HOUSE BILL No. 2831 An Act concerning workers compensation; relating to subcontracting by licensed motor
carriers; amending K.S.A. 1997 Supp. 44-503 and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:

    Section 1. K.S.A. 1997 Supp. 44-503 is hereby amended to read as
follows: 44-503. (a) Where any person (in this section referred to as prin-
cipal) undertakes to execute any work which is a part of the principal's
trade or business or which the principal has contracted to perform and
contracts with any other person (in this section referred to as the con-
tractor) for the execution by or under the contractor of the whole or any
part of the work undertaken by the principal, the principal shall be liable
to pay to any worker employed in the execution of the work any com-
pensation under the workers compensation act which the principal would
have been liable to pay if that worker had been immediately employed
by the principal; and where compensation is claimed from or proceedings
are taken against the principal, then in the application of the workers
compensation act, references to the principal shall be substituted for ref-
erences to the employer, except that the amount of compensation shall
be calculated with reference to the earnings of the worker under the
employer by whom the worker is immediately employed.

    (b) Where the principal is liable to pay compensation under this sec-
tion, the principal shall be entitled to indemnity from any person who
would have been liable to pay compensation to the worker independently
of this section, and shall have a cause of action under the workers com-
pensation act for indemnification.

    (c) Nothing in this section shall be construed as preventing a worker
from recovering compensation under the workers compensation act from
the contractor instead of the principal.

    (d) This section shall not apply to any case where the accident oc-
curred elsewhere than on, in or about the premises on which the principal
has undertaken to execute work or which are otherwise under the prin-
cipal's control or management, or on, in or about the execution of such
work under the principal's control or management.

    (e) A principal contractor, when sued by a worker of a subcontractor,
shall have the right to implead the subcontractor.

    (f) The principal contractor who pays compensation to a worker of a
subcontractor shall have the right to recover over against the subcontrac-
tor in the action under the workers compensation act if the subcontractor
has been impleaded.

    (g) Notwithstanding any other provision of this section, in any case
where the contractor (1) is an employer who employs employees in an
employment to which the act is applicable, or has filed a written statement
of election with the director to accept the provisions of the workers com-
pensation act pursuant to subsection (b) of K.S.A. 44-505, and amend-
ments thereto, to the extent of such election, and (2) has secured the
payment of compensation as required by K.S.A. 44-532, and amendments
thereto, for all persons for whom the contractor is required to or elects
to secure such compensation, as evidenced by a current certificate of
workers compensation insurance, by a certification from the director that
the contractor is currently qualified as a self-insurer under that statute,
or by a certification from the commissioner of insurance that the con-
tractor is maintaining a membership in a qualified group-funded workers
compensation pool, then, the principal shall not be liable for any com-
pensation under this or any other section of the workers compensation
act for any person for which the contractor has secured the payment of
compensation which the principal would otherwise be liable for under
this section and such person shall have no right to file a claim against or
otherwise proceed against the principal for compensation under this or
any other section of the workers compensation act. In the event that the
payment of compensation is not secured or is otherwise unavailable or in
effect, then the principal shall be liable for the payment of compensation.
No insurance company shall charge a principal a premium for workers
compensation insurance for any liability for which the contractor has se-
cured the payment of compensation.

    (h) (1) For purposes of this section, any individual who is an
owner-operator and the exclusive driver of a motor vehicle that is leased
or contracted to a licensed motor carrier shall not be considered to be a
contractor within the meaning of this section or an employee of the li-
censed motor carrier within the meaning of subsection (b) of K.S.A. 44-
508, and amendments thereto, and the licensed motor carrier shall not
be considered to be a principal within the meaning of this section or an
employer of the owner-operator within the meaning of subsection (a) of
K.S.A. 44-508, and amendments thereto, if the owner-operator is covered
by an occupational accident insurance policy and is not treated under the
terms of the lease agreement or contract with the licensed motor carrier
as an employee for purposes of the federal insurance contribution act, 26
U.S.C. sec. 3101 et seq., the federal social security act, 42 U.S.C. sec. 301 et
seq., the federal unemployment tax act, 26 U.S.C. sec. 3301 et seq., and the
federal statutes prescribing income tax withholding at the source, 26
U.S.C. sec. 3401 et seq.

