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AN ACT
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relating to the regulation of professional employer services; |
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authorizing fees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Chapter 91, Labor Code, is amended |
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to read as follows: |
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CHAPTER 91. PROFESSIONAL EMPLOYER ORGANIZATIONS [STAFF LEASING
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SERVICES] |
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SECTION 2. Section 91.001, Labor Code, is amended by |
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amending Subdivisions (1), (2-a), (3), (7), (11), (14), (15), (16), |
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and (17) and adding Subdivisions (3-a), (3-b), and (7-a) to read as |
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follows: |
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(1) "Applicant" means a person [business entity] |
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applying for a license or the renewal of a license under this |
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chapter. |
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(2-a) "Assurance organization" means an independent |
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entity approved by the commission that: |
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(A) provides a national program of accreditation |
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and financial assurance for professional employer organizations |
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[staff leasing services companies]; |
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(B) has documented qualifications, standards, |
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and procedures acceptable to the department; and |
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(C) agrees to provide information, compliance |
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monitoring services, and financial assurance useful to the |
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department in accomplishing the provisions of this chapter. |
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(3) "Client [company]" means any [a] person who enters |
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into a professional employer services agreement [that contracts] |
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with a license holder [and is assigned employees by the license
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holder under that contract]. |
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(3-a) "Coemployer" means a professional employer |
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organization or a client that is a party to a coemployment |
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relationship. |
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(3-b) "Coemployment relationship" means a contractual |
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relationship between a client and a professional employer |
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organization that involves the sharing of employment |
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responsibilities with or allocation of employment responsibilities |
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to covered employees in accordance with the professional employer |
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services agreement and this chapter. |
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(7) "Controlling person" means an individual who: |
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(A) possesses direct or indirect control of 25 |
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percent or more of the voting securities of a business entity |
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[corporation] that offers or proposes to offer professional |
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employer [staff leasing] services; |
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(B) possesses the authority to set policy and |
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direct management of a business entity [company] that offers or |
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proposes to offer professional employer [staff leasing] services; |
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(C) is employed, appointed, or authorized by a |
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business entity [company] that offers or proposes to offer |
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professional employer [staff leasing] services to enter into a |
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professional employer services agreement [contract] with a client |
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[company] on behalf of the business entity [company]; or |
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(D) a person who is an officer or director of a |
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corporation or a general partner of a partnership that offers or |
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proposes to offer professional employer [staff leasing] services. |
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(7-a) "Covered employee" means an individual having a |
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coemployment relationship with a professional employer |
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organization and a client. |
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(11) "License holder" means a person licensed under |
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this chapter to provide professional employer [staff leasing] |
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services. |
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(14) "Professional employer services" means the |
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services provided through coemployment relationships in which all |
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or a majority of the employees providing services to a client or to |
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a division or work unit of a client are covered employees. ["Staff
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leasing services" means an arrangement by which employees of a
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license holder are assigned to work at a client company and in which
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employment responsibilities are in fact shared by the license
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holder and the client company, the employee's assignment is
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intended to be of a long-term or continuing nature, rather than
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temporary or seasonal in nature, and a majority of the work force at
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a client company worksite or a specialized group within that work
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force consists of assigned employees of the license holder. The
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term includes professional employer organization services.] The |
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term does not include: |
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(A) temporary help; |
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(B) an independent contractor; |
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(C) the provision of services that otherwise meet |
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the definition of "professional employer ["staff leasing] |
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services" by one person solely to other persons who are related to |
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the service provider by common ownership; or |
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(D) a temporary common worker employer as defined |
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by Chapter 92. |
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(15) "Professional employer organization" ["Staff
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leasing services company"] means a business entity that offers |
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professional employer [staff leasing] services. [The term includes
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a professional employer organization.] |
