656.850
License; compliance with workers’ compensation and safety laws. (1) As used in this section and
ORS 656.018, 656.403, 656.855 and 737.270:
(a) “Worker
leasing company” means a person who provides workers, by contract and for a
fee, to work for a client but does not include a person who provides workers to
a client on a temporary basis.
(b) “Temporary
basis” means providing workers to a client for special situations such as to
cover employee absences, employee leaves, professional skill shortages,
seasonal workloads and special assignments and projects with the expectation
that the position or positions will be terminated upon completion of the
special situation. Workers also are provided on a temporary basis if they are
provided as probationary new hires with a reasonable expectation of
transitioning to permanent employment with the client and the client uses a
preestablished probationary period in its overall employment selection program.
(c) “Temporary
service provider” means a person who provides workers, by contract and for a
fee, to a client on a temporary basis.
(2) No person
shall perform services as a worker leasing company in this state without first
having obtained a license therefor from the Director of the Department of
Consumer and Business Services. No person required by this section to obtain a
license shall fail to comply with this section or ORS 656.855, or any rule
adopted pursuant thereto.
(3) When a worker
leasing company provides workers to a client, the worker leasing company shall
satisfy the requirements of ORS 656.017 and 656.407 and provide workers’
compensation coverage for those workers and any subject workers employed by the
client unless during the term of the lease arrangement the client has proof of
coverage on file with the director that extends coverage to subject workers
employed by the client and any workers leased by the client. If the client
allows the coverage to expire and continues to employ subject workers or has
leased workers, the client shall be considered a noncomplying employer unless
the worker leasing company has complied with subsection (5) of this section.
(4) When a worker
leasing company provides workers for a client, the worker leasing company shall
assure that the client provides adequate training, supervision and instruction
for those workers to meet the requirements of ORS chapter 654.
(5) When a worker
leasing company provides subject workers to work for a client and also provides
workers’ compensation coverage for those workers, the worker leasing company
shall notify the director in writing. The notification shall be given in such
manner as the director may prescribe. A worker leasing company may terminate
its obligation to provide workers’ compensation coverage for workers provided
to a client by giving to the client and the director written notice of the
termination. A notice of termination shall state the effective date and hour of
the termination, but the termination shall be effective not less than 30 days
after the notice is received by the director. Notice to the client under this
section shall be given by mail, addressed to the client at the client’s
last-known address. If the client is a partnership, notice may be given to any
of the partners. If the client is a corporation, notice may be given to any
agent or officer of the corporation upon whom legal process may be served. [1993
c.628 §2; 1997 c.491 §4; 2007 c.241 §20]
Note: The amendments to 656.850 by
section 3, chapter 78, Oregon Laws 2025, become operative July 1, 2027. See
section 23, chapter 78, Oregon Laws 2025. The text that is operative on and
after July 1, 2027, is set forth for the user’s convenience.
656.850. (1)(a) A person may not provide
services as a professional employer organization (PEO) in this state without
first having obtained a license from the Director of the Department of Consumer
and Business Services.
(b) No person
required to obtain a license under this section shall fail to comply with this
section or ORS 656.855 or any rule adopted pursuant to such sections.
(2)(a) When a PEO
enters into a PEO relationship, the PEO shall satisfy the requirements of ORS
656.017 and 656.407 and provide workers’ compensation coverage for all of the
client’s covered employees and direct hire employees unless, during the term of
the PEO’s agreement with the client, the client has proof of coverage on file
with the director.
(b) If the client
has proof of coverage on file with the director, the client’s coverage shall
extend to all of the client’s covered employees and direct hire employees.
(c) If the client
allows the coverage to expire and continues to employ covered employees or
direct hire employees, the client shall be considered a noncomplying employer
unless the PEO has complied with subsection (4) of this section.
(3) When a PEO
enters into a PEO relationship, the PEO shall ensure that the client provides
adequate training, supervision and instruction for the client’s covered
employees to meet the requirements of ORS chapter 654.
(4) If a PEO
enters into a PEO relationship and the PEO is responsible for providing workers’
compensation coverage to the client under subsection (2) of this section, the
PEO shall:
(a) If the PEO is
a carrier-insured employer, notify the insurer in writing. The insurer shall
file proof of coverage with the director within 30 days after workers’
compensation coverage of the client becomes effective.
(b) If the PEO is
a self-insured employer, notify the director in writing.
(5)(a) A PEO’s
responsibility to provide workers’ compensation coverage under subsection (2)
of this section shall continue until the earlier of the date on which:
(A) The client
obtains alternate coverage; or
(B) The PEO terminates
its responsibility to provide coverage.
(b) For purposes
of paragraph (a)(A) of this subsection, if a client obtains alternate workers’
compensation coverage, the PEO’s responsibility to provide coverage ends on:
(A) The effective
date of a policy for which an insurer makes a proof of coverage filing on
behalf of the employer;
(B) The date on
which another PEO becomes responsible for providing coverage to the client; or
(C) The date on
which the client becomes a self-insured employer.
