WASHINGTON COUNTY SERVICES CONTRACT WORKERS’ COMPENSATION EXEMPTION CERTIFICATE Contractor (Event) is exempt from the requirement to obtain workers’ compensation insurance under ORS Chapter 656 for the following reason (check the appropriate box).

*NOTE: Under OAR 436-50-050 a shareholder has a “substantial ownership” interest if the shareholder owns 10% of the corporation, or if less than 10% is owned, the shareholder has ownership that is at least equal to or greater than the average percentage of ownership of all shareholders. **NOTE: Under certain circumstances, partnerships and limited liability companies can claim an exemption even when performing construction work. The requirements for this exemption are complicated. Consult with County Counsel before an exemption request is accepted from a contractor who will perform construction work.

Oregon law (ORS 656.023) states that every employer employing one or more “subject workers” is required to adhere to the workers’ compensation statutes. “Subject workers” are all employees except certain domestic workers, certain kinds of casual workers (people earning less than $200 in a 30-day period), and certain groups of employees covered by federal compensation programs (for example, Longshore and Harborworkers). Also excluded from the definition of subject workers are sole proprietors who qualify as independent contractors, partners who are not engaged in construction-related work and who qualify as independent contractors, and certain kinds of corporate officers who are directors of the corporation and have a substantial ownership interest in the corporation. Other workers excluded from the definition of subject workers are people performing services for room and board or other nominal compensation for religious, charitable, or relief organizations, foster parents, certain sports-related workers, and volunteers participating in certain ACTION programs for seniors. Generally, most organizations with which the County contracts for services either by contract or purchase order will be required to provide proof of workers’ compensation insurance coverage. The only exceptions to this requirement are likely to be found in contracts with individuals or partners who are independent contractors. It is critical to obtain proof of workers’ compensation insurance prior to allowing work to begin under the contract. By Oregon law (ORS 656.029), the person (in our case, the County) awarding the contract is responsible for providing workers’ compensation insurance “unless the person to whom the contract is awarded provides such coverage for those individuals before labor under the contract commences.” What this means is that if a worker employed by an agency with which the County contracts is injured and the contractor has failed to obtain workers’ compensation coverage, the County would become the workers’ compensation coverage provider for that workers’ injury. The County, because it is self-insured, would pay for the workers’ medical costs, any time lost from work, and compensation for any permanent disability. Depending on the severity of the injury, this could be quite costly. The only way to protect the County from these kinds of losses is to require proof of workers’ compensation coverage prior to executing and/or allowing work to begin under the contract. The proof of insurance must cover the start date of the contract. If the insurance coverage will expire during the term of the contract, the contract should specify that the contractor or its insurer will notify the County at least 30 days prior to the expiration of the coverage. If your contractor is from out-of-state, you do not need to require them to purchase Oregon workers’ compensation coverage. You must, however, require the contractor to show proof of workers’ compensation coverage in his/her home state that includes extraterritorial coverage. The contractor’s workers’ compensation extraterritorial coverage must pay benefits due under Oregon law if those benefits are greater than those provided for in the home state. Sometimes, the organization with which the County is contracting will be self-insured. That is, it will have received approval from the State to be its own workers’ compensation insurer, rather than being required to purchase insurance. These self-insured employers are generally governments and other large employers that can provide guarantees of their ability to fund their workers’ compensation obligations under the law. In these instances, the organization should be able to provide documentation of its self-insured status, either by providing a letter from a person authorized to make such representations (for example, the chief financial officer or risk manager) or by providing a copy of its State Certification of Compliance.

In some instances, contractors will maintain that they are exempt from the requirement to provide workers’ compensation insurance. In order for this to be true, the contractors must be (1) sole proprietorships, (2) partnerships, or (3) corporate officers who are directors of the corporation and have a substantial ownership interest in the corporation (subject to certain limitations). Certain limited liability companies and non-profit corporations may also qualify for exemption. When labor or services are performed under the contract or purchase order, the contractor must qualify as an independent contractor. Independent contractors are defined by Oregon law (ORS 670.600). Generally, an independent contractor is an individual or business entity that provides labor or services under its own direction and control, obtains its own business/professional licenses and registrations, furnishes its own tools or equipment, hires and fires its own employees, and is paid upon completion of a project or by retainer. In addition, an independent contractor must operate as a business: registering with the State if appropriate, filing business tax returns, and presenting itself to the public as an independently established business. If a contractor states that (s)he is exempt from State requirements to provide workers’ compensation coverage, the contractor must sign the “Certification Statement for Corporation or Independent Contractor” and “Workers’ Compensation Exemption Certification” forms. If a contractor is exempt from workers’ compensation requirements, (s)he must provide the signed statement of exemption and certification statement to the County prior to any work being done on the contract. These forms, when signed prior to the commencement of the contract, protect the County from having to pay for any workers’ compensation claims that might be brought by employees hired by the contractor. It is not clear whether the County would be protected from a workers’ compensation claim if the County had knowledge that the contractor was not exempt, even though the statement of exemption had been signed. Therefore, in the event a County employee learns that a contractor who has signed the exemption certificate has one or more employees working under the contract, (s)he should contact Risk Management for assistance.