By: Williams S.B. No. 1286
(In the Senate - Filed March 7, 2013; March 13, 2013, read
first time and referred to Committee on Business and Commerce;
April 2, 2013, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; April 2, 2013,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1286 By: Taylor
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of professional employer services;
authorizing fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Chapter 91, Labor Code, is amended
to read as follows:
CHAPTER 91. PROFESSIONAL EMPLOYER ORGANIZATIONS [STAFF LEASING
SERVICES]
SECTION 2. Section 91.001, Labor Code, is amended by
amending Subdivisions (1), (2-a), (3), (7), (11), (14), (15), (16),
and (17) and adding Subdivisions (3-a), (3-b), and (7-a) to read as
follows:
(1) "Applicant" means a person [business entity]
applying for a license or the renewal of a license under this
chapter.
(2-a) "Assurance organization" means an independent
entity approved by the commission that:
(A) provides a national program of accreditation
and financial assurance for professional employer organizations
[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.
(3) "Client [company]" means any [a] person who enters
into a professional employer services agreement [that contracts]
with a license holder [and is assigned employees by the license
holder under that contract].
(3-a) "Coemployer" means a professional employer
organization or a client that is a party to a coemployment
relationship.
(3-b) "Coemployment relationship" means a contractual
relationship between a client and a professional employer
organization that involves the sharing of employment
responsibilities with or allocation of employment responsibilities
to covered employees in accordance with the professional employer
services agreement and this chapter.
(7) "Controlling person" means an individual who:
(A) possesses direct or indirect control of 25
percent or more of the voting securities of a business entity
[corporation] that offers or proposes to offer professional
employer [staff leasing] services;
(B) possesses the authority to set policy and
direct management of a business entity [company] that offers or
proposes to offer professional employer [staff leasing] services;
(C) is employed, appointed, or authorized by a
business entity [company] that offers or proposes to offer
professional employer [staff leasing] services to enter into a
professional employer services agreement [contract] with a client
[company] on behalf of the business entity [company]; or
(D) a person who is an officer or director of a
corporation or a general partner of a partnership that offers or
proposes to offer professional employer [staff leasing] services.
(7-a) "Covered employee" means an individual having a
coemployment relationship with a professional employer
organization and a client.
(11) "License holder" means a person licensed under
this chapter to provide professional employer [staff leasing]
services.
(14) "Professional employer services" means the
services provided through coemployment relationships in which all
or a majority of the employees providing services to a client or to
a division or work unit of a client are covered employees. ["Staff
leasing services" means an arrangement by which employees of a
license holder are assigned to work at a client company and in which
employment responsibilities are in fact shared by the license
holder and the client company, the employee's assignment is
intended to be of a long-term or continuing nature, rather than
temporary or seasonal in nature, and a majority of the work force at
a client company worksite or a specialized group within that work
force consists of assigned employees of the license holder. The
term includes professional employer organization services.] The
term does not include:
(A) temporary help;
(B) an independent contractor;
(C) the provision of services that otherwise meet
the definition of "professional employer ["staff leasing]
services" by one person solely to other persons who are related to
the service provider by common ownership; or
(D) a temporary common worker employer as defined
by Chapter 92.
(15) "Professional employer organization" ["Staff
leasing services company"] means a business entity that offers
professional employer [staff leasing] services. [The term includes
a professional employer organization.]
(16) "Temporary help" means an arrangement by which an
organization hires its own employees and assigns them to a company
[client] to support or supplement the company's [client's] work
force in a special work situation, including:
(A) an employee absence;
(B) a temporary skill shortage;
(C) a seasonal workload; or
(D) a special assignment or project.
(17) "Wages" means:
(A) compensation for labor or services rendered
by a covered [an assigned] employee, whether computed on a time,
task, piece, or other basis; and
(B) vacation pay, holiday pay, sick leave pay,
parental leave pay, severance pay, bonuses, commissions, stock
option grants, or deferred compensation owed to a covered [an
assigned] employee under a written agreement.
SECTION 3. Subchapter A, Chapter 91, Labor Code, is amended
by adding Sections 91.0011 and 91.0012 to read as follows:
Sec. 91.0011. COEMPLOYMENT RELATIONSHIP. (a) A
coemployment relationship is intended to be an ongoing
relationship, rather than a temporary or specific one, in which the
rights, duties, and obligations of an employer that arise out of an
employment relationship are allocated between coemployers under a
professional employer services agreement. Coemployment is not a
joint employment arrangement.
