                                 CODE OF VIRGINIA

PROFESSIONAL EMPLOYER ORGANIZATION WORKERS&#8217; COMPENSATION RATING (§
38.2-1921.1)

A. Whenever any professional employer organization enters into an agreement with
a client company to provide professional employer services, the experience
rating of the professional employer organization shall be used for voluntary
market workers&#8217; compensation insurance premium computation purposes with
respect to such coemployees. In the event that the agreement between a client
company and a professional employer organization is terminated, the coemployees
shall become solely the employees of the former client company. If the
coemployees have been covered as employees of the professional employer
organization under a voluntary market workers&#8217; compensation insurance
policy for a period of three consecutive years or more, the workers&#8217;
compensation insurance premium applicable to the policy of the former client
company shall be based upon the rating of the professional employer organization
until the former client employer has developed sufficient experience to be rated
on its own or no longer qualifies for experience rating. If the coemployees have
been covered as employees of the professional employer organization for a period
of less than three consecutive years, the workers&#8217; compensation insurance
premium applicable to the policy of the former client company shall be based
upon the experience of the former client company which reflects its experience
during the experience period specified by the approved experience rating plan,
including, if available, experience incurred for coemployees under the
professional employer services agreement.

B. Insurers may conduct periodic audits of any professional employer
organization, including payrolls, operations and records as related to
individual client company operations in order to ensure that the appropriate
premium is charged for workers&#8217; compensation insurance coverage. Such
audits may include audits of the client company in order to verify payroll,
losses and classifications, and inspections of the premises where the
coemployees work.

C. A professional employer organization may aggregate its coemployees under a
single employer plan for the purpose of providing employee benefits provided
that the professional employer organization meets the regulatory licensure and
filing requirements promulgated by the Commission for fully insured multiple
employer welfare arrangements. The following information required to be filed
shall be confidential and shall not be disclosed to the public: (i) all
information related to the names and addresses of employers participating in the
plan and (ii) all information pertaining to the adequacy of the plan&#8217;s
level of reserves and contributions; however, nothing herein shall (i) prevent
the Commission from using such information in any regulatory proceeding or (ii)
be interpreted to prohibit or limit the production of documents containing such
information from the professional employer organization pursuant to an otherwise
lawful subpoena issued by a court of competent jurisdiction.

D. The Commission may promulgate regulations as it deems necessary for the
administration of this section.

HISTORY: 2000, cc. 624, 718.