SB167: relative to employee leasing companies.

CHAPTER 308

SB 167-FN – FINAL VERSION

04/08/09 1288s

06May2009… 1449h

03Jun2009… 1716h

06/24/09 2239CofC

06/24/09 2353eba

2009 SESSION

09-0924

06/05

SENATE BILL 167-FN

AN ACT relative to employee leasing companies.

SPONSORS: Sen. Cilley, Dist 6

COMMITTEE: Commerce, Labor and Consumer Protection

ANALYSIS

This bill modifies certain provisions relating to standards for the operation, regulation, and licensing of employee leasing companies.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

04/08/09 1288s

06May2009… 1449h

03Jun2009… 1716h

06/24/09 2239CofC

06/24/09 2353eba

09-0924

06/05

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Nine

AN ACT relative to employee leasing companies.

Be it Enacted by the Senate and House of Representatives in General Court convened:

308:1 Employee Leasing Companies; Definitions. RSA 277-B:2, III-IV are repealed and reenacted to read as follows:

III. “Client company” means a person who enters into an employee leasing arrangement with an employee leasing company.

IV. “Employee leasing arrangement” means an arrangement, under written contract, whereby:

(a) An employee leasing company assigns an individual, including an individual who was previously employed by the client company or its predecessor, affiliate, or subsidiary, to perform services for the client company; and

(b) The arrangement is intended to be, or is, on-going rather than temporary in nature, and not aimed at temporarily supplementing the work force.

308:2 Employee Leasing Companies; Definitions. Amend RSA 277-B:2, V(a) to read as follows:

(a) Engaged in providing the services of employees pursuant to one or more employee leasing arrangements [or any other arrangement]; or

308:3 Employee Leasing Companies; Definitions. Amend RSA 277-B:2 by inserting after paragraph V the following new paragraph:

V-a. “Person” means any individual, partnership, corporation, limited liability company, association, or other legal entity.

308:4 License and Application Fees. RSA 277-B:5, IV-V are repealed and reenacted to read as follows:

IV. Every application for an original, renewal, or restricted license, shall be accompanied by evidence satisfactory to the commissioner that the leased employees are covered by workers’ compensation insurance issued by a carrier admitted to write such coverage in this state. No unlicensed leasing company shall be provided workers’ compensation coverage. An employee leasing company may meet its obligation to provide such insurance for leased employees through no more than 2 policies. When 2 policies are issued, one shall be issued in the voluntary market, and the other shall be issued in the residual market.

(a) Upon request of a client company, an employee leasing company insured in the voluntary market shall request that the carrier of the employee leasing company make available claims data on a client company basis to the National Council on Compensation Insurance.

(b) An employee leasing company insured in the residual market shall only be issued the National Council on Compensation Insurance Multiple Coordinated Policy as approved by the insurance commissioner.

(c) A client company shall be assigned its claims data upon terminating its relationship with an employee leasing company which data shall be used in calculating the client company’s subsequent workers’ compensation premium.

(d) An employee leasing company may meet its obligation to provide workers’ compensation insurance coverage for leased employees through 2 carriers, provided that each client company’s leased employees shall be covered by only one carrier and that such coverage shall clearly delineate such client company employees by client company name and federal identification number.

V. The application shall also be accompanied by evidence satisfactory to the commissioner that any health insurance benefits covering leased employees are provided pursuant to the provisions of RSA 277-B:11, II.

VI. Each application for an original, renewal, or restricted license, shall be accompanied by a certification that the applicant does not conduct a temporary help service through the same entity as the applicant’s employee leasing company and that both entities do not commingle any financial components of the operations.

308:5 Employee Leasing Company License; Financial Assurances Required. Amend RSA 277-B:6, I and II to read as follows:

I. Every application for issuance or renewal of a license as an employee leasing company shall be accompanied by[, at a minimum, a reviewed] an audited financial statement prepared by an independent certified public accountant in accordance with generally accepted accounting principles. Such statement shall show a minimum working capital of $100,000. At the time of application for a new license, the employee leasing company shall submit its most recent audit which may not be older than 13 months. Thereafter, an employee leasing company shall file a succeeding audit, performed within [6] 12 months [prior to] before the date of application or renewal, [and such statement shall show a minimum net worth of $100,000] showing a minimum working capital of $100,000. An employee leasing company with less than $100,000 in working capital at renewal shall have 180 days to eliminate the deficiency. During that 180 days the employee leasing company shall submit quarterly financial statements to the department of labor accompanied by an attestation of the chief executive officer that all wages, taxes, workers’ compensation premiums, and employee benefits have been paid by the employee leasing company. As an alternative, an employee leasing company may, as approved by the commissioner, provide a surety bond, irrevocable letter of credit, or securities with a minimum market value of $100,000 to the department. For any employee leasing company whose annual financial statements do not indicate positive working capital, the amount of the bond, irrevocable letter of credit, or securities shall be $100,000 plus an amount sufficient to cover the deficit in working capital.

