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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
|||| 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
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