2001 Legislation
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HOUSE BILL NO. 227 – Prof employer/self-funded hlth plan

HOUSE BILL NO. 227

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H0227.......................................by COMMERCE AND HUMAN RESOURCES
PROFESSIONAL EMPLOYERS - SELF-FUNDED HEALTH PLANS - Amends existing law to
clarify that a professional employer may establish a self-funded employer
plan which is subject to ERISA and other applicable federal law, and which
shall not be subject to Chapter 40, Title 41, Idaho Code; and to provide
that the sale of professional employer arrangements, including the
sponsorship and maintenance of benefit or welfare plans in conformance with
law, shall not constitute the sale of insurance nor subject the
professional employer to regulation as an insurer under Idaho law.
                                                                        
02/14    House intro - 1st rdg - to printing
02/15    Rpt prt - to Bus
02/22    Rpt out - to Com/HuRes
02/28    Rpt out - rec d/p - to 2nd rdg
03/01    2nd rdg - to 3rd rdg
03/02    3rd rdg - FAILED - 30-37-3
      AYES -- Barrett, Bedke, Bolz, Bradford, Bruneel, Callister, Denney,
      Ellis, Ellsworth, Field(20), Hadley, Harwood, Hornbeck, Kendell,
      Lake, Marley, McKague, Moss, Moyle, Pearce, Ridinger, Roberts, Sali,
      Schaefer, Sellman, Smith, Stevenson, Trail, Wheeler, Wood
      NAYS -- Barraclough, Bell, Bieter, Black, Boe, Campbell, Chase,
      Clark, Collins, Crow, Cuddy, Deal, Eskridge, Field(13), Gagner,
      Gould, Hammond, Henbest, Higgins, Jones, Kellogg, Kunz, Langford,
      Loertscher, Mader, Meyer, Montgomery, Pischner, Pomeroy, Raybould,
      Robison, Shepherd, Smylie, Stone, Tilman, Young, Mr. Speaker
      Absent and excused -- Jaquet, Mortensen, Swan
    Floor Sponsors -- Ridinger & Schaefer
    Filed w/ Office of the Chief Clerk

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 227
                                                                        
                         BY COMMERCE AND HUMAN RESOURCES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO PROFESSIONAL EMPLOYERS; AMENDING SECTION 44-2405, IDAHO  CODE,  TO
  3        CLARIFY  THAT A PROFESSIONAL EMPLOYER MAY ESTABLISH A SELF-FUNDED EMPLOYER
  4        PLAN WHICH IS SUBJECT TO ERISA AND OTHER APPLICABLE FEDERAL LAW AND  WHICH
  5        SHALL  NOT  BE SUBJECT TO CHAPTER 40, TITLE 41, IDAHO CODE, AND TO PROVIDE
  6        THAT THE SALE OF PROFESSIONAL EMPLOYER ARRANGEMENTS, INCLUDING  THE  SPON-
  7        SORSHIP  AND  MAINTENANCE  OF BENEFIT OR WELFARE PLANS IN CONFORMANCE WITH
  8        LAW SHALL NOT CONSTITUTE THE SALE OF INSURANCE  NOR  SUBJECT  THE  PROFES-
  9        SIONAL EMPLOYER TO REGULATION AS AN INSURER UNDER IDAHO LAW; AND DECLARING
 10        AN EMERGENCY.
                                                                        
 11    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 12        SECTION  1.  That  Section 44-2405, Idaho Code, be, and the same is hereby
 13    amended to read as follows:
                                                                        
 14        44-2405.  MINIMUM STANDARDS. (1) Each professional employer  shall,  as  a
 15    condition  to  being  recognized by this chapter, agree to the following stan-
 16    dards:
 17        (a)  Have a written contract  between  the  client  and  the  professional
 18        employer setting forth the responsibilities and duties of each party.  The
 19        contract  shall  disclose  to  the client the services to be rendered, the
 20        respective rights and obligations of the parties,  and  provide  that  the
 21        professional employer:
 22             (i)   Reserves a right of direction and control over workers assigned
 23             to the client's location.  However, the client may retain such suffi-
 24             cient direction and control over the assigned workers as is necessary
 25             to  conduct  the client's business and without which the client would
 26             be unable to conduct its business, discharge any fiduciary  responsi-
 27             bility  which  it  may have, or comply with any applicable licensure,
 28             regulatory or statutory requirement of the client;
 29             (ii)  Assume responsibility for the  withholding  and  remittance  of
 30             payroll-related taxes and employee benefits from its own accounts, as
 31             long  as  the  contract  between the client and professional employer
 32             remains in force;
 33             (iii) Retain authority to hire, terminate, discipline,  and  reassign
 34             assigned workers. However, the client, if it accepts the responsibil-
 35             ity  for  its  action,  may  have  the  right to accept or cancel the
 36             arrangement of any assigned worker.
 37        (b)  Give written notice of the general nature of the relationship between
 38        the professional employer and the client to the workers  assigned  to  the
 39        client and the public at large. Such notice may be posted in a visible and
 40        conspicuous manner at the client's work site.
 41        (2)  It  is  anticipated  that  under  this chapter professional employers
 42    will, from time to time, receive from client companies, moneys which represent
 43    assigned workers' wages, withholdings, taxes, and benefit plan payments.  Each
                                                                        
