Print Friendly HOUSE BILL NO. 168 – Professional employer/benefit plans
HOUSE BILL NO. 168
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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
02/06 House intro - 1st rdg - to printing
02/07 Rpt prt - to Bus
|||| 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
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
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-
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
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-
5 (a) Pay wages and collect, report and pay employment taxes from its trust
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
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
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.
There is no impact on the general fund.
Name: Dave Kerrick
Phone: 459 4574
STATEMENT OF PURPOSE/FISCAL NOTE H 16