On Wednesday, October 27, HBA CEO Matt Morrow and Administrative Law Judge Margaret Holden presented to the professional association of city clerks and finance professionals in Southwest Missouri regarding work comp requirements for the construction industry and recent changes to the Affidavit of Exemption form to improve compliance with the law.
Judge Holden reviewed the work comp rules specific to the construction industry. After meeting with the HBA last year, the Division of Workers’ Compensation developed a “plain english” brochure that better explained the unique requirements for the construction industry under this law including the broader definition of the term “employee”. To download the brochure, click here.
The “Affidavit of Exemption” form, required by the state, is a part of the proof of insurance process for a construction-related company when any jurisdiction issues a business or industry specific license. This requirement was placed in the law by the legislature in 1993 for any business that is a “contractor in the construction industry.” Any city or county that issues a business license for a contractor in the construction industry is required to obtain proof of workers’ compensation insurance coverage or have the completed Affidavit of Exemption submitted by the contractor. Knowingly providing false information, i.e., signing the exemption form when actually not exempt, is a criminal act under the law. According to legal experts the HBA talked with, it has been difficult to prosecute because of the vagueness of the form and level of confusion about this legal requirement.
The old form was confusing in terms of explaining eligibility for exemption from the work comp coverage requirement and conveying the definition of what constitutes an “employee” under the statute. It made it very easy for someone reading the form to think that if they did not have any traditional W-2 employees, they were considered exempt.
After meeting with the HBA and as part of its comprehensive form review process, the Division modified the form with more direct reference to the definition of employee and also to ensure that the law as it applies to businesses in construction is understood by the person signing the form which should be a stronger tool in both fraud prevention and, if necessary, prosecution. If someone doesn’t understand whether or not they should have coverage under the law, the new form encourages them to seek legal counsel before signing the form. To see a comparison of the first page of the old and new Affidavit of Exemption form, click here. To download the full version of the new form, click here.
The Division has also developed an on-line tool that allows anyone to verify work comp coverage. It is a valuable proof of insurance tool which could be used by contractors, company employees, government agencies and homeowners to protect themselves when working with construction related businesses. To enter the web portal for the search tool, click here.