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(16) "Temporary help" means an arrangement by which an |
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organization hires its own employees and assigns them to a company |
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[client] to support or supplement the company's [client's] work |
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force in a special work situation, including: |
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(A) an employee absence; |
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(B) a temporary skill shortage; |
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(C) a seasonal workload; or |
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(D) a special assignment or project. |
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(17) "Wages" means: |
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(A) compensation for labor or services rendered |
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by a covered [an assigned] employee, whether computed on a time, |
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task, piece, or other basis; and |
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(B) vacation pay, holiday pay, sick leave pay, |
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parental leave pay, severance pay, bonuses, commissions, stock |
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option grants, or deferred compensation owed to a covered [an
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assigned] employee under a written agreement. |
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SECTION 3. Chapter 91, Labor Code, is amended by adding |
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Sections 91.0011 and 91.0012 to read as follows: |
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Sec. 91.0011. COEMPLOYMENT RELATIONSHIP. (a) A |
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coemployment relationship is intended to be an ongoing relationship |
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rather than a temporary or specific one, in which the rights, |
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duties, and obligations of an employer that arise out of an |
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employment relationship are allocated between coemployers under a |
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professional employer services agreement. Coemployment is not a |
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joint employment arrangement. |
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(b) In a coemployment relationship: |
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(1) the professional employer organization may |
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enforce only those employer rights and is subject to only those |
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obligations specifically allocated to the professional employer |
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organization by the professional employer services agreement or |
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this chapter; |
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(2) the client may enforce any right and is obligated |
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to perform those employer obligations allocated to the client by |
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the professional employer services agreement or this chapter; and |
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(3) the client may enforce any right and is obligated |
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to perform any obligation of an employer not specifically allocated |
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to the professional employer organization by the professional |
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employer services agreement or this chapter. |
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Sec. 91.0012. COVERED EMPLOYEE. (a) A covered employee |
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must meet all the following criteria: |
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(1) the individual must receive written notice of the |
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coemployment relationship with the professional employer |
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organization; and |
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(2) the individual's coemployment relationship must be |
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under a professional employer services agreement subject to this |
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chapter. |
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(b) An individual who is an executive employee, as described |
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by Section 406.097, of the client is a covered employee, except to |
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the extent the professional employer organization and the client |
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expressly agree in the professional employer services agreement |
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that the individual is not a covered employee. |
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SECTION 4. Subsections (b) and (c), Section 91.002, Labor |
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Code, are amended to read as follows: |
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(b) Each person who offers professional employer [staff
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leasing] services is subject to this chapter and the rules adopted |
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by the commission. |
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(c) Notwithstanding any other provision of this chapter, |
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nothing in this chapter preempts the existing statutory or |
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rulemaking authority of any other state agency or entity to |
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regulate professional employer [staff leasing] services in a manner |
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consistent with the statutory authority of that state agency or |
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entity. |
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SECTION 5. Susbection (a), Section 91.003, Labor Code, is |
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amended to read as follows: |
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(a) Each state agency that in performing duties under other |
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law affects the regulation of professional employer [staff leasing] |
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services shall cooperate with the department and other state |
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agencies as necessary to implement and enforce this chapter. |
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SECTION 6. Sections 91.004, 91.005, 91.006, 91.007, 91.011, |
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and 91.012, Labor Code, are amended to read as follows: |
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Sec. 91.004. EFFECT OF OTHER LAW ON CLIENTS AND EMPLOYEES. |
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(a) This chapter does not exempt a client of a license holder, or |
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any covered [assigned] employee, from any other license |
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requirements imposed under local, state, or federal law. |
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(b) A covered [An] employee who is licensed, registered, or |
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certified under law [and who is assigned to a client company] is |
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considered to be an employee of the client [company] for the purpose |
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of that license, registration, or certification. |
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(c) A license holder is not engaged in the unauthorized |
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practice of an occupation, trade, or profession that is licensed, |
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certified, or otherwise regulated by a governmental entity solely |
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by entering into a professional employer services [staff leasing] |
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agreement with a client [company] and covered [assigned] employees. |
