By: Williams S.B. No. 1427
(In the Senate - Filed March 6, 2009; March 17, 2009, read
first time and referred to Committee on Business and Commerce;
April 14, 2009, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; April 14, 2009,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1427 By: Eltife
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of staff leasing services.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 91.001, Labor Code, is amended by adding
Subdivisions (2-a) and (18) to read as follows:
(2-a) "Assurance organization" means an independent
entity approved by the commission that:
(A) provides a national program of accreditation
and financial assurance for staff leasing services companies;
(B) has documented qualifications, standards,
and procedures acceptable to the department; and
(C) agrees to provide information, compliance
monitoring services, and financial assurance useful to the
department in accomplishing the provisions of this chapter.
(18) "Working capital" of an applicant means the
applicant's current assets minus the applicant's current
liabilities as determined by generally accepted accounting
principles.
SECTION 2. Section 91.014, Labor Code, is amended to read as
follows:
Sec. 91.014. WORKING CAPITAL [NET WORTH] REQUIREMENTS.
(a) An applicant for an original or renewal license must
demonstrate positive working capital in the following amounts [a
net worth as follows]:
(1) $50,000 if the applicant employs fewer than 250
assigned employees;
(2) $75,000 if the applicant employs at least 250 but
not more than 750 assigned employees; and
(3) $100,000 if the applicant employs more than 750
assigned employees.
(b) The applicant shall [may] demonstrate the applicant's
working capital [net worth] to the department by providing the
department with the applicant's financial statement [or a copy of
the applicant's most recent federal tax return]. The financial
statement must be prepared in accordance with generally accepted
accounting principles, be audited by an independent certified
public accountant, and be without qualification as to the going
concern status of the applicant. An applicant that has not had
sufficient operating history to have audited financial statements
based on at least 12 months of operations must meet the financial
capacity requirements required by Subsection (a) and provide the
department with financial statements that have been reviewed by a
certified public accountant. The applicant may [also] satisfy
any deficiencies in the working capital [the net worth] requirement
through guarantees, letters of credit, a bond in an amount that
demonstrates compliance with the amounts required under
[requirements of] Subsection (a), or other security acceptable to
the department. A guaranty is not acceptable to satisfy this
subsection unless the applicant submits sufficient evidence to
satisfy the department that the guarantor has adequate resources to
satisfy the obligations of the guaranty.
(c) [In computing net worth, an applicant shall include
adequate reserves for all taxes and insurance, including reserves
for claims incurred but not paid and for claims incurred but not
reported under plans of self-insurance for health benefits. The
computation of net worth by an applicant is to be made according to
Section 448, Internal Revenue Code (26 U.S.C. Section 448).
[(d) A document submitted to establish net worth must show
the net worth on a date not earlier than nine months before the date
on which the application is submitted. A document submitted to
establish net worth must be prepared or certified by an independent
certified public accountant.] Information submitted to or
maintained by the department is subject to Chapter 552, Government
Code, other than information related to:
(1) identification of client companies;
(2) working capital [net worth];
(3) financial statements; or
(4) federal tax returns.
SECTION 3. Section 91.020, Labor Code, is amended to read as
follows:
Sec. 91.020. GROUNDS FOR DISCIPLINARY ACTION. The
department may take disciplinary action against a license holder on
any of the following grounds:
(1) engaging in staff leasing services or offering to
engage in the provision of staff leasing services without a
license;
(2) transferring or attempting to transfer a license
issued under this chapter;
(3) violating this chapter or any order or rule issued
by the executive director or commission under this chapter;
(4) failing after the 31st day after the date on which
a felony conviction of a controlling person is final to notify the
department in writing of the conviction;
(5) failing to cooperate with an investigation,
examination, or audit of the license holder's records conducted by
the license holder's insurance company or the insurance company's
designee, as allowed by the insurance contract or as authorized by
law by the Texas Department of Insurance;
(6) failing after the 31st day after the effective
date of a change in ownership, principal business address, or the
address of accounts and records to notify the department and the
Texas Department of Insurance of the change;
(7) failing to correct any tax filings or payment
deficiencies within a reasonable time as determined by the
executive director;
(8) refusing, after reasonable notice, to meet
reasonable health and safety requirements within the license
holder's control and made known to the license holder by a federal
or state agency;
(9) being delinquent in the payment of the license
holder's insurance premiums other than those subject to a
legitimate dispute;
(10) being delinquent in the payment of any employee
benefit plan premiums or contributions other than those subject to
a legitimate dispute;
(11) knowingly making a material misrepresentation to
an insurance company or to the department or other governmental
agency;
(12) failing to maintain the working capital [net
worth requirements] required under Section 91.014; or
(13) using staff leasing services to avert or avoid an
existing collective bargaining agreement.
SECTION 4. Subchapter B, Chapter 91, Labor Code, is amended
by adding Section 91.021 to read as follows:
Sec. 91.021. ELECTRONIC FILING AND COMPLIANCE. (a) The
commission may adopt rules to permit the acceptance of electronic
filings under this chapter, including the filing of applications,
documents, reports, and other documents required by this chapter.
The rules may provide for the acceptance of electronic filing and
other assurance by an assurance organization, qualified and
approved by the commission, that provides satisfactory assurance
and documentation of compliance acceptable to the department that
meets or exceeds the requirements of this chapter.
(b) A staff leasing services company may authorize an
assurance organization that is qualified and approved by the
commission to act on its behalf in complying with the licensing
requirements of this chapter, including the electronic filing of
information and the payment of application and licensing fees. Use
of an assurance organization is optional and is not mandatory for a
staff leasing services company.
(c) Nothing in this section may be construed to change or
affect the department's authority to issue licenses, revoke
licenses, conduct investigations, or enforce any provision of this
chapter.
SECTION 5. Subchapter D, Chapter 91, Labor Code, is amended
by adding Section 91.050 to read as follows:
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, 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 assigned employees of the client.
This subsection applies even if the 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
co-employed by the client. Assigned employees working for other
clients of the staff leasing services company may not be included in
the computation.
(c) Each 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.
SECTION 6. Subdivision (12), Section 91.001, Labor Code, is
repealed.
SECTION 7. The changes in law made by this Act regarding the
qualifications for or the issuance or renewal of a license apply to
a staff leasing services license issued or renewed under Chapter
91, Labor Code, on or after December 31, 2010. A license issued or
renewed before December 31, 2010, is governed by the law as it
existed immediately before that date, and that law is continued in
effect for that purpose.
SECTION 8. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2009.
(b) Section 91.014, Labor Code, as amended by this Act,
takes effect December 31, 2011.
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