New Workers Comp Law to Help 40,000 Ohio Employers

October 13, 2008

A new law has gone into effect that erases a competitive disadvantage for roughly 40,000 Ohio employers paying workers compensation premiums.

Here are some questions and answers about the new law, which took effect this month:

Q: What was the problem that led to the law?

A: For years, about 40,000 of the roughly 280,000 Ohio employers paying workers compensation premiums were paying them twice for the same workers, because if they had operations and employees outside Ohio, many were paying premiums in the other state as well as in Ohio.

Q: How does the new law make it better for many employers?

A: The law enables Ohio employers to submit payroll data that includes payments for labor and services performed only in Ohio. The employers can only file their reports this way if they have coverage from another state for work performed in that state. The data is used by the Ohio Bureau of Workers Compensation to determine the premiums that businesses pay.

Q: Did the actions of other states have a role in this change in Ohio law?

A: Yes. Other states, including Kentucky, New York and Florida, began requiring Ohio-based employers with operations in those states to pay premiums for the work done locally. That left some Ohio-based employers paying premiums in two states for the same workers. Many started to complain.

Q: Does the new law have any impact on other states, so that employers outside Ohio can’t freeload off of workers comp coverage in Ohio?

A: Yes. Employers based in another state must purchase Ohio workers comp coverage for temporary workers in the state, unless the state where the employer is based offers some degree of coverage for Ohio-based employers with operations in the other state. The Ohio Bureau of Workers Compensation says it is trying to negotiate with as many other states as possible so that businesses will have the least possible burden.

Q: What about businesses based in foreign countries? Does this rule apply to them?

A: It’s unclear. Some attorneys believe the new law is written in a way that foreign-based businesses won’t be affected.

Q: Is there a certain number of employees that an outside employer must have in Ohio before the employer is required to pay premiums here?

A: Even if a business only has one employee in Ohio, it must still pay workers compensation coverage.

Q: Does the new law have anything in it that will prevent an injured worker from abusing the system in multiple states?

A: Yes. The law prevents an injured worker from getting any benefits from Ohio on a claim for an injury on which benefits are also being paid in another state. Injured workers must pick one state.

Q: How will this law affect the average Ohio worker?

A: Ohio-based businesses that were previously paying twice for the same worker will now be able to redirect those funds elsewhere. Whether those savings help employees, or are invested elsewhere in the business, is up to the individual employer.

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