MONTANA
Last Updated: Wednesday, November 15, 2006
Independent Contractor Requirement for MCCF Member Companies
MCCF Independent
Contractor Checklist and IC Sample Certificate
Information taken from Joint Operating Agreement
7.2 Penalty for Employment of Persons Without Workers’ Compensation Coverage.
A. Subject to the terms and conditions of this section, no Member shall contract with any person or entity, including contractors or subcontractors, who have not produced evidence of current workers’ compensation insurance coverage. In addition, before any services are performed under any such contract, each member shall secure written verification from the current workers’ compensation insurer for each such person or entity verifying that the insurer will provide the Member notice, in advance, of any modification or cancellation of the coverage.
B. Each contract entered into by a member with a partnership, limited liability partnership, sole proprietor, member-managed limited liability company, quasi public corporation, private corporation, manager-managed limited liability company or any other entity or business shall contain a provision requiring that each member of the partnership or limited liability partnership, the owner(s) of the sole proprietorship, any member of the limited liability company devoting full time to the entity or business, partnership, limited liability partnership, proprietorship or limited liability company and any corporate officer or manager shall elect to be covered as an employee under the provisions of the Montana Workers' Compensation and Occupational Disease Acts. In addition, before any services are performed under any such contract, each Member shall secure written verification from the current workers' compensation insurer for each such person or entity verifying that the elections have been properly made and are effective until further written notice provided to the Member from the insurer.
C. Any member that contracts with an entity in violation of Sections 7.2 (A) or (B), or any member that does not verify that the noted coverages and elections are in place at all times during the term of any contract will be subject to audit and will be assessed the workers' compensation and occupational disease premium for coverage for any uninsured sub-contractor and all employees of such sub-contractor. In such event, the premium will be calculated by applying the appropriate premium rate to the full value of the sub-contract. In addition, a surcharge in the amount of 5 per cent of the premium so calculated shall be added to the amount due from the Member to cover the cost of the audit and as a penalty for non-compliance. The full amount of the premium and surcharge will be assessed to the Member and immediately due and payable to the Fund in accordance with Article III hereof.
D. Sections 7.2(A), (B) and (C) do not apply to a Member for contracts entered into with a person who is a sole proprietor, a working member of a partnership, a working member of a limited liability partnership, or a working member of a member-managed limited liability company (hereinafter referred to as “person”) who has received an independent contractor exemption (IC exemption) from the State of Montana, Department of Labor and Industry (Department), so long as each of the following conditions are met:
1.
The Member shall verify with the Department (or the
Department web site) that the IC exemption was granted (originally or by
renewal) to the person on or after
2. The Member contracts with the person to perform work in the trade, business, occupation, or profession listed on the person’s IC exemption certificate;
3. The Member and the person holding the IC exemption certificate do not have a written or oral agreement that the IC exemption certificate holder’s status with respect to the Member is that of an employee;
4. IC exemptions are valid for two years. As a result, a Member shall properly note and calendar the expiration date of the IC exemption certificate and shall takes all necessary steps to insure that the certificate is renewed upon the occurrence of the expiration date in a form meeting the requirements of this Paragraph or terminates all services under the contract by such date;
5. The Member shall immediately terminate or suspend the contract and all services under the contract upon being notified that the person’s IC exemption certificate was suspended or revoked by the Department. In such event, no further services pursuant to the contract with the person shall be allowed until the IC exemption certificate is reinstated in a form meeting the requirements of this Paragraph;
6. The independent contractor exemption statutes enacted by the 2005 Montana Legislature set forth certain obligations for employers (Paragraph 2 of Section 3). Members shall become familiar with and abide by the provisions of such statutes. In that regard, and consistent with the requirements of the statutes, Members shall not require any person through coercion, misrepresentation, or fraudulent means to inappropriately adopt independent contractor status to avoid the Member’s obligations to provide workers’ compensation coverage under the laws of the State of Montana or exert control to a degree that causes the independent contractor to violate the provisions of Montana law defining independent contractor status;
i. In the event a Member is found guilty by the Department of violating the noted statutory obligations and the violation finding becomes final by way of the Member’s failure to dispute the finding or through proceedings in the Workers’ Compensation Court a penalty shall be imposed upon the Member, as follows:
1. first offense-$2500 payable to the Fund in accordance with Article III hereof;
2. second offense-$5000 payable to the Fund in accordance with Article III hereof;
3. third offense-$10,000 payable to the Fund in accordance with Article III hereof;
4. fourth offense—the Board shall consider expulsion of the Member from the Fund; and
7. The Member shall retain a copy of the IC exemption certificate for each person with whom a contract is entered into. The document shall be available for inspection and copying by the Fund or its designated representatives or auditors.
E. Any Member exempted from the provisions of Sections 7.2(A) and (B) for contracts entered into with persons pursuant to Section 7.2(D) shall be responsible for all incurred losses, claims and expenses whatsoever paid or assumed by the Fund as a result of any claim arising from or out of the services performed under such contract, the full amount of which shall be assessed to the Member and immediately due and payable to the Fund in accordance with Article III hereof.
1. In the event a Member reports a person certified as an independent contractor as an employee to the Fund for purposes of a particular project or contract prior to any incurred loss, claim or expense the provisions of this subparagraph shall not apply.
F.
Any Member contracting with a
person with an IC exemption pursuant to Paragraph 7.2(D) shall verify that the
employees of such person are properly insured for workers’ compensation
purposes under the laws of the State of
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General email: mccf@mccfmt.org
Questions, requests, information and comments may be
e-mailed to: Marv Jordan