Texas 2013 - 83rd Regular

Texas House Bill HB2763 Compare Versions

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1	1	83R21019 MAW-F
2	2	By: Hunter H.B. No. 2763
3	3	Substitute the following for H.B. No. 2763:
4	4	By: Bohac C.S.H.B. No. 2763
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the regulation of professional employer services;
10	10	authorizing fees.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. The heading to Chapter 91, Labor Code, is amended
13	13	to read as follows:
14	14	CHAPTER 91. PROFESSIONAL EMPLOYER ORGANIZATIONS [STAFF LEASING
15	15	SERVICES]
16	16	SECTION 2. Section 91.001, Labor Code, is amended by
17	17	amending Subdivisions (1), (2-a), (3), (7), (11), (14), (15), (16),
18	18	and (17) and adding Subdivisions (3-a), (3-b), and (7-a) to read as
19	19	follows:
20	20	(1) "Applicant" means a person [business entity]
21	21	applying for a license or the renewal of a license under this
22	22	chapter.
23	23	(2-a) "Assurance organization" means an independent
24	24	entity approved by the commission that:
25	25	(A) provides a national program of accreditation
26	26	and financial assurance for professional employer organizations
27	27	[staff leasing services companies];
28	28	(B) has documented qualifications, standards,
29	29	and procedures acceptable to the department; and
30	30	(C) agrees to provide information, compliance
31	31	monitoring services, and financial assurance useful to the
32	32	department in accomplishing the provisions of this chapter.
33	33	(3) "Client [company]" means any [a] person who enters
34	34	into a professional employer services agreement [that contracts]
35	35	with a license holder [and is assigned employees by the license
36	36	holder under that contract].
37	37	(3-a) "Coemployer" means a professional employer
38	38	organization or a client that is a party to a coemployment
39	39	relationship.
40	40	(3-b) "Coemployment relationship" means a contractual
41	41	relationship between a client and a professional employer
42	42	organization that involves the sharing of employment
43	43	responsibilities with or allocation of employment responsibilities
44	44	to covered employees in accordance with the professional employer
45	45	services agreement and this chapter.
46	46	(7) "Controlling person" means an individual who:
47	47	(A) possesses direct or indirect control of 25
48	48	percent or more of the voting securities of a business entity
49	49	[corporation] that offers or proposes to offer professional
50	50	employer [staff leasing] services;
51	51	(B) possesses the authority to set policy and
52	52	direct management of a business entity [company] that offers or
53	53	proposes to offer professional employer [staff leasing] services;
54	54	(C) is employed, appointed, or authorized by a
55	55	business entity [company] that offers or proposes to offer
56	56	professional employer [staff leasing] services to enter into a
57	57	professional employer services agreement [contract] with a client
58	58	[company] on behalf of the business entity [company]; or
59	59	(D) a person who is an officer or director of a
60	60	corporation or a general partner of a partnership that offers or
61	61	proposes to offer professional employer [staff leasing] services.
62	62	(7-a) "Covered employee" means an individual having a
63	63	coemployment relationship with a professional employer
64	64	organization and a client.
65	65	(11) "License holder" means a person licensed under
66	66	this chapter to provide professional employer [staff leasing]
67	67	services.
68	68	(14) "Professional employer services" means the
69	69	services provided through coemployment relationships in which all
70	70	or a majority of the employees providing services to a client or to
71	71	a division or work unit of a client are covered employees. ["Staff
72	72	leasing services" means an arrangement by which employees of a
73	73	license holder are assigned to work at a client company and in which
74	74	employment responsibilities are in fact shared by the license
75	75	holder and the client company, the employee's assignment is
76	76	intended to be of a long-term or continuing nature, rather than
77	77	temporary or seasonal in nature, and a majority of the work force at
78	78	a client company worksite or a specialized group within that work
79	79	force consists of assigned employees of the license holder. The
80	80	term includes professional employer organization services.] The
81	81	term does not include:
82	82	(A) temporary help;
83	83	(B) an independent contractor;
84	84	(C) the provision of services that otherwise meet
85	85	the definition of "professional employer ["staff leasing]
86	86	services" by one person solely to other persons who are related to
87	87	the service provider by common ownership; or
88	88	(D) a temporary common worker employer as defined
89	89	by Chapter 92.
90	90	(15) "Professional employer organization" ["Staff
91	91	leasing services company"] means a business entity that offers
92	92	professional employer [staff leasing] services. [The term includes
93	93	a professional employer organization.]
94	94	(16) "Temporary help" means an arrangement by which an
95	95	organization hires its own employees and assigns them to a company
96	96	[client] to support or supplement the company's [client's] work
97	97	force in a special work situation, including:
98	98	(A) an employee absence;
99	99	(B) a temporary skill shortage;
100	100	(C) a seasonal workload; or
101	101	(D) a special assignment or project.
102	102	(17) "Wages" means:
103	103	(A) compensation for labor or services rendered
104	104	by a covered [an assigned] employee, whether computed on a time,
105	105	task, piece, or other basis; and
106	106	(B) vacation pay, holiday pay, sick leave pay,
107	107	parental leave pay, severance pay, bonuses, commissions, stock
108	108	option grants, or deferred compensation owed to a covered [an
109	109	assigned] employee under a written agreement.
110	110	SECTION 3. Chapter 91, Labor Code, is amended by adding
111	111	Sections 91.0011 and 91.0012 to read as follows:
112	112	Sec. 91.0011. COEMPLOYMENT RELATIONSHIP. (a) A
113	113	coemployment relationship is intended to be an ongoing relationship
114	114	rather than a temporary or specific one, in which the rights,
115	115	duties, and obligations of an employer that arise out of an
116	116	employment relationship are allocated between coemployers under a
117	117	professional employer services agreement. Coemployment is not a
118	118	joint employment arrangement.