(b) In a coemployment relationship:
(1) the professional employer organization may
enforce only those employer rights and is subject to only those
obligations specifically allocated to the professional employer
organization by the professional employer services agreement or
this chapter;
(2) the client may enforce any right and is obligated
to perform those employer obligations allocated to the client by
the professional employer services agreement or this chapter; and
(3) the client may enforce any right and is obligated
to perform any obligation of an employer not specifically allocated
to the professional employer organization by the professional
employer services agreement or this chapter.
Sec. 91.0012. COVERED EMPLOYEE. (a) A covered employee
must meet all the following criteria:
(1) the individual must receive written notice of the
coemployment relationship with the professional employer
organization; and
(2) the individual's coemployment relationship must be
under a professional employer services agreement subject to this
chapter.
(b) An individual who is an executive employee, as described
by Section 406.097, of the client is a covered employee, except to
the extent the professional employer organization and the client
expressly agree in the professional employer services agreement
that the individual is not a covered employee, if the individual
meets the criteria of this section and acts as an operational
manager or performs day-to-day operational services for the client.
SECTION 4. Subsections (b) and (c), Section 91.002, Labor
Code, are amended to read as follows:
(b) Each person who offers professional employer [staff
leasing] services is subject to this chapter and the rules adopted
by the commission.
(c) Notwithstanding any other provision of this chapter,
nothing in this chapter preempts the existing statutory or
rulemaking authority of any other state agency or entity to
regulate professional employer [staff leasing] services in a manner
consistent with the statutory authority of that state agency or
entity.
SECTION 5. Subsection (a), Section 91.003, Labor Code, is
amended to read as follows:
(a) Each state agency that in performing duties under other
law affects the regulation of professional employer [staff leasing]
services shall cooperate with the department and other state
agencies as necessary to implement and enforce this chapter.
SECTION 6. Sections 91.004, 91.005, 91.006, 91.007, 91.011,
and 91.012, Labor Code, are amended to read as follows:
Sec. 91.004. EFFECT OF OTHER LAW ON CLIENTS AND EMPLOYEES.
(a) This chapter does not exempt a client of a license holder, or
any covered [assigned] employee, from any other license
requirements imposed under local, state, or federal law.
(b) A covered [An] employee who is licensed, registered, or
certified under law [and who is assigned to a client company] is
considered to be an employee of the client [company] for the purpose
of that license, registration, or certification.
(c) A license holder is not engaged in the unauthorized
practice of an occupation, trade, or profession that is licensed,
certified, or otherwise regulated by a governmental entity solely
by entering into a professional employer services [staff leasing]
agreement with a client [company] and covered [assigned] employees.
Sec. 91.005. APPLICATION OF CERTAIN PROCUREMENT LAWS. With
respect to a bid, contract, purchase order, or agreement entered
into with the state or a political subdivision of the state, a
client's [client company's] status or certification as a small,
minority-owned, disadvantaged, or woman-owned business enterprise
or as a historically underutilized business is not affected because
the client [company] has entered into a professional employer
services [an] agreement with a license holder or uses the services
of a license holder.
Sec. 91.006. WORKERS' COMPENSATION COVERAGE. (a) A
certificate of insurance coverage or other evidence of coverage
showing that either a license holder or a client maintains [a policy
of] workers' compensation insurance coverage constitutes proof of
workers' compensation insurance coverage for the license holder and
the client [company] with respect to all covered employees of the
license holder and [assigned to] the client [company]. The state
and a political subdivision of the state shall accept a certificate
of insurance coverage or other evidence of coverage described by
this section as proof of workers' compensation coverage under
Chapter 406.
(b) For a client [company] that has employees who are not
covered [assigned] employees under a professional employer [staff
leasing] services agreement, the state or a political subdivision
of the state may require the client [company] to furnish separate
proof of workers' compensation insurance coverage for those
employees.
Sec. 91.007. APPLICATION OF LABOR RELATIONS LAWS. This
chapter does not relieve a client [company] of a right, obligation,
or duty under:
(1) Chapter 101;
(2) the federal National Labor Relations Act (29
U.S.C. Section 151 et seq.);
(3) the federal Railway Labor Act (45 U.S.C. Section
151 et seq.); or
(4) any other law governing labor relations.