II. In addition to the requirement in paragraph I, the commissioner may require an employee leasing company to deposit in a depository designated by the commissioner, a bond or securities with a market value, deemed sufficient by the commissioner to assure payment of wages and benefits. The securities so deposited shall include authorization to the commissioner to sell any such securities in an amount sufficient to pay any wages, benefits or other entitlements due a leased employee, if the employee leasing company does not make such payments when due. The commissioner may require such bond or deposit only if the commissioner finds, although not limited to such instances, that the leasing company has had its license suspended, denied, or limited in any other jurisdiction; or that there have been instances where the leasing company has not paid employees’ wages or benefits when due, or failed to make timely payment of any federal or state payroll taxes or unemployment compensation contributions when due. Any bond or securities deposited under this paragraph shall not be included for the purpose of the calculation of [net worth] working capital required by paragraph I.

308:6 Employee Leasing Company License; Financial Assurances Required. Amend RSA 277-B:6 by inserting after paragraph III the following new paragraph:

IV. The department shall to the extent practical permit by rule the acceptance of electronic filings in conformance with RSA 294-E. Such rule may provide for the acceptance of electronic fillings and other assurance by an independent and qualified assurance organization approved by the commissioner that provides satisfactory assurance of compliance acceptable to the department of labor consistent with or instead of the requirements of this chapter or the rules adopted under it. Such rule shall permit an employee leasing company to authorize an assurance organization approved by the commissioner to act on the employee leasing company’s behalf in complying with the licensure requirements of this chapter, including the electronic filings of information and payment of fees. Use of such an approved assurance organization is optional. Nothing in this section shall limit the department’s authority to license or terminate licensure of an employee leasing company or to investigate or enforce any provision of this chapter.

308:7 Renewal of License. Amend RSA 277-B:8 to read as follows:

277-B:8 Renewal of License. [Every license] Licenses issued pursuant to this chapter shall remain in force for one year from the date of issue, unless the license has been revoked under RSA 277-B:7. If an employee leasing company has been continuously licensed without revocation or suspension for a period of 5 years or more following the effective date of this section, a license shall remain in force for 2 years from the date of issue provided that financial information required under RSA 277-B:6 is submitted to the department on an annual basis. Every licensee shall file an application for renewal 60 days before expiration of its license. The commissioner shall act upon such application for renewal within such 60-day period. In the event that an applicant for renewal shall qualify for a 2-year license, the licensing fee shall be twice the annual amount.

308:8 Employee Leasing Deemed Co-Employment. RSA 277-B:9 is repealed and reenacted to read as follows:

277-B:9 Employee Leasing Deemed Co-Employment. An employee leasing company and a client company shall be deemed co-employers and shall divide employment responsibilities as follows:

I. An employee leasing company shall be solely responsible for:

(a) Paying wages to leased employees. The employee leasing company may rely on initial hiring documentation of wages, ongoing pay change documentation, and reported payroll documentation regarding hours worked or other measured unit of employee compensation received from the client company. Notification shall be made in compliance with the signed notice as required by regulations issued by the department.

(b) Preparing and issuing of W-2 forms for leased employees.

(c) Calculating, collecting, and remitting all payroll taxes, including income tax and social security tax, as required by law with respect to leased employees.

(d) Complying with state and federal unemployment compensation requirements, including the reporting of wages paid, making required contributions, and processing claims for benefits on a timely basis as required by New Hampshire law.

(e) Paying for workers’ compensation insurance for the leased employees.

(f) Making payments for health or other benefits for leased employees, to the extent the contract calls for the employee leasing company to provide such benefits.

(g) Complying with all laws, rules, and regulations for employee leasing companies under their contract or as required by this state or the federal government.

(h) Paying the tax imposed by RSA 77-E and inclusion in its compensation portion of the base tax those wages paid to its leased employees.

(i) Providing to each employee an employee manual outlining the terms and conditions of employment with the leasing company.

(j) Providing an employee grievance system for employees employed by the leasing company.

II. A client company shall be solely responsible for:

(a) Directing and controlling the leased employees as necessary to conduct the client company’s business, discharge any applicable fiduciary duty, or comply with any licensure or regulatory or statutory requirement.

(b) The goods and services produced by the client company and its direct and leased employees.