119	119	(b) In a coemployment relationship:
120	120	(1) the professional employer organization may
121	121	enforce only those employer rights and is subject to only those
122	122	obligations specifically allocated to the professional employer
123	123	organization by the professional employer services agreement or
124	124	this chapter;
125	125	(2) the client may enforce any right and is obligated
126	126	to perform those employer obligations allocated to the client by
127	127	the professional employer services agreement or this chapter; and
128	128	(3) the client may enforce any right and is obligated
129	129	to perform any obligation of an employer not specifically allocated
130	130	to the professional employer organization by the professional
131	131	employer services agreement or this chapter.
132	132	Sec. 91.0012. COVERED EMPLOYEE. (a) A covered employee
133	133	must meet all the following criteria:
134	134	(1) the individual must receive written notice of the
135	135	coemployment relationship with the professional employer
136	136	organization; and
137	137	(2) the individual's coemployment relationship must be
138	138	under a professional employer services agreement subject to this
139	139	chapter.
140	140	(b) An individual who is an executive employee, as described
141	141	by Section 406.097, of the client is a covered employee, except to
142	142	the extent the professional employer organization and the client
143	143	expressly agree in the professional employer services agreement
144	144	that the individual is not a covered employee.
145	145	SECTION 4. Sections 91.002(b) and (c), Labor Code, are
146	146	amended to read as follows:
147	147	(b) Each person who offers professional employer [staff
148	148	leasing] services is subject to this chapter and the rules adopted
149	149	by the commission.
150	150	(c) Notwithstanding any other provision of this chapter,
151	151	nothing in this chapter preempts the existing statutory or
152	152	rulemaking authority of any other state agency or entity to
153	153	regulate professional employer [staff leasing] services in a manner
154	154	consistent with the statutory authority of that state agency or
155	155	entity.
156	156	SECTION 5. Section 91.003(a), Labor Code, is amended to
157	157	read as follows:
158	158	(a) Each state agency that in performing duties under other
159	159	law affects the regulation of professional employer [staff leasing]
160	160	services shall cooperate with the department and other state
161	161	agencies as necessary to implement and enforce this chapter.
162	162	SECTION 6. Sections 91.004, 91.005, 91.006, 91.007, 91.011,
163	163	and 91.012, Labor Code, are amended to read as follows:
164	164	Sec. 91.004. EFFECT OF OTHER LAW ON CLIENTS AND EMPLOYEES.
165	165	(a) This chapter does not exempt a client of a license holder, or
166	166	any covered [assigned] employee, from any other license
167	167	requirements imposed under local, state, or federal law.
168	168	(b) A covered [An] employee who is licensed, registered, or
169	169	certified under law [and who is assigned to a client company] is
170	170	considered to be an employee of the client [company] for the purpose
171	171	of that license, registration, or certification.
172	172	(c) A license holder is not engaged in the unauthorized
173	173	practice of an occupation, trade, or profession that is licensed,
174	174	certified, or otherwise regulated by a governmental entity solely
175	175	by entering into a professional employer services [staff leasing]
176	176	agreement with a client [company] and covered [assigned] employees.
177	177	Sec. 91.005. APPLICATION OF CERTAIN PROCUREMENT LAWS. With
178	178	respect to a bid, contract, purchase order, or agreement entered
179	179	into with the state or a political subdivision of the state, a
180	180	client's [client company's] status or certification as a small,
181	181	minority-owned, disadvantaged, or woman-owned business enterprise
182	182	or as a historically underutilized business is not affected because
183	183	the client [company] has entered into a professional employer
184	184	services [an] agreement with a license holder or uses the services
185	185	of a license holder.
186	186	Sec. 91.006. WORKERS' COMPENSATION COVERAGE. (a) A
187	187	certificate of insurance coverage or other evidence of coverage
188	188	showing that either a license holder or a client maintains [a policy
189	189	of] workers' compensation insurance coverage constitutes proof of
190	190	workers' compensation insurance coverage for the license holder and
191	191	the client [company] with respect to all covered employees of the
192	192	license holder and [assigned to] the client [company]. The state
193	193	and a political subdivision of the state shall accept a certificate
194	194	of insurance coverage or other evidence of coverage described by
195	195	this section as proof of workers' compensation coverage under
196	196	Chapter 406.
197	197	(b) For a client [company] that has employees who are not
198	198	covered [assigned] employees under a professional employer [staff
199	199	leasing] services agreement, the state or a political subdivision
200	200	of the state may require the client [company] to furnish separate
201	201	proof of workers' compensation insurance coverage for those
202	202	employees.
203	203	Sec. 91.007. APPLICATION OF LABOR RELATIONS LAWS. This
204	204	chapter does not relieve a client [company] of a right, obligation,
205	205	or duty under:
206	206	(1) Chapter 101;
207	207	(2) the federal National Labor Relations Act (29
208	208	U.S.C. Section 151 et seq.);
209	209	(3) the federal Railway Labor Act (45 U.S.C. Section
210	210	151 et seq.); or
211	211	(4) any other law governing labor relations.
212	212	Sec. 91.011. LICENSE REQUIRED. A person may not engage in
213	213	or offer professional employer [staff leasing] services in this
214	214	state unless the person holds a license issued under this chapter.
215	215	Sec. 91.012. GENERAL LICENSE REQUIREMENTS. To be qualified
216	216	to serve as a controlling person of a license holder under this
217	217	chapter, that person must be at least 18 years of age and have
218	218	educational, managerial, or business experience relevant to:
219	219	(1) operation of a business entity offering
220	220	professional employer [staff leasing] services; or
221	221	(2) service as a controlling person of a professional
222	222	employer organization [staff leasing services company].