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Sec. 91.005. APPLICATION OF CERTAIN PROCUREMENT LAWS. With |
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respect to a bid, contract, purchase order, or agreement entered |
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into with the state or a political subdivision of the state, a |
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client's [client company's] status or certification as a small, |
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minority-owned, disadvantaged, or woman-owned business enterprise |
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or as a historically underutilized business is not affected because |
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the client [company] has entered into a professional employer |
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services [an] agreement with a license holder or uses the services |
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of a license holder. |
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Sec. 91.006. WORKERS' COMPENSATION COVERAGE. (a) A |
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certificate of insurance coverage or other evidence of coverage |
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showing that either a license holder or a client maintains [a policy
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of] workers' compensation insurance coverage constitutes proof of |
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workers' compensation insurance coverage for the license holder and |
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the client [company] with respect to all covered employees of the |
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license holder and [assigned to] the client [company]. The state |
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and a political subdivision of the state shall accept a certificate |
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of insurance coverage or other evidence of coverage described by |
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this section as proof of workers' compensation coverage under |
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Chapter 406. |
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(b) For a client [company] that has employees who are not |
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covered [assigned] employees under a professional employer [staff
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leasing] services agreement, the state or a political subdivision |
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of the state may require the client [company] to furnish separate |
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proof of workers' compensation insurance coverage for those |
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employees. |
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Sec. 91.007. APPLICATION OF LABOR RELATIONS LAWS. This |
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chapter does not relieve a client [company] of a right, obligation, |
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or duty under: |
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(1) Chapter 101; |
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(2) the federal National Labor Relations Act (29 |
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U.S.C. Section 151 et seq.); |
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(3) the federal Railway Labor Act (45 U.S.C. Section |
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151 et seq.); or |
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(4) any other law governing labor relations. |
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Sec. 91.011. LICENSE REQUIRED. A person may not engage in |
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or offer professional employer [staff leasing] services in this |
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state unless the person holds a license issued under this chapter. |
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Sec. 91.012. GENERAL LICENSE REQUIREMENTS. To be qualified |
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to serve as a controlling person of a license holder under this |
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chapter, that person must be at least 18 years of age and have |
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educational, managerial, or business experience relevant to: |
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(1) operation of a business entity offering |
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professional employer [staff leasing] services; or |
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(2) service as a controlling person of a professional |
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employer organization [staff leasing services company]. |
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SECTION 7. Subsections (a) and (c), Section 91.014, Labor |
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Code, are amended to read as follows: |
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(a) An applicant for an original or renewal license must |
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demonstrate positive working capital in the following amounts: |
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(1) $50,000 if the applicant employs fewer than 250 |
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covered [assigned] employees; |
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(2) $75,000 if the applicant employs at least 250 but |
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not more than 750 covered [assigned] employees; and |
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(3) $100,000 if the applicant employs more than 750 |
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covered [assigned] employees. |
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(c) Information submitted to or maintained by the |
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department is subject to Chapter 552, Government Code, other than |
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information related to: |
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(1) identification of clients [client companies]; |
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(2) working capital; |
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(3) financial statements; or |
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(4) federal tax returns. |
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SECTION 8. Subsection (a), Section 91.015, Labor Code, is |
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amended to read as follows: |
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(a) To receive a professional employer organization [staff
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leasing services company] original license, a person shall file |
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with the department a written application accompanied by the |
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application fee. |
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SECTION 9. Subsections (a) and (c), Section 91.017, Labor |
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Code, are amended to read as follows: |
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(a) Each applicant for an original or renewal professional |
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employer organization [staff leasing services company] license |
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shall pay to the department before the issuance of the license or |
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license renewal a fee set by the commission by rule. |
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(c) Fees collected by the department under this chapter may |
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[shall] be used only to implement this chapter. |
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SECTION 10. Subsections (e) and (f), Section 91.018, Labor |
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Code, are amended to read as follows: |
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(e) A license holder offering professional employer [staff
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leasing] services in more than one state may advertise in this state |
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using the name of its parent company or under a trade name, |
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trademark, or service mark. The trade name, trademark, service |
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mark, or parent company name must be listed on the license in |
