PRINTER'S NO. 2131
No. 1716 Session of 2001
INTRODUCED BY WILT, CAPPELLI, CLARK, J. EVANS, FLICK, LEH,
LEWIS, SATHER AND R. STEVENSON, JUNE 11, 2001
REFERRED TO COMMITTEE ON LABOR RELATIONS, JUNE 11, 2001
AN ACT
1 Regulating professional employer organizations; providing for
2 penalties and remedies; and conferring powers and duties on
3 the Department of Labor and Industry.
4 TABLE OF CONTENTS
5 Section 1. Short title.
6 Section 2. Legislative intent.
7 Section 3. Definitions.
8 Section 4. Registration required.
9 Section 5. Application for registration.
10 Section 6. Tax clearance.
11 Section 7. Fees; issuance, denial and revocation of
12 registration.
13 Section 8. Determinations and appeals.
14 Section 9. Unemployment compensation.
15 Section 10. Workers' compensation.
16 Section 11. Other responsibilities.
17 Section 12. Criminal and civil penalties; injunctions.
18 Section 13. Wages.
1 Section 14. Benefit plans.
2 Section 15. Department.
3 Section 16. Other laws.
4 Section 17. Collective bargaining protections.
5 Section 60. Effective date.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the Professional
10 Employer Organization Registration Act.
11 Section 2. Legislative intent.
12 The General Assembly finds and declares that it is necessary
13 to do all of the following:
14 (1) Safeguard the rights of employees participating in a
15 professional employer arrangement.
16 (2) Preserve the rights of employees with regard to
17 unemployment compensation and workers' compensation.
18 (3) Protect the interest of the Commonwealth in the
19 financial security of the unemployment compensation and
20 workers' compensation systems.
21 (4) Recognize the professional employer organization as
22 an employer.
23 (5) Preserve the integrity of the collective bargaining
24 process by prohibiting the use of professional employer
25 arrangements to interfere with the right of any employee or
26 worker to organize and freely choose unions or associations
27 which may represent them for the purpose of collective
28 bargaining.
29 Section 3. Definitions.
30 The following words and phrases when used in this act shall
20010H1716B2131 - 2 -
1 have the meanings given to them in this section unless the
2 context clearly indicates otherwise:
3 "Application." An application for a registration.
4 "Client." A person that enters into a professional employer
5 arrangement with a professional employer organization.
6 "Covered employee." An employee covered under a professional
7 employer arrangement.
8 "Department." The Department of Labor and Industry of the
9 Commonwealth.
10 "Inside director." For a professional employer organization
11 organized as a corporation, an individual who is both a director
12 of the corporation and any of the following:
13 (1) An employee or agent of or consultant to the
14 corporation.
15 (2) An individual who is involved in the daily
16 management of the corporation.
17 (3) A spouse, parent or child of an individual listed in
18 paragraph (1) or (2).
19 "Person." An individual, partnership, corporation, company,
20 firm, association, organization, joint venture, limited
21 liability company or any type of business entity.
22 "Professional employer arrangement." An arrangement between
23 a professional employer organization and a client under which
24 the professional employer organization agrees to hire one or
25 more members of the client's work force and agrees to assign one
26 or more of those individuals to that client to perform services
27 for the client on a long-term, ongoing basis. The term includes
28 subsequent long-term, ongoing assignments to a client by a
29 professional employer organization of individuals not previously
30 employed by the client; long-term, ongoing assignments to a
20010H1716B2131 - 3 -
1 client, that is a newly formed business, by a professional
2 employer organization of individuals to constitute that client's
3 work force or distinct portion of that client's work force; and
4 long-term, ongoing assignments to a client by the professional
5 employer organization of individuals to constitute that client's
6 work force or distinct portion of that work force at a newly
7 instituted facility. The term does not include any of the
8 following:
9 (1) An arrangement in which a person shares employees
10 with a commonly owned company within the meaning of section
11 414(b) and (c) of the Internal Revenue Code of 1986 (Public
12 Law 99-514, 26 U.S.C. § 414 (b) and (c)) but:
13 (i) the person does not make its services as a
14 professional employer organization available to the
15 public; and
16 (ii) the principal business activity of the person
17 is not entering into professional employer arrangements.