223	223	SECTION 7. Sections 91.014(a) and (c), Labor Code, are
224	224	amended to read as follows:
225	225	(a) An applicant for an original or renewal license must
226	226	demonstrate positive working capital in the following amounts:
227	227	(1) $50,000 if the applicant employs fewer than 250
228	228	covered [assigned] employees;
229	229	(2) $75,000 if the applicant employs at least 250 but
230	230	not more than 750 covered [assigned] employees; and
231	231	(3) $100,000 if the applicant employs more than 750
232	232	covered [assigned] employees.
233	233	(c) Information submitted to or maintained by the
234	234	department is subject to Chapter 552, Government Code, other than
235	235	information related to:
236	236	(1) identification of clients [client companies];
237	237	(2) working capital;
238	238	(3) financial statements; or
239	239	(4) federal tax returns.
240	240	SECTION 8. Section 91.015(a), Labor Code, is amended to
241	241	read as follows:
242	242	(a) To receive a professional employer organization [staff
243	243	leasing services company] original license, a person shall file
244	244	with the department a written application accompanied by the
245	245	application fee.
246	246	SECTION 9. Sections 91.017(a) and (c), Labor Code, are
247	247	amended to read as follows:
248	248	(a) Each applicant for an original or renewal professional
249	249	employer organization [staff leasing services company] license
250	250	shall pay to the department before the issuance of the license or
251	251	license renewal a fee set by the commission by rule.
252	252	(c) Fees collected by the department under this chapter may
253	253	[shall] be used only to implement this chapter.
254	254	SECTION 10. Sections 91.018(e) and (f), Labor Code, are
255	255	amended to read as follows:
256	256	(e) A license holder offering professional employer [staff
257	257	leasing] services in more than one state may advertise in this state
258	258	using the name of its parent company or under a trade name,
259	259	trademark, or service mark. The trade name, trademark, service
260	260	mark, or parent company name must be listed on the license in
261	261	addition to the licensed name used by the license holder in this
262	262	state.
263	263	(f) Each written proposal provided to a prospective client
264	264	[company] and each contract between a license holder and a client
265	265	[company] or covered [assigned] employee shall clearly identify the
266	266	name of the license holder. A proposal or contract may also
267	267	identify the trade name, trademark, service mark, or parent company
268	268	name of the license holder. A license holder may use written
269	269	materials including forms, benefit information, letterhead, and
270	270	business cards that bear only the trade name, trademark, service
271	271	mark, or parent company name of the license holder.
272	272	SECTION 11. Sections 91.019(a), (b), and (c), Labor Code,
273	273	are amended to read as follows:
274	274	(a) The commission by rule shall provide for the issuance of
275	275	a limited license to a person who seeks to offer limited
276	276	professional employer [staff leasing] services in this state.
277	277	(b) For purposes of this section, a professional employer
278	278	organization [staff leasing services company] is considered to be
279	279	offering limited professional employer [staff leasing] services if
280	280	the professional employer organization [staff leasing services
281	281	company]:
282	282	(1) employs fewer than 50 covered [assigned] employees
283	283	in this state at any one time;
284	284	(2) does not provide covered [assigned] employees to a
285	285	client [company] based or domiciled in this state; and
286	286	(3) does not maintain an office in this state or
287	287	solicit clients [client companies] located or domiciled in this
288	288	state.
289	289	(c) A professional employer organization [staff leasing
290	290	services company] that offers limited professional employer [staff
291	291	leasing] services shall complete the application forms and pay the
292	292	fees for a limited license as prescribed by the department. A
293	293	limited license is valid for one year from the date of issuance and
294	294	may be renewed annually on submission of a renewal application and
295	295	payment of the required fees.
296	296	SECTION 12. Section 91.020, Labor Code, is amended to read
297	297	as follows:
298	298	Sec. 91.020. GROUNDS FOR DISCIPLINARY ACTION. The
299	299	department may take disciplinary action against a license holder on
300	300	any of the following grounds:
301	301	(1) engaging in professional employer [staff leasing]
302	302	services or offering to engage in the provision of professional
303	303	employer [staff leasing] services without a license;
304	304	(2) transferring or attempting to transfer a license
305	305	issued under this chapter;
306	306	(3) violating this chapter or any order or rule issued
307	307	by the executive director or commission under this chapter;
308	308	(4) failing after the 31st day after the date on which
309	309	a felony conviction of a controlling person is final to notify the
310	310	department in writing of the conviction;
311	311	(5) failing to cooperate with an investigation,
312	312	examination, or audit of the license holder's records conducted by
313	313	the license holder's insurance company or the insurance company's
314	314	designee, as allowed by the insurance contract or as authorized by
315	315	law by the Texas Department of Insurance;
316	316	(6) failing after the 31st day after the effective
317	317	date of a change in ownership, principal business address, or the
318	318	address of accounts and records to notify the department and the
319	319	Texas Department of Insurance of the change;
320	320	(7) failing to correct any tax filings or payment
321	321	deficiencies within a reasonable time as determined by the
322	322	executive director;
323	323	(8) refusing, after reasonable notice, to meet
324	324	reasonable health and safety requirements within the license
325	325	holder's control and made known to the license holder by a federal
326	326	or state agency;
327	327	(9) being delinquent in the payment of the license
328	328	holder's insurance premiums other than those subject to a
329	329	legitimate dispute;
330	330	(10) being delinquent in the payment of any employee
331	331	benefit plan premiums or contributions other than those subject to
332	332	a legitimate dispute;
333	333	(11) knowingly making a material misrepresentation to
334	334	an insurance company or to the department or other governmental
335	335	agency;
336	336	(12) failing to maintain the working capital required
337	337	under Section 91.014; or
338	338	(13) using professional employer [staff leasing]
339	339	services to avert or avoid an existing collective bargaining
340	340	agreement.