(c) For purposes
of paragraph (a)(B) of this subsection:
(A) A PEO may
terminate its responsibility to provide coverage by giving written notice of
the termination to:
(i) If the PEO is
a carrier-insured employer, the client, the director and the insurer. The
insurer shall file notice of termination with the director within 10 calendar
days after the effective date of the termination or the date on which the
insurer receives notice from the PEO, whichever is later.
(ii) If the PEO
is a self-insured employer, the client and the director.
(B) Unless a
later date is specified, the termination shall become effective at 12 midnight
on the 30th day after the date on which the notice is received by:
(i) An authorized
representative of the insurer; or
(ii) If the PEO
is a self-insured employer, the director.
(6) When a PEO
satisfies its responsibility to provide workers’ compensation coverage to a
client under subsection (2) of this section by obtaining a workers’
compensation insurance policy, coverage of the client under the policy shall
continue until:
(a) The PEO’s
coverage under the policy ends under ORS 656.419 (4); or
(b) The PEO’s
responsibility to provide workers’ compensation coverage ends under subsection
(5) of this section.
(7)(a) A PEO
shall submit reports to the director that list:
(A) All clients
with which the PEO has entered into a PEO relationship;
(B) Each client
to which the PEO provides workers’ compensation coverage; and
(C) The date on
which the coverage begins.
(b) The director
shall prescribe the interval and form of these reports by rule.
(8) The director
may adopt any rules necessary for the implementation of this section, including
but not limited to:
(a) Prescribing
the form and content of notices required under this section, including
requiring electronic transmission and filing; and
(b) Requiring
insurers that provide coverage to PEOs to do so on a multiple coordinated
policy or other basis.
(9)(a) Notice to
the client under this section shall be given by mail, addressed to the client
at the client’s last-known address.
(b) If the client
is a partnership, notice may be given to any of the partners.
(c) If the client
is a corporation, notice may be given to any agent or officer of the
corporation upon whom legal process may be served.
(d) If the client
is a limited liability company, notice may be given to any manager.
(e) If the client
is a member-managed limited liability company, notice may be given to any
member.
Notes of Decisions
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
· cites it 65× “This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
Mayfly Grp., Inc. v. Ruiz, 250 P.3d 360 (Or. Ct. App. 2011).
· cites it 12× “On remand, the parties filed amended pleadings, and, based on those amended pleadings, the trial court dismissed plaintiffs claim under ORCP 21 on the ground that plaintiff was not licensed as a worker leasing company, ORS 656.850. The trial court concluded that, because…”
Dep't of Consum. & Bus. Servs. v. Zurich Am., 268 P.3d 671 (Or. Ct. App. 2011).
· cites it 20× “nsequently, was a subject worker for purposes of the Workers’ Compensation Law; (2) claimant has a compensable claim; (3) because claimant was a subject worker and On-Time had not timely filed proof of workers’ compensation insurance with the director, the director correctly…”
Baugh v. Maint. & Mach. Erectors, Inc., 968 P.2d 392 (Or. Ct. App. 1998).
· cites it 6× “At the time plaintiff was injured, Mid-Oregon was a worker leasing company, licensed as such by the Department of Consumer and Business Services (DCBS) under ORS 656.850 (1993). In early 1995, plaintiff, a journeyman welder, interviewed with Nelson Howard, MME’s owner and…”
In Re Comp. of Mccoy, 268 P.3d 671 (Or. Ct. App. 2011).
· cites it 20× “nsequently, was a subject worker for purposes of the Workers' Compensation Law; (2) claimant has a compensable claim; (3) because claimant was a subject worker and On-Time had not timely filed proof of workers' compensation insurance with the director, the director correctly…”
Young v. United States Dep't of Com. (D. Or. 2020).
· cites it 3× “Or. Rev. Stat. Ann. § 656.850 (1)(a). Oregon law generally requires that the worker leasing company maintain workers’ compensation coverage when it provides workers to a client.”
Madden Indus. v. Steel Bldgs. USA, 328 Or. App. 257 (Or. Ct. App. 2023).
· cites it 2× “If, as SBU claims, the correct construction of the written contract limits its scope to the provision of temporary work- ers as defined by ORS 656.850, then its integration clause would not apply to a subsequent agreement to provide leased workers.”
Phillips v. Bohnstedt, 27 P.3d 531 (Or. Ct. App. 2001).
· cites it 2× ““(5)(a) The exemption from liability given an employer under this section applies to a temporary service provider, as that term is used in ORS 656.850,[ 1 ] and also extends to the *218 client to whom workers are provided when the temporary service provider complies with ORS 656.”
Roe v. Dep't of Revenue, 16 Or. Tax 395 (Or. T.C. 2001).
“See ORS 656.850 to 656.855 (1997) (regulating worker leasing companies).”
— Or. Rev. Stat. § 656.850(1) — 4 cases
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
“This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
Baugh v. Maint. & Mach. Erectors, Inc., 968 P.2d 392 (Or. Ct. App. 1998).