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addition to the licensed name used by the license holder in this |
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state. |
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(f) Each written proposal provided to a prospective client |
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[company] and each contract between a license holder and a client |
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[company] or covered [assigned] employee shall clearly identify the |
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name of the license holder. A proposal or contract may also |
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identify the trade name, trademark, service mark, or parent company |
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name of the license holder. A license holder may use written |
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materials including forms, benefit information, letterhead, and |
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business cards that bear only the trade name, trademark, service |
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mark, or parent company name of the license holder. |
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SECTION 11. Subsections (a), (b), and (c), Section 91.019, |
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Labor Code, are amended to read as follows: |
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(a) The commission by rule shall provide for the issuance of |
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a limited license to a person who seeks to offer limited |
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professional employer [staff leasing] services in this state. |
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(b) For purposes of this section, a professional employer |
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organization [staff leasing services company] is considered to be |
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offering limited professional employer [staff leasing] services if |
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the professional employer organization [staff leasing services
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company]: |
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(1) employs fewer than 50 covered [assigned] employees |
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in this state at any one time; |
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(2) does not provide covered [assigned] employees to a |
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client [company] based or domiciled in this state; and |
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(3) does not maintain an office in this state or |
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solicit clients [client companies] located or domiciled in this |
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state. |
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(c) A professional employer organization [staff leasing
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services company] that offers limited professional employer [staff
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leasing] services shall complete the application forms and pay the |
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fees for a limited license as prescribed by the department. A |
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limited license is valid for one year from the date of issuance and |
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may be renewed annually on submission of a renewal application and |
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payment of the required fees. |
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SECTION 12. Section 91.020, Labor Code, is amended to read |
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as follows: |
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Sec. 91.020. GROUNDS FOR DISCIPLINARY ACTION. The |
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department may take disciplinary action against a license holder on |
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any of the following grounds: |
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(1) engaging in professional employer [staff leasing] |
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services or offering to engage in the provision of professional |
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employer [staff leasing] services without a license; |
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(2) transferring or attempting to transfer a license |
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issued under this chapter; |
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(3) violating this chapter or any order or rule issued |
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by the executive director or commission under this chapter; |
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(4) failing after the 31st day after the date on which |
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a felony conviction of a controlling person is final to notify the |
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department in writing of the conviction; |
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(5) failing to cooperate with an investigation, |
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examination, or audit of the license holder's records conducted by |
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the license holder's insurance company or the insurance company's |
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designee, as allowed by the insurance contract or as authorized by |
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law by the Texas Department of Insurance; |
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(6) failing after the 31st day after the effective |
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date of a change in ownership, principal business address, or the |
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address of accounts and records to notify the department and the |
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Texas Department of Insurance of the change; |
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(7) failing to correct any tax filings or payment |
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deficiencies within a reasonable time as determined by the |
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executive director; |
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(8) refusing, after reasonable notice, to meet |
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reasonable health and safety requirements within the license |
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holder's control and made known to the license holder by a federal |
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or state agency; |
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(9) being delinquent in the payment of the license |
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holder's insurance premiums other than those subject to a |
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legitimate dispute; |
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(10) being delinquent in the payment of any employee |
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benefit plan premiums or contributions other than those subject to |
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a legitimate dispute; |
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(11) knowingly making a material misrepresentation to |
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an insurance company or to the department or other governmental |
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agency; |
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(12) failing to maintain the working capital required |
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under Section 91.014; or |
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(13) using professional employer [staff leasing] |
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services to avert or avoid an existing collective bargaining |
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agreement. |
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SECTION 13. Subsection (b), Section 91.021, Labor Code, is |
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amended to read as follows: |
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(b) A professional employer organization [staff leasing
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services company] may authorize an assurance organization that is |
