(a) A licensee or the licensee’s client company shall provide workers’ compensation insurance coverage through a licensed insurance carrier or a licensed self-insurance plan for the licensee’s assigned employees as provided in Chapter 97 of the N.C. Gen. Stat., the Workers’ Compensation Act. To the extent that the licensee secures and maintains workers’ compensation coverage for assigned employees, the carrier may elect to provide such coverage to the licensee pursuant to either the multiple coordinated policy method, as set forth in subsection (b) of this section, or the single policy method, as set forth in subsection (c) of this section.

(b) If the licensee provides workers’ compensation coverage pursuant to the multiple coordinated policy method, the licensee shall secure a separate policy for each client company of the licensee. Each policy shall identify the name of the client company and the licensee. The licensee shall be named as the insured and identify the client company. The licensee shall specify that it is the labor contractor for the client company by using the designation “L/C/F” on the policy.

Each policy shall expire on the same date. The policy shall not include coverage for nonleased employees of the client company or employees solely employed by the licensee. Only the licensee, as the first-named insured under such a policy, may request the insurer to cancel the policy. Each policy shall be sent to the licensee as the named insured.

The client company of a licensee shall have a continuing obligation to provide coverage as required by Chapter 97 of the N.C. Gen. Stat., the Workers’ Compensation Act, for any employees of the client company who are not assigned employees and not otherwise covered under a policy described in this subsection.

If a client company of a licensee leases employees from more than one licensee, there shall be a separate policy for the assigned employees of each licensee.

The workers’ compensation carrier also shall issue a policy covering the internal employees of the licensee unless they are otherwise covered.

All policies written in accordance with this subsection by the same insurance carrier that reference the same licensee as labor contractor shall be combined for premium discount purposes.

When policies written in accordance with this subsection are written by the same insurance carrier, the carrier and licensee may agree to a retrospective rating program or any other permitted pricing program.

Whenever a policy written in accordance with this subsection is cancelled, the insurance company writing the policy shall provide individual notices of cancellation as required by this Chapter to the licensee and the client company of the licensee.

(c) If the licensee provides workers’ compensation coverage pursuant to the single policy method, the insurer shall issue to the licensee a single policy covering all assigned employees in this State in accordance with Chapter 97 of the N.C. Gen. Stat., the Workers’ Compensation Act, and any other applicable laws or rating plans of this State.

As a condition of issuing a single policy, the licensee shall provide to the insurer of the policy all of the following information regarding each client company of the licensee with assigned employees in this State:

(1) The correct legal name, any fictitious names, and the federal identification number.

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(2) The name and address of the president and chief executive officer.

(3) The business mailing address.

(4) The business telephone number and facsimile number.

The licensee shall also provide to the insurer the name and address of the insurance producer responsible for securing the policy of insurance on behalf of the licensee.

The insurer shall issue to each client company of the licensee a certificate of insurance on the single policy. The certificate of insurance shall require that the insurer provide notice of cancellation to the licensee and the client company of the licensee.

Whenever a policy written in accordance with this subsection is cancelled, the insurance company writing the policy shall provide individual notices of cancellation as required by this Chapter to the licensee and the client company of the licensee.

If the insurer fails to provide individual notices of cancellation to the licensee and the client company, the insurer shall remain liable on the risk for losses incurred by the client company that would have been covered by the workers’ compensation policy prior to the attempted cancellation.

(d) A license shall not be issued to any professional employer organization unless (i) the organization first files with the Commissioner evidence of workers’ compensation coverage for all assigned employees in this State, including those leased from or coemployed with another person, and (ii) the organization certifies to the Commissioner that it has provided its workers’ compensation carrier with proper and necessary documentation to allow the carrier to determine and charge a premium that is commensurate with exposure and anticipated claim experience for all employees covered under policies issued by the carrier in the name of the licensee.

(e) Each licensee shall maintain and make available to its workers’ compensation carrier on an annual basis the following information:

(1) The correct name and federal identification number of each client company.

(2) A listing of all covered employees provided to each client company, by classification code.

(3) The total eligible wages, by classification code, and the premiums due to the carrier for the employees provided to each client company.

(4) Sufficient information to permit the calculation of an experience modification factor for each client company upon termination of the professional employer relationship. Information accruing during the term of the leasing arrangement that is used to calculate an experience modification factor for a client company upon termination of the leasing relationship shall continue to be used in the future experience ratings of the licensee.

(f) Every Form 19 “Employer’s Report of Employee’s Injury or Occupational Disease to the Industrial Commission” filed with the Industrial Commission shall identify by name and address both the licensee and the client company employing the employee who is the subject of the Form 19.

(g) A licensee shall, within 30 days of initiation or termination of the licensee’s relationship with any client company, notify its workers’ compensation carrier and the North Carolina Industrial Commission of both the initiation and termination of the relationship. If the client company terminates the relationship between the licensee and the client company, the notice required by this subsection shall be given within 10 days of the licensee’s actual knowledge of the termination.

(h) If the professional employer services arrangement with a client company is terminated, the client company shall be assigned an experience modification factor that reflects its experience during the experience period specified by the approved experience rating plan, including, if applicable, experience incurred for assigned employees under the PEO agreement.

(i) A client company shall not enter into a PEO agreement or be eligible for workers’ compensation coverage in the voluntary market if the client-workers’ company owes its current or prior carrier any premium for workers’ compensation insurance, or if the client company owes its current or prior professional employer organization amounts due under the PEO agreement, except for premiums or amounts due that are subject to dispute. For the purposes of this section and compliance with other laws and rules, a licensee may rely on a statement by the client company that the client company has met any and all prior premium or fee obligations, unless the licensee has actual knowledge to the contrary.

(j) This section shall not prevent a client company of a licensee from providing workers’ compensation insurance coverage for assigned employees coemployed by the client company and the licensee through a policy of insurance issued by a licensed insurance carrier in the name of the client company as the insured.

(k) Irrespective of whether the licensee or client company maintains the policy of workers’ compensation insurance for the covered employees pursuant to the PEO agreement, the licensee and the client company shall be entitled to the exclusivity of the remedy under both the workers’ compensation and the employer liability provision of the workers’ compensation policy or plan that either party has secured and shall both be afforded the protections provided under Chapter 97 of the N.C. Gen. Stat.. The licensee shall be entitled, along with the client company, to the exclusivity of the remedy under both the workers’ compensation and employers’ liability provision of the workers’ compensation policy or plan that either party has secured.

(l) All assigned risk policies for client companies of the same licensee shall be assigned to one workers’ compensation carrier in the State and in other states to the extent possible. (2004-162, s. 1; 2005-124, s. 4; 2022-46, ss. 3, 14(iiii).)