Ohio Supreme Court Weighs in on Workers’ Compensation Successor Owner Liability

On November 25, 2014, the Supreme Court of Ohio affirmed the decision of the Court of Appeals in a case where a parent company purchased the assets of a business and then transferred a portion of those assets to its’ subsidiary.  The Ohio Bureau of Workers’ Compensation (BWC) was accordingly notified of the sale of the business and proceeded to charge the new owners workers’ compensation premiums based on the previous owner’s claims history.  The new owners objected to the BWC decision to do so and eventually appealed the decision to Ohio the Supreme Court.  The Court, in a slip opinion published on 11/25/14, affirms the decision of the BWC to transfer the risk history over to the new business.

Sbwcome of the factors that the BWC order cited were that the new owners kept the old company name, had substantially the same clients and employees as the old ownership had, and were conducting business in the same location as it did under the previous ownership.  The Court also stated that the new ownership did not detail in the purchase agreement that only a portion of the old business’ assets were transferring and did not make that information available to the BWC upon its request.

Takeaway:  If you have purchased a business, and the BWC is requesting information in order to calculate your new workers’ compensation premiums, it is advisable that you consult with an attorney experienced in these matters before the BWC issues a decision.  In this case, the Court could not consider the documents that the business had not given the BWC after the fact; the Court could only decide whether, based upon the information that the BWC had at the time, whether the BWC had made its decision  acting in “an arbitrary, capricious, or discriminatory manner by entering an order not supported by the evidence in the record.”  (See State ex rel. RFFG, L.L.C. v. Ohio Bur. Of Workers’ Comp., Slip Opinion No. 2014-Ohio-5199)

 If you are purchasing a business or transferring the assets of a business and have questions about your workers’ compensation coverage, please contact Kristina Curry at (937)223-1130, Ext. 2250 or Jeff Senney or one of the other attorneys at Pickrel Schaeffer & Ebeling.  We are here to help and answer any questions that you may have.

AUTHOR: Kristina Curry