2003 Legislation
Print Friendly

HOUSE BILL NO. 168 – Professional employer/benefit plans

HOUSE BILL NO. 168

View Daily Data Tracking History

View Bill Text

View Statement of Purpose / Fiscal Impact



Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Daily Data Tracking History



H0168..........................................by COMMERCE AND HUMAN RESOURCES
PROFESSIONAL EMPLOYERS - Amends existing law to provide that benefit and
welfare plans for assigned workers, if limited to the employees of the
professional employer and clients, shall not be deemed to be multiple employer
welfare arrangements within the meaning of the applicable law; and to provide
that nothing in the law regarding professional employers shall diminish the
defense and limitation afforded a political subdivision under the Idaho Tort
Claims Act when, as a client, it enters into a professional employer
arrangement.
                                                                        
02/06    House intro - 1st rdg - to printing
02/07    Rpt prt - to Bus

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 168
                                                                        
                         BY COMMERCE AND HUMAN RESOURCES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO PROFESSIONAL EMPLOYERS; AMENDING SECTION 44-2403, IDAHO  CODE,  TO
  3        FURTHER  DEFINE  THE  TERM  "PERSON"  AND  TO MAKE A TECHNICAL CORRECTION;
  4        AMENDING SECTION 44-2405, IDAHO CODE, TO PROVIDE THAT BENEFIT AND  WELFARE
  5        PLANS FOR ITS ASSIGNED WORKERS, IF LIMITED TO THE EMPLOYEES OF THE PROFES-
  6        SIONAL  EMPLOYER  AND  CLIENTS SHALL NOT BE DEEMED TO BE MULTIPLE EMPLOYER
  7        WELFARE ARRANGEMENTS WITHIN THE MEANING OF THE APPLICABLE LAW; AND  AMEND-
  8        ING  SECTION  44-2406,  IDAHO  CODE,  TO  PROVIDE  THAT NOTHING IN THE LAW
  9        REGARDING PROFESSIONAL EMPLOYERS SHALL DIMINISH THE DEFENSE AND LIMITATION
 10        AFFORDED A POLITICAL SUBDIVISION UNDER THE IDAHO TORT CLAIMS ACT WHEN,  AS
 11        A CLIENT, IT ENTERS INTO A PROFESSIONAL EMPLOYER ARRANGEMENT.
                                                                        
 12    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 13        SECTION  1.  That  Section 44-2403, Idaho Code, be, and the same is hereby
 14    amended to read as follows:
                                                                        
 15        44-2403.  DEFINITIONS. As used in this chapter:
 16        (1)  "Administration fee" means those charges  made  by  the  professional
 17    employer  to  the  client  over  and above the cost of taxes, premiums, wages,
 18    state and federal withholdings or licensing procedures.
 19        (2)  "Assigned worker" is a person with an  employment  relationship  with
 20    both the professional employer and the client.
 21        (3)  "Client"  means a person who obtains its work force from another per-
 22    son through a professional employer arrangement.
 23        (4)  "Person" means an individual, an association, a company,  a  firm,  a
 24    partnership, or a corporation or a political subdivision of the state.
 25        (5)  "Professional  employer arrangement" means an arrangement, under con-
 26    tract or otherwise, whereby:
 27        (a)  A professional employer assigns workers to  perform  services  for  a
 28        client;
 29        (b)  The  arrangement  is  intended  to be, or is, on-going ongoing rather
 30        than temporary in nature; and
 31        (c)  Employer responsibilities are in  fact  shared  by  the  professional
 32        employer and the client for assigned workers.
 33        (d)  For the purposes of this chapter, a professional employer arrangement
 34        shall not include:
 35             (i)   Temporary employees;
 36             (ii)  Arrangements  wherein a person, whose principal business activ-
 37             ity is not entering into professional employer  arrangements,  shares
 38             employees with a commonly owned company within the meaning of section
 39             414(b)  and (c) of the Internal Revenue Code of 1986, as amended, and
 40             which does not hold itself out as a professional employer;
 41             (iii) Arrangements for which a person assumes full responsibility for
 42             the product or service performed by such person  or  his  agents  and
 43             retains  and exercises, both legally and in fact, a complete right of
                                                                        