Sec. 91.011. LICENSE REQUIRED. A person may not engage in
or offer professional employer [staff leasing] services in this
state unless the person holds a license issued under this chapter.
Sec. 91.012. GENERAL LICENSE REQUIREMENTS. To be qualified
to serve as a controlling person of a license holder under this
chapter, that person must be at least 18 years of age and have
educational, managerial, or business experience relevant to:
(1) operation of a business entity offering
professional employer [staff leasing] services; or
(2) service as a controlling person of a professional
employer organization [staff leasing services company].
SECTION 7. Subsections (a) and (c), Section 91.014, Labor
Code, are amended to read as follows:
(a) An applicant for an original or renewal license must
demonstrate positive working capital in the following amounts:
(1) $50,000 if the applicant employs fewer than 250
covered [assigned] employees;
(2) $75,000 if the applicant employs at least 250 but
not more than 750 covered [assigned] employees; and
(3) $100,000 if the applicant employs more than 750
covered [assigned] employees.
(c) Information submitted to or maintained by the
department is subject to Chapter 552, Government Code, other than
information related to:
(1) identification of clients [client companies];
(2) working capital;
(3) financial statements; or
(4) federal tax returns.
SECTION 8. Subsection (a), Section 91.015, Labor Code, is
amended to read as follows:
(a) To receive a professional employer organization [staff
leasing services company] original license, a person shall file
with the department a written application accompanied by the
application fee.
SECTION 9. Subsection (a), Section 91.017, Labor Code, is
amended to read as follows:
(a) Each applicant for an original or renewal professional
employer organization [staff leasing services company] license
shall pay to the department before the issuance of the license or
license renewal a fee set by the commission by rule.
SECTION 10. Subsection (e) and (f), Section 91.018, Labor
Code, are amended to read as follows:
(e) A license holder offering professional employer [staff
leasing] services in more than one state may advertise in this state
using the name of its parent company or under a trade name,
trademark, or service mark. The trade name, trademark, service
mark, or parent company name must be listed on the license in
addition to the licensed name used by the license holder in this
state.
(f) Each written proposal provided to a prospective client
[company] and each contract between a license holder and a client
[company] or covered [assigned] employee shall clearly identify the
name of the license holder. A proposal or contract may also
identify the trade name, trademark, service mark, or parent company
name of the license holder. A license holder may use written
materials including forms, benefit information, letterhead, and
business cards that bear only the trade name, trademark, service
mark, or parent company name of the license holder.
SECTION 11. Subsections (a), (b), and (c), Section 91.019,
Labor Code, are amended to read as follows:
(a) The commission by rule shall provide for the issuance of
a limited license to a person who seeks to offer limited
professional employer [staff leasing] services in this state.
(b) For purposes of this section, a professional employer
organization [staff leasing services company] is considered to be
offering limited professional employer [staff leasing] services if
the professional employer organization [staff leasing services
company]:
(1) employs fewer than 50 covered [assigned] employees
in this state at any one time;
(2) does not provide covered [assigned] employees to a
client [company] based or domiciled in this state; and
(3) does not maintain an office in this state or
solicit clients [client companies] located or domiciled in this
state.
(c) A professional employer organization [staff leasing
services company] that offers limited professional employer [staff
leasing] services shall complete the application forms and pay the
fees for a limited license as prescribed by the department. A
limited license is valid for one year from the date of issuance and
may be renewed annually on submission of a renewal application and
payment of the required fees.
SECTION 12. 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 professional employer [staff leasing]
services or offering to engage in the provision of professional
employer [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 required
under Section 91.014; or
(13) using professional employer [staff leasing]
services to avert or avoid an existing collective bargaining
agreement.
SECTION 13. Subsection (b), Section 91.021, Labor Code, is
amended to read as follows:
(b) A professional employer organization [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 professional employer
organization [staff leasing services company].
SECTION 14. Subchapter C, Chapter 91, Labor Code, is
amended to read as follows:
SUBCHAPTER C. PROFESSIONAL EMPLOYER SERVICES [STAFF LEASING
SERVICES] AGREEMENT
Sec. 91.031. AGREEMENT; NOTICE. (a) A license holder
shall establish the terms of a professional employer [staff
leasing] services agreement by a written contract between the
license holder and the client [company].