18 (2) A temporary help arrangement in which a person
19 assigns one or more employees to another person to support or
20 supplement the other persons work force in special temporary
21 work situations, such as employee absences, skill shortages,
22 seasonal workloads and special assignments.
23 (3) A vendor arrangement in which:
24 (i) a person provides a product or service to
25 another person;
26 (ii) the person providing the product or service is
27 fully responsible for it; and
28 (iii) providing the product or service to the other
29 person, rather than assigning one or more employees to
30 the other person to constitute some or all of the other
20010H1716B2131 - 4 -
1 person's work force, is the purpose of the arrangement.
2 "Professional employer organization." A person that enters
3 into a professional employer arrangement with a client. The term
4 includes an applicant for a registration.
5 "Registration." A new registration or renewal registration.
6 A new registration shall include a registration for which a
7 renewal application is filed late.
8 "Responsible person." An individual who:
9 (1) is the proprietor of a sole proprietorship;
10 (2) is a general partner in a partnership;
11 (3) is a shareholder who owns at least 15% of the voting
12 shares of a corporation;
13 (4) is an inside director or officer of a corporation;
14 or
15 (5) has the authority to establish and direct the
16 policies or management of the organization.
17 "Secretary." The Secretary of Labor and Industry of the
18 Commonwealth.
19 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
20 known as the Tax Reform Code of 1971.
21 "Unemployment Compensation Law." The act of December 5, 1936
22 (2nd Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment
23 Compensation Law.
24 "Workers' Compensation Act." The act of June 2, 1915
25 (P.L.736, No.338), known as the Workers' Compensation Act.
26 Section 4. Registration required.
27 (a) Unregistered operation prohibited.--A professional
28 employer organization may not engage in a professional employer
29 arrangement without being registered if an employee is assigned
30 to the client to do any of the following:
20010H1716B2131 - 5 -
1 (1) Perform services in this Commonwealth for the
2 client. This paragraph does not include services which are
3 isolated, transitory or incidental to services performed
4 outside this Commonwealth.
5 (2) Perform services for which the client's base of
6 operations is located in this Commonwealth.
7 (b) Term of registration.--Except as otherwise prescribed by
8 the department, a registration shall be valid for two years
9 unless revoked.
10 (c) Transfer or assignment prohibited.--A registration is a
11 privilege which is not transferable or assignable.
12 Section 5. Application for registration.
13 An application for a registration must include all
14 information and documentation required by the department,
15 including information on the professional employer
16 organization's ownership, operations in other states and past
17 and present compliance with applicable law. The application must
18 be made in the manner prescribed by the department. The
19 department may include as an application requirement criminal
20 background checks and credit reporting investigations of
21 responsible persons.
22 Section 6. Tax clearance.
23 (a) Waiver of confidentiality.--An application constitutes a
24 waiver of confidentiality with respect to the department for tax
25 information in the possession of the Department of Revenue or
26 the Office of Attorney General, regardless of the source and a
27 consent to the providing of the information to the department.
28 (b) Review.--Upon receipt of an application, the Department
29 of Revenue and the Office of Attorney General shall provide
30 information regarding the professional employer organization's
20010H1716B2131 - 6 -
1 tax status to the department.
2 Section 7. Fees; issuance, denial and revocation of
3 registration.
4 (a) Issuance.--The department may issue a registration to a
5 professional employer organization only if there is compliance
6 with all of the following:
7 (1) The professional employer organization pays to the
8 department a nonrefundable fee of $1,000 for a first-time
9 application or $500 for a renewal application.
10 (2) The professional employer organization provides
11 proof, in a manner satisfactory to the department, of
12 workers' compensation insurance coverage for existing clients
13 under section 10.
14 (3) The application and all required documents are
15 complete and accurate and meet the requirements of this act.
16 (4) The professional employer organization meets all
17 requirements of sections 5 and 6 and this subsection.
18 (5) All fees are paid, all reports are filed and all
19 penalties are paid or are subject to a deferred payment plan
20 approved by the department.