    (2) As used in this subsection:

    (A) ``Motor vehicle'' means any automobile, truck trailer, semitrailer,
tractor, motor bus or any other self-propelled or motor-driven vehicle
used upon any of the public highways of Kansas for the purpose of trans-
porting persons or property;

    (B) ``licensed motor carrier'' means any person, firm, corporation or
other business entity that holds a certificate of convenience and necessity,
a contract carrier permit, or an interstate license as a common, contract
or exempt carrier from the state corporation commission or is required
to register motor carrier equipment pursuant to 49 U.S.C. sec. 11506; and

    (C) ``owner-operator'' means an individual who is the owner of a sin-
gle motor vehicle that is driven exclusively by the owner under a lease
agreement or contract with a licensed motor carrier.

    New Sec. 2. (a)(1) Any individual who is an owner-operator and the
exclusive driver of a motor vehicle that is leased or contracted to a licensed
motor carrier shall not be considered to be a contractor or an employee
of the licensed motor carrier within the meaning of K.S.A. 44-503, and
amendments thereto, or an employee of the licensed motor carrier within
the meaning of subsection (b) of K.S.A. 44-508, and amendments thereto,
and the licensed motor carrier shall not be considered to be a principal
within the meaning of K.S.A. 44-503, and amendments thereto, or an
employer of the owner-operator within the meaning of subsection (a) of
K.S.A. 44-508, and amendments thereto, if the owner-operator is covered
by an occupational accident insurance policy and is not treated under the
terms of the lease agreement or contract with the licensed motor carrier
as an employee for purposes of the federal insurance contribution act, 26
U.S.C. sec. 3101 et seq., the federal social security act, 42 U.S.C. sec. 301 et
seq., the federal unemployment tax act, 26 U.S.C. sec. 3301 et seq., and the
federal statutes prescribing income tax withholding at the source, 26
U.S.C. sec. 3401 et seq.

    (2) As used in this subsection:

    (A) ``Motor vehicle'' means any automobile, truck-trailer, semitrailer,
tractor, motor bus or any other self-propelled or motor-driven vehicle
used upon any of the public highways of Kansas for the purpose of trans-
porting persons or property;

    (B) ``licensed motor carrier'' means any person, firm, corporation or
other business entity that holds a certificate of convenience and necessity,
a certificate of public service, a contract carrier permit, or an interstate
license as a common, contract or exempt carrier from the state corpora-
tion commission or is required to register motor carrier equipment pur-
suant to 49 U.S.C. sec. 11506; and

    (C) ``owner-operator'' means an individual who is the owner of a sin-
gle motor vehicle that is driven exclusively by the owner under a lease
agreement or contract with a licensed motor carrier.

    (b) Notwithstanding any other provision of this act, a licensed motor
carrier may by lease agreement or contract secure workers compensation
insurance for an owner-operator, otherwise subject to the act by statute
or election, and may charge-back to the owner-operator the premium for
such workers compensation insurance, and by doing so does not create
an employer-employee relationship between the licensed motor carrier
and the owner-operator, or subject the licensed motor carrier to liability
under subsection (d)(1) of K.S.A. 44-5,120 and amendments thereto.

    (c) For purposes of subsection (b) of this section only, ``owner-op-
erator'' means a person, firm, corporation or other business entity that is
the owner of one or more motor vehicles that are driven exclusively by
the owner or the owner's employees or agents under a lease agreement
or contract with a licensed motor carrier; provided that neither the owner-
operator nor the owner's employees are treated under the term of the
lease agreement or contract with the licensed motor carrier as an em-
ployee for purposes of the federal insurance contribution act, 26 U.S.C.
sec. 3101 et seq., the federal social security act, 42 U.S.C. sec. 301 et seq., the
federal unemployment tax act, 26 U.S.C. sec. 3301 et seq., and the federal
statutes prescribing income tax withholding at the source, 26 U.S.C. sec.
3401 et seq.

    Sec. 3. K.S.A. 1997 Supp. 44-503 is hereby repealed.

    Sec. 4. This act shall take effect and be in force from and after its
publication in the Kansas register.

I hereby certify that the above Bill originated in the House,
and passed that body

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__________________________________

Speaker of the House.

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Chief Clerk of the House.

Passed the Senate __________________________

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President of the Senate

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Secretary of the Senate.

Aproved __________________________________

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Governor.