(b) The license holder shall give written notice of the
agreement as it affects covered [assigned] employees to each
covered employee [assigned to a client company worksite].
(c) The written notice required by Subsection (b) must be
given to each covered [assigned] employee not later than the first
payday after the date on which that individual becomes a covered [an
assigned] employee.
Sec. 91.032. CONTRACT REQUIREMENTS. (a) A professional
employer services agreement [contract] between a license holder and
a client [company] must provide that the license holder:
(1) shares, as provided by Subsection (b), with the
client [company] the right of direction and control over covered
employees [assigned to a client's worksites];
(2) assumes responsibility for the payment of wages to
the covered [assigned] employees without regard to payments by the
client to the license holder;
(3) assumes responsibility for the payment of payroll
taxes and collection of taxes from payroll on covered [assigned]
employees;
(4) shares, as provided by Subsection (b), with the
client [company] the right to hire, fire, discipline, and reassign
the covered [assigned] employees; and
(5) shares, as provided by Subsection (b), with the
client [company] the right of direction and control over the
adoption of employment and safety policies and the management of
workers' compensation claims, claim filings, and related
procedures.
(b) Notwithstanding any other provision of this chapter, a
client [company] retains sole responsibility for:
(1) the direction and control of covered [assigned]
employees as necessary to conduct the client's [client company's]
business, discharge any applicable fiduciary duty, or comply with
any licensure, regulatory, or statutory requirement;
(2) goods and services produced by the client
[company]; and
(3) the acts, errors, and omissions of covered
[assigned] employees committed within the scope of the client's
[client company's] business.
(c) Notwithstanding Subsection (a)(2), a client [company]
is solely obligated to pay any wages for which:
(1) obligation to pay is created by an agreement,
contract, plan, or policy between the client [company] and the
covered [assigned] employee; and
(2) the professional employer organization [staff
leasing services company] has not contracted to pay.
(d) Each professional employer organization [staff leasing
services company] shall disclose the requirements of Subsection (c)
in writing to each covered [assigned] employee.
SECTION 15. Section 91.041, Labor Code, is amended by
amending Subsections (a) and (b) and adding Subsections (a-1) and
(a-2) to read as follows:
(a) A client and license holder are each considered an
employer under the laws of this state for purposes of sponsoring
retirement and welfare benefit plans for covered employees. [A
license holder may sponsor and maintain employee benefit plans for
the benefit of assigned employees. A client company may include
assigned employees in any benefit plan sponsored by the client
company.]
(a-1) A license holder may sponsor a single welfare benefit
plan under which eligible covered employees of one or more clients
may elect to participate.
(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.
(b) With respect to any insurance or benefit plan provided
by a license holder for the benefit of its assigned employees, a
license holder shall disclose the following information to the
department, each client [company], and its covered [assigned]
employees:
(1) the type of coverage;
(2) the identity of each insurer for each type of
coverage;
(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
insured, or fully self-funded.
SECTION 16. Subchapter D, Chapter 91, Labor Code, is
amended by adding Section 91.0411 to read as follows:
Sec. 91.0411. SELF-FUNDED HEALTH BENEFIT.
(a) Notwithstanding Section 91.001, in this section, "department"
means the Texas Department of Insurance.
(b) A license holder may sponsor benefits that are not fully
insured if the license holder meets the requirements of Subsection
(c) and is approved by the department.
(c) The department 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 department 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. 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 department by the license holder;
(3) a fidelity bond;
(4) use of an independent actuary;
(5) use of a third-party administrator;
(6) authority for the department 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 department's operating fund.
(d) Information submitted under this section is
confidential and not subject to public inspection.
(e) Each license holder under this section shall appoint the
commissioner of the department 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 department may examine the affairs of any plan and
shall have access to the records of the plan. The department 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 department may suspend, revoke, or limit the certificate of
authority of a plan if the department determines, after notice and
hearing, that the plan does not comply with this section. The
department 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 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)
and (a-2) 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. 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.
(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. Subdivision (15), Section 171.0001, Tax Code,
is amended to read as follows:
(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; and
(2) Section 91.043, Labor 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.
SECTION 30. This Act takes effect September 1, 2013.
* * * * *