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qualified and approved by the commission to act on its behalf in |
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complying with the licensing requirements of this chapter, |
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including the electronic filing of information and the payment of |
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application and licensing fees. Use of an assurance organization |
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is optional and is not mandatory for a professional employer |
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organization [staff leasing services company]. |
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SECTION 14. Subchapter C, Chapter 91, Labor Code, is |
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amended to read as follows: |
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SUBCHAPTER C. PROFESSIONAL EMPLOYER SERVICES [STAFF LEASING
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SERVICES] AGREEMENT |
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Sec. 91.031. AGREEMENT; NOTICE. (a) A license holder |
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shall establish the terms of a professional employer [staff
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leasing] services agreement by a written contract between the |
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license holder and the client [company]. |
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(b) The license holder shall give written notice of the |
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agreement as it affects covered [assigned] employees to each |
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covered employee [assigned to a client company worksite]. |
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(c) The written notice required by Subsection (b) must be |
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given to each covered [assigned] employee not later than the first |
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payday after the date on which that individual becomes a covered [an
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assigned] employee. |
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Sec. 91.032. CONTRACT REQUIREMENTS. (a) A professional |
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employer services agreement [contract] between a license holder and |
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a client [company] must provide that the license holder: |
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(1) shares, as provided by Subsection (b), with the |
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client [company] the right of direction and control over covered |
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employees [assigned to a client's worksites]; |
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(2) assumes responsibility for the payment of wages to |
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the covered [assigned] employees without regard to payments by the |
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client to the license holder; |
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(3) assumes responsibility for the payment of payroll |
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taxes and collection of taxes from payroll on covered [assigned] |
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employees; |
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(4) shares, as provided by Subsection (b), with the |
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client [company] the right to hire, fire, discipline, and reassign |
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the covered [assigned] employees; and |
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(5) shares, as provided by Subsection (b), with the |
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client [company] the right of direction and control over the |
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adoption of employment and safety policies and the management of |
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workers' compensation claims, claim filings, and related |
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procedures. |
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(b) Notwithstanding any other provision of this chapter, a |
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client [company] retains sole responsibility for: |
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(1) the direction and control of covered [assigned] |
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employees as necessary to conduct the client's [client company's] |
|
business, discharge any applicable fiduciary duty, or comply with |
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any licensure, regulatory, or statutory requirement; |
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(2) goods and services produced by the client |
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[company]; and |
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(3) the acts, errors, and omissions of covered |
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[assigned] employees committed within the scope of the client's |
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[client company's] business. |
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(c) Notwithstanding Subsection (a)(2), a client [company] |
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is solely obligated to pay any wages for which: |
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(1) obligation to pay is created by an agreement, |
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contract, plan, or policy between the client [company] and the |
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covered [assigned] employee; and |
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(2) the professional employer organization [staff
|
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leasing services company] has not contracted to pay. |
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(d) Each professional employer organization [staff leasing
|
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services company] shall disclose the requirements of Subsection (c) |
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in writing to each covered [assigned] employee. |
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SECTION 15. Section 91.041, Labor Code, is amended by |
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amending Subsections (a) and (b) and adding Subsections (a-1) and |
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(a-2) to read as follows: |
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(a) A client and license holder are each considered an |
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employer under the laws of this state for purposes of sponsoring |
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retirement and welfare benefit plans for covered employees. [A
|
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license holder may sponsor and maintain employee benefit plans for
|
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the benefit of assigned employees. A client company may include
|
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assigned employees in any benefit plan sponsored by the client
|
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company.] |
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(a-1) A license holder may sponsor a single welfare benefit |
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plan under which eligible covered employees of one or more clients |
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may elect to participate. |
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(a-2) A fully insured welfare benefit plan offered to the |
|
covered employees of a license holder and provided by an insurance |
|
company authorized to provide that insurance in this state or a |
|
self-funded health benefit plan sponsored by a license holder as |
|
provided by Section 91.0411 shall be treated for purposes of state |
|
law as a single employer welfare benefit plan. |
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(b) With respect to any insurance or benefit plan provided |
|
by a license holder for the benefit of its assigned employees, a |
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license holder shall disclose the following information to the |
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department, each client [company], and its covered [assigned] |
|
employees: |
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(1) the type of coverage; |
