WORKERS’ COMP. ON OUR MINDS: UPDATES & TRENDS FROM KEY STATES

The first few months of 2025 have been filled with legislative and regulatory activity in the states. One particular area of interest to PEOs is workers’ compensation insurance. We’ve seen quite a bit of activity in this area, and the NAPEO state government affairs team has been actively engaged in Oregon and Georgia on this issue. We’ve also seen trends emerge across the Southeast, Midwest, and the Heartlands regions of workers’ compensation legislation aimed at improving worker protections, addressing mental health issues, and adapting to new hiring trends. Driven by improved workplace safety, many states are seeing a trend towards reducing workers’ compensation insurance premium rates.

There is also a growing recognition of the importance of mental health in the workplace. Legislation is increasingly focused on providing coverage for mental injuries, particularly PTSD for high-stress occupations. The rise of temporary, contract-based work is leading to efforts to address the unique challenges created by this shift in hiring trends. States are exploring ways to provide adequate workers’ compensation coverage for these workers. NAPEO is monitoring such legislation to assess any impact on PEOs and determine when and where to engage if needed.

Here are some additional highlights and updates from key states you’ll want to keep in mind.

GEORGIA

We had our work cut out for us in Georgia as we worked to advance our Model Act legislation in the state. We were up against strong opposition from the Trial Lawyers Board, “Big Insurance” and the Board of Workers’ Compensation due to the misconception that the PEO relationship leaves injured workers without coverage. In Georgia, employers provide workers’ compensation coverage to all known and unknown workers and have asked PEOs do the same even if those workers are not known by the PEO and the PEO does not have an insurable interest in the worker under the PEO agreement with the client employer. NAPEO does not support this position, so as a compromise we stripped all workers’ compensation language from our bill to keep the status quo in the state.

Unfortunately, even with the stripping of this language and the bill passing out of the state House with enormous support, we still faced heavy opposition in the Senate’s Labor and Insurance subcommittee due to political rhetoric surrounding the workers’ compensation insurance provision of the bill, albeit no workers’ compensation provisions remained in the bill. However, because the subcommittee meeting did not end in a negative vote against our bill, our efforts are paused as the bill carries over to the 2026 legislative session. We will work over the summer to further clear up the false rhetoric surrounding the PEO relationship and work to find agreement with the opposition so we can get the bill across the finish line.

OREGON

In Oregon we are working with the state’s Workers’ Compensation Division to update and modernize existing statutory definitions that were originally passed in 1993. Currently, Oregon refers to PEOs as “worker leasing companies” and HB 2800 will update this terminology to the more modern PEO terminology, so Oregon statutes more adequately reflect current PEO practices.

This bill will also steer toward a rulemaking that looks to move Oregon away from purely a master policy state to more of a MCP or hybrid state. NAPEO shared its strong desire to have Oregon become a hybrid workers’ compensation state, rather than a MCP state, and the Division has said it will work with us during rulemaking to move in that direction.

MISSOURI

A 2018 statutory change regarding experience modification factor (EMOD) calculations for PEOs operating under a master workers’ compensation policy has caused some issues in Missouri. Currently, Missouri applies the PEO’s entire three-year experience history to its EMOD, even for former clients who have left the PEO master policy. This can result in higher workers’ compensation rates for current and future clients, which can make PEOs in Missouri less competitive compared to those in states where the EMOD follows the client. We will work with the Missouri working group of NAPEO members to explore possibilities to address this issue.

EAST COAST

Across the mid-Atlantic and New England regions, state legislatures have introduced, but not passed, a variety of bills related to workers’ compensation that fall into two categories. First, efforts to expand the workers’ compensation benefit schedule. Second, requirements for the administrative agency of workers’ compensation to study the system and make recommendations. This is in line with post-pandemic efforts to stamp out fraud in statewide benefit programs. The first category of bills is generally led by Democrats and the second is generally led by agencies and/or Republicans. NAPEO is keeping watch of these issues for any implications for PEOs.