(c) The acts, errors, and omissions of the leased employees committed within the scope of the client company’s business or under the direction and control of the client company.

(d) Providing accurate personnel and payroll information, and a record of hours and wages to the employee leasing company and department of labor when requested, as a co-employer on all leased employees as required of employers under RSA 279:27.

(e) Complying with all wage and hour laws, including recordkeeping requirements and determinations of exempt and non-exempt status.

(f) Providing a safe workplace to the employees free of all hazards in compliance with the Occupational Safety and Health Act of 1970 and regulations or any similar law.

(g) Complying with all laws prohibiting employment discrimination, harassment, and retaliation on the basis of any protected class or characteristic.

(h) Paying all expenses arising from unionization, negotiating collective bargaining agreements, and processing grievances and unfair labor practice charges related to the client company or the leased employees.

(i) Complying with all applicable professional license or bonding requirements pertaining to the client company’s business and maintaining professional liability coverage.

(j) Assuming and accepting responsibility for all compensation paid to any employee that is not paid through the employee leasing relationship or reported to the employee leasing company. Responsibility shall include but shall not be limited to all payroll taxes, federal and state taxes, additional premium for insurances including but not limited to workers’ compensation insurance, and additional matching contributions if any.

(k) Assuming and accepting all responsibilities, as defined under New Hampshire law, of an employer when hiring or employing individuals separately and not included in the contract with the employee leasing company.

III. The employee leasing company shall notify the commissioner of employment security and the commissioner of the department of labor in writing of all new and terminated client companies within 10 days of engagement or termination.

308:9 New Paragraph; Workers’ Compensation Insurance; Certification. Amend RSA 277-B:11-a by inserting after paragraph III the following new paragraph:

IV. A client company retains the statutory obligation of providing workers’ compensation coverage for employees that are not provided, supplied, or assigned by an employee leasing company under an employee leasing arrangement.

308:10 New Paragraphs; Penalties. Amend RSA 277-B:12 by inserting after paragraph III the following new paragraphs:

IV. Any such fines or penalties for violations of the labor law of New Hampshire shall be assessed either against the employee leasing company or the client company based upon the commensurate level of control of the worksite and each party’s responsibility for compliance with the applicable violation.

V. Any such fines or penalties assessed by the state to an employee leasing company for violations of the labor law of New Hampshire shall specify at which client company the violation occurred. Unless successive labor law violations occur within the same client company, the state shall treat each violation assessed to an employee leasing company for violations at a specific client company as a first violation and shall not aggregate violations at separate client companies to assess additional and successive penalties.

308:11 Client List; Confidentiality. Amend RSA 277-B:15-a to read as follows:

277-B:15-a Client List; Confidentiality.

I. Employee leasing firms shall maintain a list of current and past clients which shall be available for inspection by the department of labor without notice. The list shall be submitted to the labor department on a quarterly basis. Failure to maintain an updated client list shall subject the licensee to a $1,000 fine, and a $2,500 fine and loss of license for a second or subsequent offense if deemed appropriate by the commissioner. [Client lists shall remain confidential except that the commissioner may share such information with other appropriate state agencies.] Funds generated from fines shall be deposited in the general fund as unrestricted revenue.

II. Client lists, license applications, and related materials submitted therewith shall remain confidential except that the commissioner may share such information with other appropriate state agencies on a confidential basis to the extent permitted by state law.

308:12 Effective Date. This act shall take effect 60 days after its passage.

Approved: July 31, 2009

Effective Date: September 29, 2009

LBAO

09-0924

Amended 04/23/09

SB 167-FN - FISCAL NOTE

AN ACT relative to employee leasing companies.

FISCAL IMPACT:

The Department of Revenue Administration states this bill, as amended by the Senate (Amendment #2009-1288s), may decrease state revenue by an indeterminable amount in FY 2010 and each year thereafter. There is no fiscal impact on county and local revenue or state, county and local expenditures.

METHODOLOGY:

The Department of Revenue Administration states this bill modifies provisions related to standards for the operation, regulation, and licensing of employee leasing companies. The Department states this bill may result in an indeterminable loss of business profits tax and business enterprise tax revenue. The splitting of the tax liability between the leasing company and lessor will make it difficult for the Department to ensure the business enterprise tax is applied to all components of compensation. The Department states compensation includes wages, salaries, fees, bonuses and commissions. However, unless it is expressly agreed to in the employee leasing contract, bonuses and commissions are not wages and become the responsibility of the lessor to pay any business enterprise tax associated with bonuses and commissions.

The Department of Labor states this bill will have no fiscal impact.