                                           2
                                                                        
  1    professional  employer  shall keep in force, in the state of Idaho, a separate
  2    bank account or accounts for the purpose of keeping such money  separate  from
  3    the  professional  employer's  operating funds. Assigned workers' wages, with-
  4    holdings, taxes, and benefit plan payments shall be promptly  paid  from  such
  5    trust accounts.
  6        (3)  A  professional employer shall be considered an employer for purposes
  7    of withholding state income tax pursuant to section 63-3035,  Idaho  Code,  to
  8    the    same extent as the professional employer is an employer for withholding
  9    federal income taxes pursuant to the Internal Revenue Code.  As  long  as  the
 10    professional employer's contract with the client remains in force, the profes-
 11    sional  employer shall have a right to and shall perform the following respon-
 12    sibilities:
 13        (a)  Pay wages and collect, report and pay employment taxes from its trust
 14        accounts;
 15        (b)  Pay unemployment taxes as required in Idaho state unemployment  laws,
 16        chapter 13, title 72, Idaho Code;
 17        (c)  Work  with the client in securing and providing worker's compensation
 18        coverage for all of its assigned workers.
 19        (4)  A recognized professional employer shall be deemed the  employer  for
 20    the  purposes  of sponsoring and maintaining benefit and welfare plans for its
 21    assigned workers.  As the employer, the professional employer may establish  a
 22    self-funded  single  employer plan which is subject to the employee retirement
 23    income security act of 1974 (ERISA) and  other  applicable  federal  law,  and
 24    which shall not be subject to chapter 40, title 41, Idaho Code.
 25        (5)  Subject to any contrary provisions of the contract between the client
 26    and  the  professional  employer,  the  professional employer arrangement that
 27    exists between a professional employer and its clients  shall  be  interpreted
 28    for the purposes of sales tax on services, insurance and bonding as follows:
 29        (a)  A  professional  employer shall not be liable for the acts, errors or
 30        omissions of a client or of any assigned worker acting under the direction
 31        and control of a client. A client shall not be liable for the acts, errors
 32        or omissions of a professional employer or of any  assigned  worker  of  a
 33        professional  employer  acting under the direction and control of the pro-
 34        fessional employer. Nothing herein shall limit any  contractual  liability
 35        between  the  professional employer and the client, nor shall this subsec-
 36        tion in any way limit the liabilities of any professional employer or cli-
 37        ent as defined elsewhere in this chapter;
 38        (b)  Workers assigned or contracted to a client by a professional employer
 39        are not deemed employees of the professional employer for purposes of gen-
 40        eral liability insurance, automobile  insurance,  fidelity  bonds,  surety
 41        bonds, employer's liability which is not covered by worker's compensation,
 42        or  liquor liability insurance carried by the professional employer unless
 43        the employees are included by specific reference in the applicable employ-
 44        ment arrangement contract, insurance contract or bond;
 45        (c)  If Idaho enacts a tax on services  similar  to  the  sales  tax,  the
 46        administration fee will be the amount which is taxed.
 47        (6)  The  sale  of professional employer arrangements, including the spon-
 48    sorship and maintenance of benefit or welfare plans, in conformance  with  the
 49    provisions  of  this  chapter  shall not constitute the sale of insurance, nor
 50    subject the professional employer to regulation  as  an  insurer,  within  the
 51    meaning of applicable Idaho law.
                                                                        
 52        SECTION  2.  An  emergency  existing  therefor,  which emergency is hereby
 53    declared to exist, this act shall be in full force and effect on and after its
 54    passage and approval.

Statement of Purpose / Fiscal Impact


                         STATEMENT OF PURPOSE
                             RS 11090 

The purpose of this legislation is to clarify that a professional 
employer may establish a self-funded single employer plan thereby 
permitting its small business clients the ability to provide 
health benefits to their employees on a par with big business.
	
                           FISCAL IMPACT

There will be no impact on the General Fund.

Contact
Name: Dave Kerrick 
Phone: 459-4574




STATEMENT OF PURPOSE/FISCAL NOTE	H 22