341	341	SECTION 13. Section 91.021(b), Labor Code, is amended to
342	342	read as follows:
343	343	(b) A professional employer organization [staff leasing
344	344	services company] may authorize an assurance organization that is
345	345	qualified and approved by the commission to act on its behalf in
346	346	complying with the licensing requirements of this chapter,
347	347	including the electronic filing of information and the payment of
348	348	application and licensing fees. Use of an assurance organization
349	349	is optional and is not mandatory for a professional employer
350	350	organization [staff leasing services company].
351	351	SECTION 14. Subchapter C, Chapter 91, Labor Code, is
352	352	amended to read as follows:
353	353	SUBCHAPTER C. PROFESSIONAL EMPLOYER SERVICES [STAFF LEASING
354	354	SERVICES] AGREEMENT
355	355	Sec. 91.031. AGREEMENT; NOTICE. (a) A license holder
356	356	shall establish the terms of a professional employer [staff
357	357	leasing] services agreement by a written contract between the
358	358	license holder and the client [company].
359	359	(b) The license holder shall give written notice of the
360	360	agreement as it affects covered [assigned] employees to each
361	361	covered employee [assigned to a client company worksite].
362	362	(c) The written notice required by Subsection (b) must be
363	363	given to each covered [assigned] employee not later than the first
364	364	payday after the date on which that individual becomes a covered [an
365	365	assigned] employee.
366	366	Sec. 91.032. CONTRACT REQUIREMENTS. (a) A professional
367	367	employer services agreement [contract] between a license holder and
368	368	a client [company] must provide that the license holder:
369	369	(1) shares, as provided by Subsection (b), with the
370	370	client [company] the right of direction and control over covered
371	371	employees [assigned to a client's worksites];
372	372	(2) assumes responsibility for the payment of wages to
373	373	the covered [assigned] employees without regard to payments by the
374	374	client to the license holder;
375	375	(3) assumes responsibility for the payment of payroll
376	376	taxes and collection of taxes from payroll on covered [assigned]
377	377	employees;
378	378	(4) shares, as provided by Subsection (b), with the
379	379	client [company] the right to hire, fire, discipline, and reassign
380	380	the covered [assigned] employees; and
381	381	(5) shares, as provided by Subsection (b), with the
382	382	client [company] the right of direction and control over the
383	383	adoption of employment and safety policies and the management of
384	384	workers' compensation claims, claim filings, and related
385	385	procedures.
386	386	(b) Notwithstanding any other provision of this chapter, a
387	387	client [company] retains sole responsibility for:
388	388	(1) the direction and control of covered [assigned]
389	389	employees as necessary to conduct the client's [client company's]
390	390	business, discharge any applicable fiduciary duty, or comply with
391	391	any licensure, regulatory, or statutory requirement;
392	392	(2) goods and services produced by the client
393	393	[company]; and
394	394	(3) the acts, errors, and omissions of covered
395	395	[assigned] employees committed within the scope of the client's
396	396	[client company's] business.
397	397	(c) Notwithstanding Subsection (a)(2), a client [company]
398	398	is solely obligated to pay any wages for which:
399	399	(1) obligation to pay is created by an agreement,
400	400	contract, plan, or policy between the client [company] and the
401	401	covered [assigned] employee; and
402	402	(2) the professional employer organization [staff
403	403	leasing services company] has not contracted to pay.
404	404	(d) Each professional employer organization [staff leasing
405	405	services company] shall disclose the requirements of Subsection (c)
406	406	in writing to each covered [assigned] employee.
407	407	SECTION 15. Section 91.041, Labor Code, is amended by
408	408	amending Subsections (a) and (b) and adding Subsections (a-1) and
409	409	(a-2) to read as follows:
410	410	(a) A client and license holder are each considered an
411	411	employer under the laws of this state for purposes of sponsoring
412	412	retirement and welfare benefit plans for covered employees. [A
413	413	license holder may sponsor and maintain employee benefit plans for
414	414	the benefit of assigned employees. A client company may include
415	415	assigned employees in any benefit plan sponsored by the client
416	416	company.]
417	417	(a-1) A license holder may sponsor a single welfare benefit
418	418	plan under which eligible covered employees of one or more clients
419	419	may elect to participate.
420	420	(a-2) A fully insured welfare benefit plan offered to the
421	421	covered employees of a license holder and provided by an insurance
422	422	company authorized to provide that insurance in this state or a
423	423	self-funded health benefit plan sponsored by a license holder as
424	424	provided by Section 91.0411 shall be treated for purposes of state
425	425	law as a single employer welfare benefit plan.
426	426	(b) With respect to any insurance or benefit plan provided
427	427	by a license holder for the benefit of its assigned employees, a
428	428	license holder shall disclose the following information to the
429	429	department, each client [company], and its covered [assigned]
430	430	employees:
431	431	(1) the type of coverage;
432	432	(2) the identity of each insurer for each type of
433	433	coverage;
434	434	(3) the amount of benefits provided for each type of
435	435	coverage and to whom or in whose behalf benefits are to be paid;
436	436	(4) the policy limits on each insurance policy; and
437	437	(5) whether the coverage is fully insured, partially
438	438	insured, or fully self-funded.
439	439	SECTION 16. Subchapter D, Chapter 91, Labor Code, is
440	440	amended by adding Section 91.0411 to read as follows:
441	441	Sec. 91.0411. SELF-FUNDED HEALTH BENEFIT PLAN. (a) In this
442	442	section, "commissioner" means the commissioner of insurance.