“At the time plaintiff was injured, Mid-Oregon was a worker leasing company, licensed as such by the Department of Consumer and Business Services (DCBS) under ORS 656.850 (1993). In early 1995, plaintiff, a journeyman welder, interviewed with Nelson Howard, MME’s owner and…”
— Or. Rev. Stat. § 656.850(1)(a) — 2 cases
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
“This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
In Re Comp. of Mccoy, 268 P.3d 671 (Or. Ct. App. 2011).
“nsequently, was a subject worker for purposes of the Workers' Compensation Law; (2) claimant has a compensable claim; (3) because claimant was a subject worker and On-Time had not timely filed proof of workers' compensation insurance with the director, the director correctly…”
— Or. Rev. Stat. § 656.850(1)(b) — 1 case
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
“This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
— Or. Rev. Stat. § 656.850(1)(c) — 1 case
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
“This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
— Or. Rev. Stat. § 656.850(2) — 2 cases
Mayfly Grp., Inc. v. Ruiz, 250 P.3d 360 (Or. Ct. App. 2011).
“On remand, the parties filed amended pleadings, and, based on those amended pleadings, the trial court dismissed plaintiffs claim under ORCP 21 on the ground that plaintiff was not licensed as a worker leasing company, ORS 656.850. The trial court concluded that, because…”
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
“This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
— Or. Rev. Stat. § 656.850(3) — 5 cases
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
“This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
Dep't of Consum. & Bus. Servs. v. Zurich Am., 268 P.3d 671 (Or. Ct. App. 2011).
“nsequently, was a subject worker for purposes of the Workers’ Compensation Law; (2) claimant has a compensable claim; (3) because claimant was a subject worker and On-Time had not timely filed proof of workers’ compensation insurance with the director, the director correctly…”
In Re Comp. of Mccoy, 268 P.3d 671 (Or. Ct. App. 2011).
“nsequently, was a subject worker for purposes of the Workers' Compensation Law; (2) claimant has a compensable claim; (3) because claimant was a subject worker and On-Time had not timely filed proof of workers' compensation insurance with the director, the director correctly…”
Baugh v. Maint. & Mach. Erectors, Inc., 968 P.2d 392 (Or. Ct. App. 1998).
“At the time plaintiff was injured, Mid-Oregon was a worker leasing company, licensed as such by the Department of Consumer and Business Services (DCBS) under ORS 656.850 (1993). In early 1995, plaintiff, a journeyman welder, interviewed with Nelson Howard, MME’s owner and…”
— Or. Rev. Stat. § 656.850(4) — 1 case
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
“This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
— Or. Rev. Stat. § 656.850(5) — 4 cases
SAIF Corp. v. Matt Jenkins Contracting, 306 P.3d 641 (Or. Ct. App. 2013).
“This case involves the interpretation of ORS 656.850, a statute that governs the responsibility of worker leasing companies (WLCs) to provide workers’ compensation insurance coverage for the WLCs’ leased workers and the other subject workers of the WLCs’ clients.”
Dep't of Consum. & Bus. Servs. v. Zurich Am., 268 P.3d 671 (Or. Ct. App. 2011).
“nsequently, was a subject worker for purposes of the Workers’ Compensation Law; (2) claimant has a compensable claim; (3) because claimant was a subject worker and On-Time had not timely filed proof of workers’ compensation insurance with the director, the director correctly…”
In Re Comp. of Mccoy, 268 P.3d 671 (Or. Ct. App. 2011).
“nsequently, was a subject worker for purposes of the Workers' Compensation Law; (2) claimant has a compensable claim; (3) because claimant was a subject worker and On-Time had not timely filed proof of workers' compensation insurance with the director, the director correctly…”
— Or. Rev. Stat. § 656.850(l)(a) — 2 cases
Mayfly Grp., Inc. v. Ruiz, 250 P.3d 360 (Or. Ct. App. 2011).
“On remand, the parties filed amended pleadings, and, based on those amended pleadings, the trial court dismissed plaintiffs claim under ORCP 21 on the ground that plaintiff was not licensed as a worker leasing company, ORS 656.850. The trial court concluded that, because…”
Dep't of Consum. & Bus. Servs. v. Zurich Am., 268 P.3d 671 (Or. Ct. App. 2011).
“nsequently, was a subject worker for purposes of the Workers’ Compensation Law; (2) claimant has a compensable claim; (3) because claimant was a subject worker and On-Time had not timely filed proof of workers’ compensation insurance with the director, the director correctly…”
— Or. Rev. Stat. § 656.850(l)(c) — 1 case
Phillips v. Bohnstedt, 27 P.3d 531 (Or. Ct. App. 2001).
““(5)(a) The exemption from liability given an employer under this section applies to a temporary service provider, as that term is used in ORS 656.850,[ 1 ] and also extends to the *218 client to whom workers are provided when the temporary service provider complies with ORS 656.”
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