Risk-Sharing News

Risk-Sharing

Work Comp Affidavit of Exempt Status

Back in July we wrote an article on this new law that affects workers’ compensation and some independent contractors. In response to questions from our membership, we developed this Bulletin to help educate our member Cities on how and when to use the Affidavit of Exempt Status with independent contractors.

The SDML Workers’ Compensation Fund has always recommended that our members should require all independent contractors to provide proof of workers’ compensation insurance coverage before performing work for their City. The reason is to protect your City from a potential work comp claim.

Effective July 1, 2015, SDCL 62-1-19-22 allows some independent contractors the option to provide an Affidavit of Exempt Status to your City in lieu of carrying Workers’ Compensation coverage. This only applies to independent contractors who meet the following criteria:

1.They are a sole proprietor. (Not incorporated and not an employee of your City) 2.They do not have employees. (This includes paid temporary help from family, friends or any other person) 3. They contract directly with your City. (There is no General Contractor for the project) Here is how it works. Prior to work beginning on a project, the Affidavit must be signed and notarized by both the City and the Independent Contractor. The Affidavit requires that the contractor complete the Exempt Status Fact Sheet and attach it to the Affidavit.

If the contractor would bring any employee to the job, including temporary, seasonal, part-time, a family member or friend, this Affidavit may not protect the City, therefore, the contractor would need to carry Workers’ Compensation coverage and provide proof that coverage is in force.

Please keep in mind that per SDCL 62-1-22, you are not required to accept an Affidavit of Exempt Status as a substitute for a certificate of workers’ compensation coverage. The best protection for your City is to require all independent contractors, including sole proprietors, to carry workers’ compensation insurance coverage and provide a certificate as proof that the coverage is in force.

A copy of this bulletin, the Exempt Status Fact Sheet and the Affidavit can be found through a link on our website at www.sdmlwcfund.com, under the Online Forms tab.

As with all legal matters, please consult your City Attorney before entering into any agreements. As always, be sure to contact our office if you have any questions and we will be happy to assist you.

Telephone: 800-233-9073 Fax: 605-275-6193 Email: info@sdmlwcfund.com

Brad Wilson, CIC, AIC, SDWCS Administrator for SDML WC Fund Insurance Benefits, Inc.

Ladene Bachtell, CPCU, AU, CIC, SDWCS Account Executive Insurance Benefits, Inc.

ARENS ENGINEERING

municipal engineering water & wastewater engineering storm drainage - municipal streets Vernon Arens, PE 230 Capitol St. j Yankton, SD j 57078 605-665-2002 j Fax 605-260-2140 arenseng@iw.net