443	443	(b) A license holder may sponsor a benefit plan that is not
444	444	fully insured if the license holder meets the requirements of this
445	445	section and is approved to sponsor the plan by the commissioner.
446	446	(c) The commissioner may, on notice and opportunity for all
447	447	interested persons to be heard, adopt rules and issue orders
448	448	reasonably necessary to augment and implement the regulation of
449	449	benefit plans sponsored by a license holder that are not fully
450	450	insured. The commissioner may not adopt a rule that requires
451	451	clients or covered employees to be members of an association or
452	452	group in the same trade or industry in order to be covered by a
453	453	license holder-sponsored benefit plan that is not fully insured.
454	454	The rules must include all requirements that must be met by the
455	455	license holder and the plan, including:
456	456	(1) initial and final approval requirements;
457	457	(2) authority to prescribe forms and items to be
458	458	submitted to the commissioner by the license holder;
459	459	(3) a fidelity bond;
460	460	(4) use of an independent actuary;
461	461	(5) use of a third-party administrator;
462	462	(6) authority for the commissioner to examine an
463	463	application or a plan;
464	464	(7) the minimum number of clients and covered
465	465	employees covered by the plan;
466	466	(8) standards for those natural persons managing the
467	467	plan;
468	468	(9) the minimum amount of gross contributions;
469	469	(10) the minimum amount of written commitment, binder,
470	470	or policy for stop-loss insurance;
471	471	(11) the minimum amount of reserves; and
472	472	(12) a fee in an amount reasonable and necessary to
473	473	defray the costs of administering this section to be deposited to
474	474	the credit of the operating fund of the Texas Department of
475	475	Insurance.
476	476	(d) Information submitted under this section is
477	477	confidential and not subject to disclosure under Chapter 552,
478	478	Government Code.
479	479	(e) Each license holder under this section shall appoint the
480	480	commissioner as its resident agent for purposes of service of
481	481	process. The fee for that service is $50, payable at the time of
482	482	appointment.
483	483	(f) The commissioner may examine the affairs of any plan and
484	484	shall have access to the records of the plan. The commissioner may
485	485	examine under oath a manager or employee of the license holder in
486	486	connection with the plan.
487	487	(g) In addition to any requirement or remedy under a law,
488	488	the commissioner may suspend, revoke, or limit the authorization of
489	489	a plan if the commissioner determines, after notice and hearing,
490	490	that the plan does not comply with this section. The commissioner
491	491	may notify the attorney general of a violation of this section, and
492	492	the attorney general may apply to a district court in Travis County
493	493	for leave to file suit in the nature of quo warranto or for
494	494	injunctive relief or both.
495	495	(h) A plan under this section is subject to Chapters 401,
496	496	404, 441, and 443, Insurance Code.
497	497	SECTION 17. Section 91.042, Labor Code, is amended by
498	498	amending Subsections (a) through (h) and adding Subsections (a-1),
499	499	(a-2), and (c-1) to read as follows:
500	500	(a) A license holder or client may elect to obtain workers'
501	501	compensation insurance coverage for covered [the license holder's
502	502	assigned] employees through an insurance company as defined under
503	503	Section 401.011(28) or through self-insurance as provided under
504	504	Chapter 407.
505	505	(a-1) The client and the professional employer organization
506	506	shall specify in the professional employer services agreement
507	507	whether the parties have elected to obtain workers' compensation
508	508	insurance coverage for the covered employees and shall specify
509	509	which party must maintain coverage. If the license holder
510	510	maintains workers' compensation insurance coverage for the client,
511	511	an individual who is an executive employee, as described by Section
512	512	406.097, of the client is eligible to be treated as an executive
513	513	employee for premium calculation and classification purposes. A
514	514	copy of the professional employer services agreement must be
515	515	provided to the Texas Department of Insurance on request.
516	516	Information obtained by the Texas Department of Insurance under
517	517	this section is confidential and not subject to disclosure under
518	518	Chapter 552, Government Code.
519	519	(a-2) If the client elects to maintain workers'
520	520	compensation insurance coverage for the covered employees under the
521	521	client's policy or other coverage, the client shall pay workers'
522	522	compensation insurance premiums for the covered employees based on
523	523	the experience rating of the client.
524	524	(b) If a license holder maintains workers' compensation
525	525	insurance coverage for covered employees, the license holder shall
526	526	pay workers' compensation insurance premiums for the covered
527	527	employees based on the experience rating of the client [company]
528	528	for the first two years the covered employees are covered under the
529	529	professional employer organization's policy [client company has a
530	530	contract with the license holder] and as further provided by rule by
531	531	the Texas Department of Insurance.
532	532	(c) For workers' compensation insurance purposes, a license
533	533	holder and the license holder's client [company] shall be
534	534	coemployers. If either a license holder or a client elects to
535	535	obtain workers' compensation insurance coverage for covered
536	536	employees, the client [company] and the license holder are subject
537	537	to Sections 406.005, 406.034, [and] 408.001, and 411.032.
538	538	(c-1) Notwithstanding Subsection (c), for purposes of
539	539	Section 462.308(a)(2), Insurance Code, the client is considered to
540	540	be the insured employer.
541	541	(d) If a license holder or a client does not elect to obtain
542	542	workers' compensation insurance coverage for covered employees,
543	543	both the license holder and the client [company] are subject to
544	544	Sections 406.004, 406.005, [and] 406.033, and 411.032.