                                           2
                                                                        
  1             direction and control over the individuals whose  services  are  sup-
  2             plied  under  such  contractual arrangements, and such person and his
  3             agents perform a specified function for the client which is  separate
  4             and divisible from the primary business or operations of the client.
  5        (6)  "Professional  employer"  means  any  person engaged in providing the
  6    services of employees pursuant  to  one  (1)  or  more  professional  employer
  7    arrangements  or  any person that represents itself to the public as providing
  8    services pursuant to a professional employer arrangement.
  9        (7)  "Temporary employee" means a worker employed by an organization which
 10    hires its own employees and assigns them to a third party to support  or  sup-
 11    plement  the  third  party's  work  force  in work situations such as employee
 12    absences, temporary skill shortages, seasonal workload conditions, and special
 13    assignments and projects.
                                                                        
 14        SECTION 2.  That Section 44-2405, Idaho Code, be, and the same  is  hereby
 15    amended to read as follows:
                                                                        
 16        44-2405.  MINIMUM  STANDARDS.  (1)  Each professional employer shall, as a
 17    condition to being recognized by this chapter, agree to  the  following  stan-
 18    dards:
 19        (a)  Have  a  written  contract  between  the  client and the professional
 20        employer setting forth the responsibilities and duties of each party.  The
 21        contract shall disclose to the client the services  to  be  rendered,  the
 22        respective  rights  and  obligations  of the parties, and provide that the
 23        professional employer:
 24             (i)   Reserves a right of direction and control over workers assigned
 25             to the client's location.  However, the client may retain such suffi-
 26             cient direction and control over the assigned workers as is necessary
 27             to conduct the client's business and without which the  client  would
 28             be  unable to conduct its business, discharge any fiduciary responsi-
 29             bility which it may have, or comply with  any  applicable  licensure,
 30             regulatory or statutory requirement of the client;
 31             (ii)  Assume  responsibility  for  the  withholding and remittance of
 32             payroll-related taxes and employee benefits from its own accounts, as
 33             long as the contract between the  client  and  professional  employer
 34             remains in force;
 35             (iii) Retain  authority  to hire, terminate, discipline, and reassign
 36             assigned workers. However, the client, if it accepts the responsibil-
 37             ity for its action, may have  the  right  to  accept  or  cancel  the
 38             arrangement of any assigned worker.
 39        (b)  Give written notice of the general nature of the relationship between
 40        the  professional  employer  and the client to the workers assigned to the
 41        client and the public at large. Such notice may be posted in a visible and
 42        conspicuous manner at the client's work site.
 43        (2)  It is anticipated that  under  this  chapter  professional  employers
 44    will, from time to time, receive from client companies, moneys which represent
 45    assigned  workers' wages, withholdings, taxes, and benefit plan payments. Each
 46    professional employer shall keep in force, in the state of Idaho,  a  separate
 47    bank  account  or accounts for the purpose of keeping such money separate from
 48    the professional employer's operating funds. Assigned  workers'  wages,  with-
 49    holdings,  taxes,  and  benefit plan payments shall be promptly paid from such
 50    trust accounts.
 51        (3)  A professional employer shall be considered an employer for  purposes
 52    of  withholding  state  income tax pursuant to section 63-3035, Idaho Code, to
 53    the same extent as the professional employer is an  employer  for  withholding
                                                                        