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(2) the identity of each insurer for each type of |
|
coverage; |
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(3) the amount of benefits provided for each type of |
|
coverage and to whom or in whose behalf benefits are to be paid; |
|
(4) the policy limits on each insurance policy; and |
|
(5) whether the coverage is fully insured, partially |
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insured, or fully self-funded. |
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SECTION 16. Subchapter D, Chapter 91, Labor Code, is |
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amended by adding Section 91.0411 to read as follows: |
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Sec. 91.0411. SELF-FUNDED HEALTH BENEFIT PLAN. (a) In |
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this section, "commissioner" means the commissioner of insurance. |
|
(b) A license holder may sponsor a benefit plan that is not |
|
fully insured if the license holder meets the requirements of this |
|
section and is approved to sponsor the plan by the commissioner. |
|
(c) The commissioner may, on notice and opportunity for all |
|
interested persons to be heard, adopt rules and issue orders |
|
reasonably necessary to augment and implement the regulation of |
|
benefit plans sponsored by a license holder that are not fully |
|
insured. The commissioner may not adopt a rule that requires |
|
clients or covered employees to be members of an association or |
|
group in the same trade or industry in order to be covered by a |
|
license holder-sponsored benefit plan that is not fully insured. |
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The rules must include all requirements that must be met by the |
|
license holder and the plan, including: |
|
(1) initial and final approval requirements; |
|
(2) authority to prescribe forms and items to be |
|
submitted to the commissioner by the license holder; |
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(3) a fidelity bond; |
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(4) use of an independent actuary; |
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(5) use of a third-party administrator; |
|
(6) authority for the commissioner to examine an |
|
application or a plan; |
|
(7) the minimum number of clients and covered |
|
employees covered by the plan; |
|
(8) standards for those natural persons managing the |
|
plan; |
|
(9) the minimum amount of gross contributions; |
|
(10) the minimum amount of written commitment, binder, |
|
or policy for stop-loss insurance; |
|
(11) the minimum amount of reserves; and |
|
(12) a fee in an amount reasonable and necessary to |
|
defray the costs of administering this section to be deposited to |
|
the credit of the operating fund of the Texas Department of |
|
Insurance. |
|
(d) Information submitted under this section is |
|
confidential and not subject to disclosure under Chapter 552, |
|
Government Code. |
|
(e) Each license holder under this section shall appoint the |
|
commissioner as its resident agent for purposes of service of |
|
process. The fee for that service is $50, payable at the time of |
|
appointment. |
|
(f) The commissioner may examine the affairs of any plan and |
|
shall have access to the records of the plan. The commissioner may |
|
examine under oath a manager or employee of the license holder in |
|
connection with the plan. |
|
(g) In addition to any requirement or remedy under a law, |
|
the commissioner may suspend, revoke, or limit the authorization of |
|
a plan if the commissioner determines, after notice and hearing, |
|
that the plan does not comply with this section. The commissioner |
|
may notify the attorney general of a violation of this section, and |
|
the attorney general may apply to a district court in Travis County |
|
for leave to file suit in the nature of quo warranto or for |
|
injunctive relief or both. |
|
(h) A plan under this section is subject to Chapters 401, |
|
404, 441, and 443, Insurance Code. |
|
SECTION 17. Section 91.042, Labor Code, is amended by |
|
amending Subsections (a) through (h) and adding Subsections (a-1), |
|
(a-2), and (c-1) to read as follows: |
|
(a) A license holder or client may elect to obtain workers' |
|
compensation insurance coverage for covered [the license holder's
|
|
assigned] employees through an insurance company as defined under |
|
Section 401.011(28) or through self-insurance as provided under |
|
Chapter 407. |
|
(a-1) The client and the professional employer organization |
|
shall specify in the professional employer services agreement |
|
whether the parties have elected to obtain workers' compensation |
|
insurance coverage for the covered employees and shall specify |
|
which party must maintain coverage. If the license holder |
|
maintains workers' compensation insurance coverage for the client, |
|
an individual who is an executive employee, as described by Section |
|
406.097, of the client is eligible to be treated as an executive |
|
employee for premium calculation and classification purposes. A |
|
copy of the professional employer services agreement must be |
|
provided to the Texas Department of Insurance on request. |
|
Information obtained by the Texas Department of Insurance under |
|
this section is confidential and not subject to disclosure under |
|
Chapter 552, Government Code. |
|
(a-2) If the client elects to maintain workers' |
|
compensation insurance coverage for the covered employees under the |
|
client's policy or other coverage, the client shall pay workers' |
|
compensation insurance premiums for the covered employees based on |
|
the experience rating of the client. |
|
(b) If a license holder maintains workers' compensation |
|
insurance coverage for covered employees, the license holder shall |
|
pay workers' compensation insurance premiums for the covered |
|
employees based on the experience rating of the client [company] |
|
for the first two years the covered employees are covered under the |
|
professional employer organization's policy [client company has a
|
|
contract with the license holder] and as further provided by rule by |
|
the Texas Department of Insurance. |
|
(c) For workers' compensation insurance purposes, a license |
|
holder and the license holder's client [company] shall be |
|
coemployers. If either a license holder or a client elects to |
|
obtain workers' compensation insurance coverage for covered |
|
employees, the client [company] and the license holder are subject |
|
to Sections 406.005, 406.034, [and] 408.001, and 411.032. |
|
(c-1) Notwithstanding Subsection (c), for purposes of |
|
Section 462.308(a)(2), Insurance Code, the client is considered to |
|
be the insured employer. |
|
(d) If a license holder or a client does not elect to obtain |
|
workers' compensation insurance coverage for covered employees, |
|
both the license holder and the client [company] are subject to |
|
Sections 406.004, 406.005, [and] 406.033, and 411.032. |
|
(e) After the expiration of the two-year period under |
|
Subsection (b), if the client elects to obtain [company obtains a
|
|
new] workers' compensation insurance coverage for covered |
|
employees through coverage maintained by the client, or if the |
|
professional employer services agreement is terminated and the |
|
client elects to maintain, through coverage maintained by the |
|
client or through coverage maintained by a successor professional |
|
employer organization, workers' compensation insurance coverage |
|
for employees previously covered by the former professional |
|
employer organization's policy [policy in the company's own name or
|
|
adds the company's former assigned workers to an existing policy], |
|
the premium for the workers' compensation insurance coverage for |
|
the client [policy of the company] shall be based on the lower of: |
|
(1) the experience modifier of the client [company] |
|
before being covered under the professional employer |
|
organization's coverage [entering into the staff leasing
|
|
arrangement]; or |
|
(2) the experience modifier of the license holder at |
|
the time the client's coverage under the professional employer |
|
organization's coverage is [staff leasing arrangement] terminated. |
|
(f) On request, an insurer [the Texas Department of
|
|
Insurance] shall provide the necessary computations to the |
|
prospective workers' compensation insurer of the client [company] |
|
to comply with Subsection (e). |
|
(g) On the written request of a client [company], a license |
|
holder that elects to provide workers' compensation insurance for |
|
covered [assigned] employees shall provide to the client [company] |
|
a list of: |
|
(1) claims associated with that client [company] made |
|
against the license holder's workers' compensation policy; and |
|
(2) payments made and reserves established on each |
|
claim. |