545	545	(e) After the expiration of the two-year period under
546	546	Subsection (b), if the client elects to obtain [company obtains a
547	547	new] workers' compensation insurance coverage for covered
548	548	employees through coverage maintained by the client, or if the
549	549	professional employer services agreement is terminated and the
550	550	client elects to maintain, through coverage maintained by the
551	551	client or through coverage maintained by a successor professional
552	552	employer organization, workers' compensation insurance coverage
553	553	for employees previously covered by the former professional
554	554	employer organization's policy [policy in the company's own name or
555	555	adds the company's former assigned workers to an existing policy],
556	556	the premium for the workers' compensation insurance coverage for
557	557	the client [policy of the company] shall be based on the lower of:
558	558	(1) the experience modifier of the client [company]
559	559	before being covered under the professional employer
560	560	organization's coverage [entering into the staff leasing
561	561	arrangement]; or
562	562	(2) the experience modifier of the license holder at
563	563	the time the client's coverage under the professional employer
564	564	organization's coverage is [staff leasing arrangement] terminated.
565	565	(f) On request, an insurer [the Texas Department of
566	566	Insurance] shall provide the necessary computations to the
567	567	prospective workers' compensation insurer of the client [company]
568	568	to comply with Subsection (e).
569	569	(g) On the written request of a client [company], a license
570	570	holder that elects to provide workers' compensation insurance for
571	571	covered [assigned] employees shall provide to the client [company]
572	572	a list of:
573	573	(1) claims associated with that client [company] made
574	574	against the license holder's workers' compensation policy; and
575	575	(2) payments made and reserves established on each
576	576	claim.
577	577	(h) The license holder shall provide the information
578	578	described by Subsection (g) in writing from the license holder's
579	579	own records, if the license holder is a qualified self-insurer, or
580	580	from information the license holder received from the license
581	581	holder's workers' compensation insurance provider following the
582	582	license holder's request under Section 2051.151, Insurance Code,
583	583	not later than the 60th day after the date the license holder
584	584	receives the client's [client company's] written request. For
585	585	purposes of this subsection, information is considered to be
586	586	provided to the client [company] on the date the information is:
587	587	(1) received by the United States Postal Service; or
588	588	(2) personally delivered to the client [company].
589	589	SECTION 18. Sections 91.044, 91.046, 91.048, 91.050,
590	590	91.061, 92.012, and 201.030, Labor Code, are amended to read as
591	591	follows:
592	592	Sec. 91.044. UNEMPLOYMENT TAXES; PAYROLL. (a) A license
593	593	holder is the employer of a covered [an assigned] employee for
594	594	purposes of Subtitle A, Title 4, and, except for wages subject to
595	595	Section 91.032(c), for purposes of Chapter 61. In addition to any
596	596	other reports required to be filed by law, a license holder shall
597	597	report quarterly to the Texas Workforce Commission on a form
598	598	prescribed by the Texas Workforce Commission the name, address,
599	599	telephone number, federal income tax identification number, and
600	600	classification code as described in the "Standard Industrial
601	601	Classification Manual" published by the United States Office of
602	602	Management and Budget of each client [company].
603	603	(b) For purposes of Subtitle A, Title 4, in the event of the
604	604	termination of a contract between a license holder and a client
605	605	[company] or the failure by a professional employer organization
606	606	[staff leasing entity] to submit reports or make tax payments as
607	607	required by that subtitle, the contracting client [company] shall
608	608	be treated as a new employer without a previous experience record
609	609	unless that client [company] is otherwise eligible for an
610	610	experience rating.
611	611	Sec. 91.046. CONTRACTUAL DUTIES. Each license holder is
612	612	responsible for the license holder's contractual duties and
613	613	responsibilities to manage, maintain, collect, and make timely
614	614	payments for:
615	615	(1) insurance premiums;
616	616	(2) benefit and welfare plans;
617	617	(3) other employee withholding; and
618	618	(4) any other expressed responsibility within the
619	619	scope of the professional employer services agreement [contract]
620	620	for fulfilling the duties imposed under this section and Sections
621	621	91.032, 91.047, and 91.048.
622	622	Sec. 91.048. REQUIRED INFORMATION. Each license holder
623	623	shall:
624	624	(1) maintain adequate books and records regarding the
625	625	license holder's duties and responsibilities;
626	626	(2) maintain and make available at all times to the
627	627	executive director the following information, which shall be
628	628	treated as proprietary and confidential and is exempt from
629	629	disclosure to persons other than other governmental agencies having
630	630	a reasonable, legitimate purpose for obtaining the information:
631	631	(A) the correct name, address, and telephone
632	632	number of each client [company];
633	633	(B) each professional employer services
634	634	agreement with a client [company contract]; and
635	635	(C) a listing by classification code as described
636	636	in the "Standard Industrial Classification Manual" published by the
637	637	United States Office of Management and Budget, of each client
638	638	[company];
639	639	(3) notify the department of any addition or deletion
640	640	of a controlling person as listed on the license application or
641	641	renewal form by providing the name of the person not later than the
642	642	45th day after the date on which the person is added or deleted as a
643	643	controlling person; and
644	644	(4) provide a biographical history to the department
645	645	in connection with the addition of a new controlling person.
646	646	Sec. 91.050. TAX CREDITS AND OTHER INCENTIVES. (a) For the
647	647	purpose of determining tax credits, grants, and other economic
648	648	incentives provided by this state or other governmental entities
649	649	that are based on employment, covered [assigned] employees are
650	650	considered employees of the client and the client is solely
651	651	entitled to the benefit of any tax credit, economic incentive, or
652	652	other benefit arising from the employment of covered [assigned]
653	653	employees of the client. This subsection applies even if the
654	654	professional employer organization [staff leasing services
655	655	company] is the reporting employer for federal income tax purposes.
656	656	(b) If a grant or the amount of any incentive described by
657	657	Subsection (a) is based on the number of employees, each client
658	658	shall be treated as employing only those [assigned] employees
659	659	coemployed [co-employed] by the client. Covered [Assigned]
660	660	employees working for other clients of the professional employer
661	661	organization [staff leasing services company] may not be included
662	662	in the computation.
