Okla. AG Says CNC Cards Good Until They Expire

At the request of Oklahoma State Senators Cliff A. Aldridge and Patrick Anderson, state Attorney General Drew Edmondson clarified June 29 that Certificates of Non-Coverage (CNC) cards issued to independent contractors before July 1, 2005, are effective until they expire, despite the legislative repeal of the CNC program that went into effect July 1.

According to Oklahoma’s Department of Labor, the CNC program was created more than a decade ago, when independent contractors, al-though exempt from workers’ comp provisions, were forced to purchase insurance in order to work. Before CNCs were created, businesses hiring independent contractors had to show evidence to their insurance companies that the contractor had an insurance policy or had to pay more premium to their own carrier.

Although legislators voted to repeal the CNC program, they didn’t establish a mechanism to take its place. Contractors, employers and insurers alike have been scrambling to determine what the repeal of the program means for the future, and, in the case of contractors, to obtain a CNC card before July 1.

Labor department employees worked late into the evening on June 30 in order to “process a final surge of applications.” Agency officials said about 175 new or renewed CNCs were processed on the last day. Hundreds more were mailed to qualified applicants in the days preceding the June 30 cut-off date.

The Department of Labor, the Oklahoma Workers’ Compensation Court, the Oklahoma Department of Insurance and CompSource Oklahoma are reportedly working to develop an alternative to the CNC program. An announcement was expected in mid-July, however, no information had been released at press time.

In his official opinion on the matter Edmondson said: “Certificates of Non-Coverage issued by the Commissioner of Labor pursuant to 40 O.S. 2001 (section) 415.1 prior to July 1, 2005 were not voided by the repeal of Section 415.1 in Senate Bill 1X of the 1st Extraordinary Session of the 50th Legislature. … The certificates remain valid, and any associated accrued rights remain in effect, until the certificates’ original date of expiration.”

The labor department noted that a survey conducted shortly before July 1 found that 51.94 percent of the 340 respondents believed “this decision may put me out of business.” Nearly 55 percent said repeal of CNCs “will hinder my business from receiving money owed to me for work performed.” And 72.78 percent said, “This decision will hinder my ability in obtaining jobs/work.”

In addition, more than 78 percent of respondents believed repeal of CNCs “will greatly impact my business.” Several respondents indicated they would “go out of business” or “move to another state.”

Deputy Commissioner of Labor Patrick B. McGuigan observed, “Data analysis reveals CNC cardholders, as a group, grew slightly more optimistic about their prospects after state officials supported the status of independent contractors in recent days.”

The agency reported there are about 20,000 CNC cards issued currently, down from more than 60,000 cards issued in the past.