Workers’ comp snafu
Oklahoma owner-operators left without proof of insurance exemption

By Coral Beach
Staff Editor

If they’re not already there, owner-operators in Oklahoma will soon be in limbo – the date of their arrival in the great gray area is the same as the expiration date on their work comp CNC cards.

For those not base-plated in the Sooner State, a work comp CNC refers to a state-issued Certificate of Non-Coverage card that owner-operators and other self-employed people in Oklahoma could obtain for $10 a year, or $20 for two years. Oklahoma officials have told Land Line that they believe the certificate program was unique to their state. It was repealed effective July 1 and no backup plan was put in place.

The certificates served as proof for self-employed people who needed to provide documentation to general contractors that they were exempt from laws requiring employees to be covered by workers’ compensation insurance.

Owner-operators and other self-employed people are not considered employees and are therefore exempt. There are about 20,000 Oklahomans, including many of the nearly 2,900 OOIDA members in the state, who are affected by the CNC change.

Before July 1, when the issuance of the certificates was to cease, Oklahoma officials began a mad scramble to answer a flood of inquiries from self-employed people who wanted to know what would replace the certificates. Labor Commissioner Brenda Reneau estimated her staff handled more than 3,000 direct inquiries in three to four weeks.

At first, some key players, including state Sen. Cliff A. Aldridge, R-Choctaw, said the only foolproof action would be for an owner-operator to purchase a workers’ comp policy and then check the “opt-out” box on the policy. He said that was not a satisfactory answer.

“The minimum premium on those policies is $350,” said Aldridge, who himself is an agent for Farmers Insurance. “So what it’s really done is raise their cost from $10 a year basically up to $350 a year.”

That interpretation gained support from some state officials who speculated off the record. They openly admitted the situation was at best unclear and at worst completely uncharted territory.

So legislators, including Aldridge, along with Reneau and officials in the Oklahoma Insurance Commission’s office, asked the Oklahoma Attorney General to issue an opinion.

Attorney General W.A. Drew Edmondson responded in a June 29 opinion that stated existing certificates would remain valid through the expiration dates printed on them.

Upon hearing that news, self-employed Oklahomans flocked to Department of Labor offices on June 30 so that they could get certificates for the next year or two. The department kept the office open until 8 p.m. so everyone in line was processed before the midnight deadline.

Applicants had to provide the Labor Department documents, such as their 1099 tax forms, as proof that they were exempt from work comp law, which put the burden of proof on the department.

Without the certificate program, independent contractors wonder if the firms they work with will demand that they participate in work comp programs.

Key players including legislators and officials from the departments of labor and insurance are working with representatives from the insurance industry and have drafted a new affidavit program to at least temporarily address the issue.

“The affidavit will be equivalent to the CNC,” said Diana Hartley, a spokeswoman for the Oklahoma Insurance Commission.

Only problem is, Hartley said, there is no statutory or legislative authorization for the affidavits, which would be available from any insurance agent who is licensed to sell work comp coverage in Oklahoma.

Pat McGuigan, deputy commissioner at the Labor Department, confirmed Hartley’s assessment.

“There is no statutory authority,” McGuigan said. “This is being gnawed over like a bone.

“I have to candidly say it’s tough because the most efficient solution would be to bring back the CNC program. We are where we are because the CNC program was discontinued and we are being asked to fix something that we don’t have statutory authority to do.”

Another problem with the affidavit plan – which would have independent contractors sign a form swearing that they did not have employees of their own and are therefore exempt from work comp laws – is that there is nothing in Oklahoma law to require anyone to honor the affidavits.

Aldridge said, from his perspective as a state senator and insurance agent, general contractors will likely be skeptical of the affidavits because Oklahoma law puts the burden of proof on them to make sure no one working with them is violating work comp laws.

“We will probably address this next session,” Aldridge said. “We need to put the burden on the person signing the affidavit.”

But what are owner-operators and others to do until then?

Hartley told Land Line on July 13 that she thought the final meeting on the affidavit draft document would occur that day. She suggested watching the Labor Department’s Web site for updates.

The next regular legislative session doesn’t begin until February 2006. People with existing CNC cards who did not join the frantic dash on June 30 to get a new card good for the next year or two will be in limbo when their current certificates expire.

Most officials agree that regardless whether an owner-operator has a current CNC or obtains one of the new affidavits – assuming they actually become reality – their employment status will not have changed. Aldridge suggests hanging on to expired CNC cards and also carrying tax documents and other paperwork as proof of insurance status.

Labor Commissioner Reneau announced that answers to the most frequent CNC card questions have been updated and can be viewed by visiting the department’s Web site at and then clicking on the scrolling red headline about CNC status.