|
(h) The license holder shall provide the information |
|
described by Subsection (g) in writing from the license holder's |
|
own records, if the license holder is a qualified self-insurer, or |
|
from information the license holder received from the license |
|
holder's workers' compensation insurance provider following the |
|
license holder's request under Section 2051.151, Insurance Code, |
|
not later than the 60th day after the date the license holder |
|
receives the client's [client company's] written request. For |
|
purposes of this subsection, information is considered to be |
|
provided to the client [company] on the date the information is: |
|
(1) received by the United States Postal Service; or |
|
(2) personally delivered to the client [company]. |
|
SECTION 18. Sections 91.044, 91.046, 91.048, 91.050, |
|
91.061, 92.012, and 201.030, Labor Code, are amended to read as |
|
follows: |
|
Sec. 91.044. UNEMPLOYMENT TAXES; PAYROLL. (a) A license |
|
holder is the employer of a covered [an assigned] employee for |
|
purposes of Subtitle A, Title 4, and, except for wages subject to |
|
Section 91.032(c), for purposes of Chapter 61. In addition to any |
|
other reports required to be filed by law, a license holder shall |
|
report quarterly to the Texas Workforce Commission on a form |
|
prescribed by the Texas Workforce Commission the name, address, |
|
telephone number, federal income tax identification number, and |
|
classification code as described in the "Standard Industrial |
|
Classification Manual" published by the United States Office of |
|
Management and Budget of each client [company]. |
|
(b) For purposes of Subtitle A, Title 4, in the event of the |
|
termination of a contract between a license holder and a client |
|
[company] or the failure by a professional employer organization |
|
[staff leasing entity] to submit reports or make tax payments as |
|
required by that subtitle, the contracting client [company] shall |
|
be treated as a new employer without a previous experience record |
|
unless that client [company] is otherwise eligible for an |
|
experience rating. |
|
Sec. 91.046. CONTRACTUAL DUTIES. Each license holder is |
|
responsible for the license holder's contractual duties and |
|
responsibilities to manage, maintain, collect, and make timely |
|
payments for: |
|
(1) insurance premiums; |
|
(2) benefit and welfare plans; |
|
(3) other employee withholding; and |
|
(4) any other expressed responsibility within the |
|
scope of the professional employer services agreement [contract] |
|
for fulfilling the duties imposed under this section and Sections |
|
91.032, 91.047, and 91.048. |
|
Sec. 91.048. REQUIRED INFORMATION. Each license holder |
|
shall: |
|
(1) maintain adequate books and records regarding the |
|
license holder's duties and responsibilities; |
|
(2) maintain and make available at all times to the |
|
executive director the following information, which shall be |
|
treated as proprietary and confidential and is exempt from |
|
disclosure to persons other than other governmental agencies having |
|
a reasonable, legitimate purpose for obtaining the information: |
|
(A) the correct name, address, and telephone |
|
number of each client [company]; |
|
(B) each professional employer services |
|
agreement with a client [company contract]; and |
|
(C) a listing by classification code as described |
|
in the "Standard Industrial Classification Manual" published by the |
|
United States Office of Management and Budget, of each client |
|
[company]; |
|
(3) notify the department of any addition or deletion |
|
of a controlling person as listed on the license application or |
|
renewal form by providing the name of the person not later than the |
|
45th day after the date on which the person is added or deleted as a |
|
controlling person; and |
|
(4) provide a biographical history to the department |
|
in connection with the addition of a new controlling person. |
|
Sec. 91.050. TAX CREDITS AND OTHER INCENTIVES. (a) For |
|
the purpose of determining tax credits, grants, and other economic |
|
incentives provided by this state or other governmental entities |
|
that are based on employment, covered [assigned] employees are |
|
considered employees of the client and the client is solely |
|
entitled to the benefit of any tax credit, economic incentive, or |
|
other benefit arising from the employment of covered [assigned] |
|
employees of the client. This subsection applies even if the |
|
professional employer organization [staff leasing services
|
|
company] is the reporting employer for federal income tax purposes. |
|
(b) If a grant or the amount of any incentive described by |
|
Subsection (a) is based on the number of employees, each client |
|
shall be treated as employing only those [assigned] employees |
|
coemployed [co-employed] by the client. Covered [Assigned] |
|
employees working for other clients of the professional employer |
|
organization [staff leasing services company] may not be included |
|
in the computation. |
|
(c) Each professional employer organization [staff leasing
|
|
services company] shall provide, on the request of a client or an |
|
agency of this state, employment information reasonably required by |
|
the state agency responsible for the administration of any tax |
|
credit or economic incentive described by Subsection (a) and |
|
necessary to support a request, claim, application, or other action |
|
by a client seeking the tax credit or economic incentive. |
|
Sec. 91.061. PROHIBITED ACTS. A person may not: |
|
(1) engage in or offer professional employer [staff
|
|
leasing] services without holding a license under this chapter as a |
|
professional employer organization [staff leasing services
|
|
company]; |
|
(2) use the name, [or] title, or designation |
|
"professional employer organization," "PEO," "staff leasing |
|
company," "employee leasing company," "licensed professional |
|
employer organization," "professional employer organization |
|
services company," "professional employer organization company," |
|
["licensed staff leasing company," "staff leasing services
|
|
company," "professional employer organization,"] or |
|
"administrative employer" or otherwise represent that the entity is |
|
licensed under this chapter unless the entity holds a license |
|
issued under this chapter; |
|
(3) represent as the person's own the license of |
|
another person or represent that a person is licensed if the person |
|
does not hold a license; |
|
(4) give materially false or forged evidence to the |
|
department in connection with obtaining or renewing a license or in |
|
connection with disciplinary proceedings under this chapter; or |
|
(5) use or attempt to use a license that has expired or |
|
been revoked. |
|
Sec. 92.012. EXEMPTIONS FROM LICENSING REQUIREMENT. This |
|
chapter does not apply to: |
|
(1) a temporary skilled labor agency; |
|
(2) a professional employer organization [staff
|
|
leasing services company]; |
|
(3) an employment counselor; |
|
(4) a talent agency; |
|
(5) a labor union hiring hall; |
|
(6) a temporary common worker employer that does not |
|
operate a labor hall; |
|
(7) a labor bureau or employment office operated by a |
|
person for the sole purpose of employing an individual for the |
|
person's own use; or |
|
(8) an employment service or labor training program |
|
provided by a governmental entity. |
|
Sec. 201.030. PROFESSIONAL EMPLOYER ORGANIZATION [STAFF
|
|
LEASING SERVICES COMPANY]. For the purposes of this subtitle, |
|
"professional employer organization" ["staff leasing services
|
|
company"] has the meaning assigned by Section 91.001. |
|
SECTION 19. Subsection (i), Section 207.045, Labor Code, is |
|
amended to read as follows: |
|
(i) A covered [An assigned] employee of a professional |
|
employer organization [staff leasing services company] is |
|
considered to have left the covered [assigned] employee's last work |
|
without good cause if the professional employer organization [staff
|
|
leasing services company] demonstrates that: |
|
(1) at the time the employee's assignment to a client |
|
[company] concluded, the professional employer organization [staff
|
|
leasing services company], or the client [company] acting on the |
|
professional employer organization's [staff leasing services
|
|
company's] behalf, gave written notice and written instructions to |
|
the covered [assigned] employee to contact the professional |
|
employer organization [staff leasing services company] for a new |
|
assignment; and |
|
(2) the covered [assigned] employee did not contact |
|
the professional employer organization [staff leasing services
|
|
company] regarding reassignment or continued employment; provided |
|
that the covered [assigned] employee may show that good cause |
|
existed for the covered [assigned] employee's failure to contact |
|
