2001 Legislation
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HOUSE BILL NO. 97 – Professional employers/benefit plan


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H0097.......................................by COMMERCE AND HUMAN RESOURCES
PROFESSIONAL EMPLOYERS - Amends existing law to clarify that benefit and
welfare plans maintained by professional employers are not subject to
regulation under Title 41, Idaho Code.
01/26    House intro - 1st rdg - to printing
01/29    Rpt prt - to Com/HuRes

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 97
  1                                        AN ACT
  5        ING AN EMERGENCY.
  6    Be It Enacted by the Legislature of the State of Idaho:
  7        SECTION  1.  That  Section 44-2405, Idaho Code, be, and the same is hereby
  8    amended to read as follows:
  9        44-2405.  MINIMUM STANDARDS. (1) Each professional employer  shall,  as  a
 10    condition  to  being  recognized by this chapter, agree to the following stan-
 11    dards:
 12        (a)  Have a written contract  between  the  client  and  the  professional
 13        employer setting forth the responsibilities and duties of each party.  The
 14        contract  shall  disclose  to  the client the services to be rendered, the
 15        respective rights and obligations of the parties,  and  provide  that  the
 16        professional employer:
 17             (i)   Reserves a right of direction and control over workers assigned
 18             to the client's location.  However, the client may retain such suffi-
 19             cient direction and control over the assigned workers as is necessary
 20             to  conduct  the client's business and without which the client would
 21             be unable to conduct its business, discharge any fiduciary  responsi-
 22             bility  which  it  may have, or comply with any applicable licensure,
 23             regulatory or statutory requirement of the client;
 24             (ii)  Assume responsibility for the  withholding  and  remittance  of
 25             payroll-related taxes and employee benefits from its own accounts, as
 26             long  as  the  contract  between the client and professional employer
 27             remains in force;
 28             (iii) Retain authority to hire, terminate, discipline,  and  reassign
 29             assigned workers. However, the client, if it accepts the responsibil-
 30             ity  for  its  action,  may  have  the  right to accept or cancel the
 31             arrangement of any assigned worker.
 32        (b)  Give written notice of the general nature of the relationship between
 33        the professional employer and the client to the workers  assigned  to  the
 34        client and the public at large. Such notice may be posted in a visible and
 35        conspicuous manner at the client's work site.
 36        (2)  It  is  anticipated  that  under  this chapter professional employers
 37    will, from time to time, receive from client companies, moneys which represent
 38    assigned workers' wages, withholdings, taxes, and benefit plan payments.  Each
 39    professional  employer  shall keep in force, in the state of Idaho, a separate
 40    bank account or accounts for the purpose of keeping such money  separate  from
 41    the  professional  employer's  operating funds. Assigned workers' wages, with-
 42    holdings, taxes, and benefit plan payments shall be promptly  paid  from  such
 43    trust accounts.
  1        (3)  A  professional employer shall be considered an employer for purposes
  2    of withholding state income tax pursuant to section 63-3035,  Idaho  Code,  to
  3    the  same  extent  as the professional employer is an employer for withholding
  4    federal income taxes pursuant to the Internal Revenue Code.  As  long  as  the
  5    professional employer's contract with the client remains in force, the profes-
  6    sional  employer shall have a right to and shall perform the following respon-
  7    sibilities:
  8        (a)  Pay wages and collect, report and pay employment taxes from its trust
  9        accounts;
 10        (b)  Pay unemployment taxes as required in Idaho state unemployment  laws,
 11        chapter 13, title 72, Idaho Code;
 12        (c)  Work  with the client in securing and providing worker's compensation
 13        coverage for all of its assigned workers.
 14        (4)  A recognized professional employer shall be deemed the  employer  for
 15    the  purposes  of sponsoring and maintaining benefit and welfare plans for its
 16    assigned workers.  Such plans, the sponsoring professional employer,  and  its
 17    clients shall not be subject to title 41, Idaho Code.
 18        (5)  Subject to any contrary provisions of the contract between the client
 19    and  the  professional  employer,  the  professional employer arrangement that
 20    exists between a professional employer and its clients  shall  be  interpreted
 21    for the purposes of sales tax on services, insurance and bonding as follows:
 22        (a)  A  professional  employer shall not be liable for the acts, errors or
 23        omissions of a client or of any assigned worker acting under the direction
 24        and control of a client. A client shall not be liable for the acts, errors
 25        or omissions of a professional employer or of any  assigned  worker  of  a
 26        professional  employer  acting under the direction and control of the pro-
 27        fessional employer. Nothing herein shall limit any  contractual  liability
 28        between  the  professional employer and the client, nor shall this subsec-
 29        tion in any way limit the liabilities of any professional employer or cli-
 30        ent as defined elsewhere in this chapter;
 31        (b)  Workers assigned or contracted to a client by a professional employer
 32        are not deemed employees of the professional employer for purposes of gen-
 33        eral liability insurance, automobile  insurance,  fidelity  bonds,  surety
 34        bonds, employer's liability which is not covered by worker's compensation,
 35        or  liquor liability insurance carried by the professional employer unless
 36        the employees are included by specific reference in the applicable employ-
 37        ment arrangement contract, insurance contract or bond;
 38        (c)  If Idaho enacts a tax on services  similar  to  the  sales  tax,  the
 39        administration fee will be the amount which is taxed.
 40        (6)  The  sale  of  professional employer arrangements in conformance with
 41    the provisions of this chapter shall not  constitute  the  sale  of  insurance
 42    within the meaning of applicable Idaho law.
 43        SECTION  2.  An  emergency  existing  therefor,  which emergency is hereby
 44    declared to exist, this act shall be in full force and effect on and after its
 45    passage and approval.

Statement of Purpose / Fiscal Impact

                       STATEMENT OF PURPOSE
                             RS 10708 

This legislation clarifies that benefit and welfare plans 
sponsored and maintained by recognized professional employers
are not subject to regulation under title 41 Idaho Code. This 
recognizes that professional employers are treated the same
as other self-insured employers with respect to the offering 
of employee health plans.

                           FISCAL IMPACT
There will be no impact to the general fund.

Name:  David E. Kerrick
Phone:(208)459 4574