                                           3
                                                                        
  1    federal  income  taxes  pursuant  to the Internal Revenue Code. As long as the
  2    professional employer's contract with the client remains in force, the profes-
  3    sional employer shall have a right to and shall perform the following  respon-
  4    sibilities:
  5        (a)  Pay wages and collect, report and pay employment taxes from its trust
  6        accounts;
  7        (b)  Pay  unemployment taxes as required in Idaho state unemployment laws,
  8        chapter 13, title 72, Idaho Code;
  9        (c)  Work with the client in securing and providing worker's  compensation
 10        coverage for all of its assigned workers.
 11        (4)  A  recognized  professional employer shall be deemed the employer for
 12    the purposes of sponsoring and maintaining benefit and welfare plans  for  its
 13    assigned  workers. Such plans, if limited to the employees of the professional
 14    employer and clients, shall not be deemed  to  be  multiple  employer  welfare
 15    arrangements within the meaning of the applicable law.
 16        (5)  Subject to any contrary provisions of the contract between the client
 17    and  the  professional  employer,  the  professional employer arrangement that
 18    exists between a professional employer and its clients  shall  be  interpreted
 19    for the purposes of sales tax on services, insurance and bonding as follows:
 20        (a)  A  professional  employer shall not be liable for the acts, errors or
 21        omissions of a client or of any assigned worker acting under the direction
 22        and control of a client. A client shall not be liable for the acts, errors
 23        or omissions of a professional employer or of any  assigned  worker  of  a
 24        professional  employer  acting under the direction and control of the pro-
 25        fessional employer. Nothing herein shall limit any  contractual  liability
 26        between  the  professional employer and the client, nor shall this subsec-
 27        tion in any way limit the liabilities of any professional employer or cli-
 28        ent as defined elsewhere in this chapter;
 29        (b)  Workers assigned or contracted to a client by a professional employer
 30        are not deemed employees of the professional employer for purposes of gen-
 31        eral liability insurance, automobile  insurance,  fidelity  bonds,  surety
 32        bonds, employer's liability which is not covered by worker's compensation,
 33        or  liquor liability insurance carried by the professional employer unless
 34        the employees are included by specific reference in the applicable employ-
 35        ment arrangement contract, insurance contract or bond;
 36        (c)  If Idaho enacts a tax on services  similar  to  the  sales  tax,  the
 37        administration fee will be the amount which is taxed.
 38        (6)  The  sale  of  professional employer arrangements in conformance with
 39    the provisions of this chapter shall not  constitute  the  sale  of  insurance
 40    within the meaning of applicable Idaho law.
                                                                        
 41        SECTION  3.  That  Section 44-2406, Idaho Code, be, and the same is hereby
 42    amended to read as follows:
                                                                        
 43        44-2406.  OTHER LAW. Nothing in this chapter exempts a client of a profes-
 44    sional employer company nor a worker assigned to a client  by  a  professional
 45    employer  from  any  other  state,  local  or  federal license or registration
 46    requirement. Any individual who must  be  licensed,  registered  or  certified
 47    according  to  law  and who is an assigned worker is deemed an employee of the
 48    client for purposes of the license, registration or certification.  Except  to
 49    the  extent  provided  otherwise in the contract with a client, a professional
 50    employer is not liable for the general debts, obligations,  loss  of  profits,
 51    business  goodwill  or  other consequential special or incidental damages of a
 52    client with which it has entered into  a  professional  employer  arrangement.
 53    Nothing in this chapter shall diminish the defenses and limitations afforded a
                                                                        
                                           4
                                                                        
  1    political subdivision under chapter 9, title 6, Idaho Code, when, as a client,
  2    it enters into a professional employer arrangement.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                            RS 12851C1
This legislation amends the Idaho Professional Employer
Recognition Act by allowing political subdivisions of the state
to enter into professional employer arrangements. Smaller cities
and other government entities with few employees will then be
able to utilize this service for their employee administration.

The legislation also expressly clarifies that when offering
benefit and welfare plans, such plans, if limited to the
employees of the professional employer and clients, shall not be
deemed to be multiple employer welfare arrangements within the
meaning of applicable law.


                          FISCAL IMPACT

There is no impact on the general fund.



Contact
Name: Dave Kerrick 
Phone: 459 4574




STATEMENT OF PURPOSE/FISCAL NOTE                        H 16