663	663	(c) Each professional employer organization [staff leasing
664	664	services company] shall provide, on the request of a client or an
665	665	agency of this state, employment information reasonably required by
666	666	the state agency responsible for the administration of any tax
667	667	credit or economic incentive described by Subsection (a) and
668	668	necessary to support a request, claim, application, or other action
669	669	by a client seeking the tax credit or economic incentive.
670	670	Sec. 91.061. PROHIBITED ACTS. A person may not:
671	671	(1) engage in or offer professional employer [staff
672	672	leasing] services without holding a license under this chapter as a
673	673	professional employer organization [staff leasing services
674	674	company];
675	675	(2) use the name, [or] title, or designation
676	676	"professional employer organization," "PEO," "staff leasing
677	677	company," "employee leasing company," "licensed professional
678	678	employer organization," "professional employer organization
679	679	services company," "professional employer organization company,"
680	680	["licensed staff leasing company," "staff leasing services
681	681	company," "professional employer organization,"] or
682	682	"administrative employer" or otherwise represent that the entity is
683	683	licensed under this chapter unless the entity holds a license
684	684	issued under this chapter;
685	685	(3) represent as the person's own the license of
686	686	another person or represent that a person is licensed if the person
687	687	does not hold a license;
688	688	(4) give materially false or forged evidence to the
689	689	department in connection with obtaining or renewing a license or in
690	690	connection with disciplinary proceedings under this chapter; or
691	691	(5) use or attempt to use a license that has expired or
692	692	been revoked.
693	693	Sec. 92.012. EXEMPTIONS FROM LICENSING REQUIREMENT. This
694	694	chapter does not apply to:
695	695	(1) a temporary skilled labor agency;
696	696	(2) a professional employer organization [staff
697	697	leasing services company];
698	698	(3) an employment counselor;
699	699	(4) a talent agency;
700	700	(5) a labor union hiring hall;
701	701	(6) a temporary common worker employer that does not
702	702	operate a labor hall;
703	703	(7) a labor bureau or employment office operated by a
704	704	person for the sole purpose of employing an individual for the
705	705	person's own use; or
706	706	(8) an employment service or labor training program
707	707	provided by a governmental entity.
708	708	Sec. 201.030. PROFESSIONAL EMPLOYER ORGANIZATION [STAFF
709	709	LEASING SERVICES COMPANY]. For the purposes of this subtitle,
710	710	"professional employer organization" ["staff leasing services
711	711	company"] has the meaning assigned by Section 91.001.
712	712	SECTION 19. Section 207.045(i), Labor Code, is amended to
713	713	read as follows:
714	714	(i) A covered [An assigned] employee of a professional
715	715	employer organization [staff leasing services company] is
716	716	considered to have left the covered [assigned] employee's last work
717	717	without good cause if the professional employer organization [staff
718	718	leasing services company] demonstrates that:
719	719	(1) at the time the employee's assignment to a client
720	720	[company] concluded, the professional employer organization [staff
721	721	leasing services company], or the client [company] acting on the
722	722	professional employer organization's [staff leasing services
723	723	company's] behalf, gave written notice and written instructions to
724	724	the covered [assigned] employee to contact the professional
725	725	employer organization [staff leasing services company] for a new
726	726	assignment; and
727	727	(2) the covered [assigned] employee did not contact
728	728	the professional employer organization [staff leasing services
729	729	company] regarding reassignment or continued employment; provided
730	730	that the covered [assigned] employee may show that good cause
731	731	existed for the covered [assigned] employee's failure to contact
732	732	the professional employer organization [staff leasing services
733	733	company].
734	734	SECTION 20. The heading to Section 415.011, Labor Code, is
735	735	amended to read as follows:
736	736	Sec. 415.011. NOTICE OF PROFESSIONAL EMPLOYER ORGANIZATION
737	737	[STAFF LEASING SERVICES COMPANY] WORKERS' COMPENSATION CLAIM AND
738	738	PAYMENT INFORMATION; ADMINISTRATIVE VIOLATION.
739	739	SECTION 21. Section 415.011, Labor Code, is amended by
740	740	amending Subsections (a) and (c) and adding Subsection (a-1) to
741	741	read as follows:
742	742	(a) In this section, "license holder" has the meaning
743	743	assigned by Section 91.001.
744	744	(a-1) Except as provided by Subsection (c), a [staff leasing
745	745	services company] license holder commits a violation if the license
746	746	holder fails to provide the information required by Sections
747	747	91.042(g) and (h).
748	748	(c) A [staff leasing services company] license holder does
749	749	not commit an administrative violation under this section if the
750	750	license holder requested the information required by Sections
751	751	91.042(g) and (h) from the license holder's workers' compensation
752	752	insurance provider and the provider does not provide the
753	753	information to the license holder within the required time. A
754	754	license holder shall notify the Texas Department of Insurance of a
755	755	provider's failure to comply with the requirements of Section
756	756	2051.151, Insurance Code.