the professional employer organization [staff leasing services
|
|
company]. |
|
SECTION 20. The heading to Section 415.011, Labor Code, is |
|
amended to read as follows: |
|
Sec. 415.011. NOTICE OF PROFESSIONAL EMPLOYER ORGANIZATION |
|
[STAFF LEASING SERVICES COMPANY] WORKERS' COMPENSATION CLAIM AND |
|
PAYMENT INFORMATION; ADMINISTRATIVE VIOLATION. |
|
SECTION 21. Section 415.011, Labor Code, is amended by |
|
amending Subsections (a) and (c) and adding Subsection (a-1) to |
|
read as follows: |
|
(a) In this section, "license holder" has the meaning |
|
assigned by Section 91.001. |
|
(a-1) Except as provided by Subsection (c), a [staff leasing
|
|
services company] license holder commits a violation if the license |
|
holder fails to provide the information required by Sections |
|
91.042(g) and (h). |
|
(c) A [staff leasing services company] license holder does |
|
not commit an administrative violation under this section if the |
|
license holder requested the information required by Sections |
|
91.042(g) and (h) from the license holder's workers' compensation |
|
insurance provider and the provider does not provide the |
|
information to the license holder within the required time. A |
|
license holder shall notify the Texas Department of Insurance of a |
|
provider's failure to comply with the requirements of Section |
|
2051.151, Insurance Code. |
|
SECTION 22. Section 151.057, Tax Code, is amended to read as |
|
follows: |
|
Sec. 151.057. SERVICES BY EMPLOYEES. The following |
|
services are not taxable under this chapter: |
|
(1) a service performed by an employee for his |
|
employer in the regular course of business, within the scope of the |
|
employee's duties, and for which the employee is paid his regular |
|
wages or salary; |
|
(2) a service performed by an employee of a temporary |
|
employment service as defined by Section 93.001, Labor Code, for an |
|
employer to supplement the employer's existing work force on a |
|
temporary basis, when the service is normally performed by the |
|
employer's own employees, the employer provides all supplies and |
|
equipment necessary, and the help is under the direct or general |
|
supervision of the employer to whom the help is furnished; or |
|
(3) a service performed by covered [assigned] |
|
employees of a professional employer organization [staff leasing
|
|
company], either licensed under Chapter 91, Labor Code, or exempt |
|
from the licensing requirements of that chapter, for a client |
|
[company] under a written contract that provides for shared |
|
employment responsibilities between the professional employer |
|
organization [staff leasing company] and the client [company] for |
|
the covered [assigned] employees, most of whom must have been |
|
previously employed by the client [company]. The comptroller shall |
|
prescribe by rule the minimum percentage of covered [assigned] |
|
employees that must have been previously employed by the client |
|
[company], the minimum time period the covered [assigned] employees |
|
must have been employed by the client [company] prior to the |
|
commencement of its contract, and such other criteria as the |
|
comptroller may deem necessary to properly implement this section. |
|
SECTION 23. Section 171.0001, Tax Code, is amended by |
|
amending Subdivisions (6) and (15) and adding Subdivision (8-a) to |
|
read as follows: |
|
(6) "Client [company]" means: |
|
(A) a client as that term is defined by Section |
|
91.001 [person that contracts with a license holder under Chapter
|
|
91], Labor Code[, and is assigned employees by the license holder
|
|
under that contract]; or |
|
(B) a client of a temporary employment service, |
|
as that term is defined by Section 93.001(2), Labor Code, to whom |
|
individuals are assigned for a purpose described by that |
|
subdivision. |
|
(8-a) "Covered employee" has the meaning assigned by |
|
Section 91.001, Labor Code. |
|
(15) "Professional employer organization" ["Staff
|
|
leasing services company"] means: |
|
(A) a business entity that offers professional |
|
employer [staff leasing] services, as that term is defined by |
|
Section 91.001, Labor Code; or |
|
(B) a temporary employment service, as that term |
|
is defined by Section 93.001, Labor Code. |
|
SECTION 24. Subsection (b), Section 171.101, Tax Code, is |
|
amended to read as follows: |
|
(b) Notwithstanding Subsection (a)(1)(B)(ii), a |
|
professional employer organization [staff leasing services
|
|
company] may subtract only compensation as determined under Section |
|
171.1013. |
|
SECTION 25. Subsection (k), Section 171.1011, Tax Code, is |
|
amended to read as follows: |
|
(k) A taxable entity that is a professional employer |
|
organization [staff leasing services company] shall exclude from |
|
its total revenue payments received from a client [company] for |
|
wages, payroll taxes on those wages, employee benefits, and |
|
workers' compensation benefits for the covered [assigned] |
|
employees of the client [company]. |
|
SECTION 26. Subsections (d) and (e), Section 171.1013, Tax |
|
Code, are amended to read as follows: |
|
(d) A taxable entity that is a professional employer |
|
organization [staff leasing services company]: |
|
(1) may not include as wages or cash compensation |
|
payments described by Section 171.1011(k); and |
|
(2) shall determine compensation as provided by this |
|
section only for the taxable entity's own employees that are not |
|
covered [assigned] employees. |
|
(e) Subject to the other provisions of this section, in |
|
determining compensation, a taxable entity that is a client |
|
[company] that contracts with a professional employer organization |
|
[staff leasing services company] for covered [assigned] employees: |
|
(1) shall include payments made to the professional |
|
employer organization [staff leasing services company] for wages |
|
and benefits for the covered [assigned] employees as if the covered |
|
[assigned] employees were actual employees of the entity; |
|
(2) may not include an administrative fee charged by |
|
the professional employer organization [staff leasing services
|
|
company] for the provision of the covered [assigned] employees; and |
|
(3) may not include any other amount in relation to the |
|
covered [assigned] employees, including payroll taxes. |
|
SECTION 27. Section 171.2125, Tax Code, is amended to read |
|
as follows: |
|
Sec. 171.2125. CALCULATING COST OF GOODS OR COMPENSATION IN |
|
PROFESSIONAL EMPLOYER SERVICES [STAFF LEASING] ARRANGEMENTS. In |
|
calculating cost of goods sold or compensation, a taxable entity |
|
that is a client [company] of a professional employer organization |
|
[staff leasing services company] shall rely on information provided |
|
by the professional employer organization [staff leasing services
|
|
company] on a form promulgated by the comptroller or an invoice. |
|
SECTION 28. The following laws are repealed: |
|
(1) Subdivision (2), Section 91.001, Labor Code; |
|
(2) Section 91.043, Labor Code; and |
|
(3) Subdivision (2), Section 171.0001, Tax Code. |
|
SECTION 29. (a) Not later than January 1, 2014, the Texas |
|
Commission of Licensing and Regulation shall adopt any rules |
|
necessary to administer Chapter 91, Labor Code, as amended by this |
|
Act. |
|
(b) The changes in law made by this Act apply only to a |
|
professional employer services agreement entered into on or after |
|
the effective date of this Act. An agreement entered into before |
|
the effective date of this Act is governed by the law in effect on |
|
the date the agreement is entered into, and the former law is |
|
continued in effect for that purpose. |
|
(c) Subsection (c-1), Section 91.042, Labor Code, as added |
|
by this Act, is not intended to change the interpretation of Section |
|
462.308, Insurance Code, but is intended to clarify the application |
|
of that section. |
|
(d) In adopting rules to implement Section 91.0411, Labor |
|
Code, as added by this Act, the commissioner of insurance shall |
|
consider rules adopted with respect to similar benefit plans. |
|
SECTION 30. This Act takes effect September 1, 2013. |
|
|
|
|
|
|
|
|
______________________________ |
______________________________ |
|
President of the Senate |
Speaker of the House |
|
|
I hereby certify that S.B. No. 1286 passed the Senate on |
|
April 4, 2013, by the following vote: Yeas 30, Nays 0; and that the |
|
Senate concurred in House amendment on May 7, 2013, by the following |
|
vote: Yeas 30, Nays 0. |
|
|
|
|
______________________________ |
|
Secretary of the Senate |
|
|
I hereby certify that S.B. No. 1286 passed the House, with |
|
amendment, on April 26, 2013, by the following vote: Yeas 138, |
|
Nays 0, one present not voting. |
|
|
|
|
______________________________ |
|
Chief Clerk of the House |
|
|
|
|
|
Approved: |
|
|
|
______________________________ |
|
Date |
|
|
|
|
|
______________________________ |
|
Governor |