the law is statutorily excluded from coverage. However, coverage may be elected for such executive officer(s) by obtaining a standard workers’ compensation policy.

      Attach the “New York Inclusion of Executive Officer Endorsement” (WC 31 03 06 A), when such officers are to be included.

5. Executive Officers – Not-For-Profit Organizations

   Not-for-profit unincorporated associations or not-for-profit corporations may elect to exclude unsalaried executive officers from coverage.  A written notice must be made by the organization and filed with the carrier on a form prescribed by the New York State Workers’ Compensation Board.

   Attach the “New York Executive Officers Exclusion Endorsement” (WC 31 03 04) when such officers are to be excluded.

   Note: Code 8810 “Clerical Office Employees NOC” applies to executive officers of not-for-profit unincorporated associations subject to the limitations stated in Section (A)(7) and (A)(8) shown below.  Code 8809 “Executive Officers NOC-Not Foremen, Workers or Salespersons” applies only to executive officers of corporations.

6. Premium Determination
   
   1. Corporations

      Premium for executive officers shall be based on their total payroll, subject to the following limitations:

      1. The minimum individual payroll for an executive officer, including those subject to construction classifications, is shown under “Miscellaneous Values” in Part Three –Loss Costs.
      2. The maximum individual payroll for an executive officer is shown under “Miscellaneous Values” in Part Three – Loss Costs.  Refer to Section (A)(7) of this Rule for executive officers subject to construction classifications as provided in Rule V Section (G)(1) of this Manual.
      3. The payroll limitations in (i) and (ii) above apply to the average weekly payroll of each executive officer for the number of weeks the officer was employed during the policy period.
      4. An inactive executive officer is to be included at the fixed amount of $100 payroll per   year.  Refer to Section (A)(10) of this rule for definition of “Inactive Executive Officers.”
      5. In the case of elected or appointed officers of municipal corporations or other political subdivisions of the State, covered by the policy, the minimum individual payroll and the fixed amount to be included for each officer who serves without pay will be $100 per year.  If such executive officers serve with pay, then provisions (i), (ii) and (iii) above of this Rule apply.
      6. The maximum and minimum payroll limitations in (i) and (ii) above of this Rule are applicable to executive officers regardless of the classification(s) to which the executive officers are assigned.
      7. The maximum payroll for executive officers subject to construction classifications, as provided in Rule V Section (G)(1) is based on the payroll limitations set forth in Rule V Section (G)(3) of this Manual.

         Note: Executive officer payrolls resulting from work performed with respect to one or two-family residential housing are subject to maximums as provided in Section (A)(6)(a)(ii) through (vi) of this Rule.

   2. Not-for-Profit Unincorporated Associations

      Premium for executive officers is based on the greater of either (i) or (ii) below:

      1. The actual payroll of the officer during the policy period.
      2. One-half of the minimum remuneration for executive officers as shown under “Miscellaneous Values” pages in Part Three – Loss Costs of this Manual.

         Note: Unsalaried officers are subject to Section(A)(6)(b)(ii) above.

7. Assignment of Payroll
   
   1. The payroll of executive officers whose duties are of an executive, clerical, or supervisory character, and who do not regularly and frequently perform such duties as are ordinarily undertaken by a foreman, worker, or salesperson, is to be assigned to Code 8809 “Executive Officers NOC - Not Foremen, Workers or Salespersons,” without division of payroll except as provided in Sections (A)(7)(b) and (c) of this Rule,
   2. The payroll of any executive officer who regularly and frequently performs such duties as are ordinarily undertaken by a foreman, worker, or salesperson is to be classified in the same manner as any other employee who is not an executive officer.
   3. In connection with a classification which specifically includes salespersons in its phraseology, any executive officer who regularly and frequently engages in the duties of a salesperson, as described by the standard exception classification Code 8742 “Salespersons, Collectors or Messengers-Outside,” is to be assigned to Code 8742 and not Code 8809.
   4. Any executive officer who qualifies for Code 8809 is to be assigned to that code even though the classification which describes the employer’s business includes clerical employees.
8. Flight Duties

   The payroll of an executive officer who is a pilot or member of the crew on any aircraft used in the employer’s business is to be assigned to the appropriate aviation classification.  Where Code 7421 “Aviation – Transport of Personnel in Conduct of Employer’s Business – Flying Crew” applies, the executive officer’s payroll is to be assigned as follows:

   1. For each week during which the executive officer did not perform flight duties, assign the officer’s payroll as provided in Section (A)(6) of this Rule.
   2. For each week during which the executive officer performed flight duties, assign the officer’s payroll for that week to Code 7421 “Aviation – Transport of Personnel in Conduct of Employer’s Business – Flying Crew.”  If an executive officer’s non-flying duties in that week are subject to a higher rated classification, that higher rated classification is to be assigned for that week.

      Note: Sections (A)(8)(a) and (b) above applies based on the pilot’s log book required under Federal regulations or other verifiable records.

      If Code 7421 “Aviation – Transport of Personnel in Conduct of Employer’s Business – Flying Crew” applies and verifiable records are not maintained to indicate those weeks during which flying is performed by the executive officer, assign the executive officer’s payroll to the highest rated classification that applies to any of their duties.

9. Domiciled in Other States

   An executive officer of a corporation who is domiciled and employed outside of New York State should not be included in the audit of the New York policy if:

   1. The officer performs no duties in New York State; or
   2. The officer visits New York occasionally, but only performs clerical duties in New York and is included under a workers’ compensation policy insuring that corporation in another state.
10. Inactive
    
    1. An executive officer of a corporation is considered inactive if:
       
       1. his/her office is merely nominal or honorary;
       2. the officer does not exercise any function of the office; or
       3. the officer does not perform any other duties on behalf of the corporation except as a director thereof, and the officer rarely enters the premises except to attend directors’ meetings.
    2. Examples of executive officers who may be considered inactive, provided the required conditions stated above are met, include:
       
       1. An officer who is elected for the value of name or because of stock holdings.
       2. An officer who is required to retire or has ceased to perform any duties.
       3. A member of the principal stockholder’s family who is given an honorary official title.
11. Multiple Corporations or Policies – Multiple Carriers

    If the New York operations of a corporation or of two or more corporations that are combinable with each other in accordance with Rule 3 of the New York Experience Rating Plan Manual and are insured by more than one carrier, the premium charge specified in the Manual for each executive officer who performs any duties at New York locations covered by different carriers should be divided equally among the carriers involved.

    An exception to this Rule is if one of the carriers has agreed to hold harmless, in whole or in part, the other carrier or carriers with respect to such officer(s).  In this case, the premium charge is to be divided in accordance with the hold harmless agreement.  Refer to “New York Executive Officers Hold Harmless Endorsement” (WC 31 06 03).

12. Multiple Corporations or Policies – Single Carrier

    If the New York operations of a corporation or of two or more corporations are combinable with each other, in accordance with Rule 3 of the New York Experience Plan Manual and are insured by one or more policies issued by the same carrier, a single premium charge is made for each insured executive officer based upon entire remuneration received from all such corporations, subject to the minimum/maximum remuneration for executive officers shown on the “Miscellaneous Values” pages in Part Three – Loss Costs of this Manual.

A policy may be issued for a period of three (3) years at a fixed rate, provided that the insured is not eligible for the Experience Rating Plan on the effective date of the policy.

If a policy is issued for a period of three (3) years, but is not a Three-Year Fixed Rate Policy, refer to Rule III Section (C)(3) of this Manual.

If the employer is subject to experience rating, the experience rating modification shall be shown in Item 4. of the Information Page and applied to the premium in accordance with the New York Experience Rating Plan Manual.