757	757	SECTION 22. Section 151.057, Tax Code, is amended to read as
758	758	follows:
759	759	Sec. 151.057. SERVICES BY EMPLOYEES. The following
760	760	services are not taxable under this chapter:
761	761	(1) a service performed by an employee for his
762	762	employer in the regular course of business, within the scope of the
763	763	employee's duties, and for which the employee is paid his regular
764	764	wages or salary;
765	765	(2) a service performed by an employee of a temporary
766	766	employment service as defined by Section 93.001, Labor Code, for an
767	767	employer to supplement the employer's existing work force on a
768	768	temporary basis, when the service is normally performed by the
769	769	employer's own employees, the employer provides all supplies and
770	770	equipment necessary, and the help is under the direct or general
771	771	supervision of the employer to whom the help is furnished; or
772	772	(3) a service performed by covered [assigned]
773	773	employees of a professional employer organization [staff leasing
774	774	company], either licensed under Chapter 91, Labor Code, or exempt
775	775	from the licensing requirements of that chapter, for a client
776	776	[company] under a written contract that provides for shared
777	777	employment responsibilities between the professional employer
778	778	organization [staff leasing company] and the client [company] for
779	779	the covered [assigned] employees, most of whom must have been
780	780	previously employed by the client [company]. The comptroller shall
781	781	prescribe by rule the minimum percentage of covered [assigned]
782	782	employees that must have been previously employed by the client
783	783	[company], the minimum time period the covered [assigned] employees
784	784	must have been employed by the client [company] prior to the
785	785	commencement of its contract, and such other criteria as the
786	786	comptroller may deem necessary to properly implement this section.
787	787	SECTION 23. Section 171.0001, Tax Code, is amended by
788	788	amending Subdivisions (6) and (15) and adding Subdivision (8-a) to
789	789	read as follows:
790	790	(6) "Client [company]" means:
791	791	(A) a client as that term is defined by Section
792	792	91.001 [person that contracts with a license holder under Chapter
793	793	91], Labor Code[, and is assigned employees by the license holder
794	794	under that contract]; or
795	795	(B) a client of a temporary employment service,
796	796	as that term is defined by Section 93.001(2), Labor Code, to whom
797	797	individuals are assigned for a purpose described by that
798	798	subdivision.
799	799	(8-a) "Covered employee" has the meaning assigned by
800	800	Section 91.001, Labor Code.
801	801	(15) "Professional employer organization" ["Staff
802	802	leasing services company"] means:
803	803	(A) a business entity that offers professional
804	804	employer [staff leasing] services, as that term is defined by
805	805	Section 91.001, Labor Code; or
806	806	(B) a temporary employment service, as that term
807	807	is defined by Section 93.001, Labor Code.
808	808	SECTION 24. Section 171.101(b), Tax Code, is amended to
809	809	read as follows:
810	810	(b) Notwithstanding Subsection (a)(1)(B)(ii), a
811	811	professional employer organization [staff leasing services
812	812	company] may subtract only compensation as determined under Section
813	813	171.1013.
814	814	SECTION 25. Section 171.1011(k), Tax Code, is amended to
815	815	read as follows:
816	816	(k) A taxable entity that is a professional employer
817	817	organization [staff leasing services company] shall exclude from
818	818	its total revenue payments received from a client [company] for
819	819	wages, payroll taxes on those wages, employee benefits, and
820	820	workers' compensation benefits for the covered [assigned]
821	821	employees of the client [company].
822	822	SECTION 26. Sections 171.1013(d) and (e), Tax Code, are
823	823	amended to read as follows:
824	824	(d) A taxable entity that is a professional employer
825	825	organization [staff leasing services company]:
826	826	(1) may not include as wages or cash compensation
827	827	payments described by Section 171.1011(k); and
828	828	(2) shall determine compensation as provided by this
829	829	section only for the taxable entity's own employees that are not
830	830	covered [assigned] employees.
831	831	(e) Subject to the other provisions of this section, in
832	832	determining compensation, a taxable entity that is a client
833	833	[company] that contracts with a professional employer organization
834	834	[staff leasing services company] for covered [assigned] employees:
835	835	(1) shall include payments made to the professional
836	836	employer organization [staff leasing services company] for wages
837	837	and benefits for the covered [assigned] employees as if the covered
838	838	[assigned] employees were actual employees of the entity;
839	839	(2) may not include an administrative fee charged by
840	840	the professional employer organization [staff leasing services
841	841	company] for the provision of the covered [assigned] employees; and
842	842	(3) may not include any other amount in relation to the
843	843	covered [assigned] employees, including payroll taxes.
844	844	SECTION 27. Section 171.2125, Tax Code, is amended to read
845	845	as follows:
846	846	Sec. 171.2125. CALCULATING COST OF GOODS OR COMPENSATION IN
847	847	PROFESSIONAL EMPLOYER SERVICES [STAFF LEASING] ARRANGEMENTS. In
848	848	calculating cost of goods sold or compensation, a taxable entity
849	849	that is a client [company] of a professional employer organization
850	850	[staff leasing services company] shall rely on information provided
851	851	by the professional employer organization [staff leasing services
852	852	company] on a form promulgated by the comptroller or an invoice.
853	853	SECTION 28. The following laws are repealed:
854	854	(1) Section 91.001(2), Labor Code;
855	855	(2) Section 91.043, Labor Code; and
856	856	(3) Section 171.0001(2), Tax Code.
857	857	SECTION 29. (a) Not later than January 1, 2014, the Texas
858	858	Commission of Licensing and Regulation shall adopt any rules
859	859	necessary to administer Chapter 91, Labor Code, as amended by this
860	860	Act.
861	861	(b) The changes in law made by this Act apply only to a
862	862	professional employer services agreement entered into on or after
863	863	the effective date of this Act. An agreement entered into before
864	864	the effective date of this Act is governed by the law in effect on
865	865	the date the agreement is entered into, and the former law is
866	866	continued in effect for that purpose.
867	867	(c) Section 91.042(c-1), Labor Code, as added by this Act,
868	868	is not intended to change the interpretation of Section 462.308,
869	869	Insurance Code, but is intended to clarify the application of that
870	870	section.
871	871	(d) In adopting rules to implement Section 91.0411, Labor
872	872	Code, as added by this Act, the commissioner of insurance shall
873	873	consider rules adopted with respect to similar benefit plans.
874	874	SECTION 30. This Act takes effect September 1, 2013.