21 (6) All tax returns due to the Commonwealth are filed.
22 (7) All taxes, interest and penalties owed to the
23 Commonwealth are:
24 (i) paid;
25 (ii) subject to a deferred payment plan approved by
26 the Commonwealth; or
27 (iii) under appeal unless the applicable statute
28 requires the payment of taxes while an appeal is pending.
29 (b) Denial or revocation.--The department may deny an
30 application for a registration or revoke a registration for good
20010H1716B2131 - 7 -
1 cause associated with the legislative intent of this act or if
2 any of the following applies:
3 (1) The professional employer organization or a
4 responsible person violates this act or a regulation or order
5 under this act.
6 (2) The professional employer organization or a
7 responsible person fails to provide a written response to a
8 written inquiry from the department within 30 days from the
9 date of receipt of the inquiry.
10 (3) The professional employer organization or a
11 responsible person makes a misrepresentation of material fact
12 or fails to disclose a material fact in any application,
13 document or communication under this act.
14 (4) The professional employer organization or a
15 responsible person obtains or attempts to obtain a
16 registration by fraud or bribery.
17 (5) The professional employer organization or a
18 responsible person was sentenced for:
19 (i) a Federal or state offense involving dishonesty
20 or fraud; or
21 (ii) for an offense under the Tax Reform Code, the
22 Unemployment Compensation Law, section 305 of the
23 Workers' Compensation Act or this act.
24 (6) The professional employer organization or
25 responsible person defaults on a deferred payment plan under
26 subsection (a)(5) or (7)(ii).
27 (7) The professional employer organization owes taxes,
28 interest or penalties to any state or a responsible person is
29 or was a responsible person in another professional employer
30 organization which owes taxes, interest or penalties to any
20010H1716B2131 - 8 -
1 state. This paragraph does not apply to taxes which are
2 subject to a:
3 (i) deferred payment plan approved by the taxing
4 agency; or
5 (ii) timely administrative or judicial appeal unless
6 the applicable statute requires the payment of taxes
7 while an appeal is pending.
8 (c) Subsequent information.--The department may revoke a
9 registration based on information which would have been a basis
10 to deny the application if the department had known the
11 information at the time the registration was issued.
12 (d) Termination of professional employer arrangements.--
13 (1) A professional employer organization that ceases to
14 be registered shall do all of the following:
15 (i) Terminate professional employer arrangements
16 within 45 days.
17 (ii) Provide written notice to clients within five
18 business days that it is no longer registered.
19 (2) The professional employer organization shall
20 immediately provide proof to the department of the notice to
21 clients required by paragraph (1)(ii). Absent such proof, the
22 department may notify the clients that the professional
23 employer organization is no longer registered.
24 (3) During the 45 days specified in paragraph (1)(i),
25 the professional employer organization:
26 (i) shall notify clients of the requirements of
27 section 305(a)(1) of the Workers' Compensation Act and
28 assist clients in obtaining replacement workers'
29 compensation insurance coverage;
30 (ii) shall assist clients in obtaining replacement
20010H1716B2131 - 9 -
1 benefit plans, if any;
2 (iii) shall notify each covered employee that the
3 employee's relationship with the professional employer
4 organization is being terminated; and
5 (iv) may not commence professional employer
6 arrangements with new clients.
7 (4) The 45 days and five business days specified in
8 paragraph (1)(i) shall be calculated as prescribed by the
9 department.
10 (f) Limitation.--If the department denies an application or
11 revokes a registration under subsection (b) or (c), the
12 organization may not reapply for a registration for one year.
13 The one-year period shall be calculated as prescribed by the
14 department.
15 Section 8. Determinations and appeals.
16 (a) Determinations.--
17 (1) A determination denying an application, revoking a
18 registration or charging a penalty, and any decision on an
19 appeal, must be sent by certified mail to the professional
20 employer organization at the address designated in the
21 application and must designate the effective date of the
22 determination.
23 (2) The department shall grant or deny a completed
24 application for a new registration within 90 days after it is
25 filed, except that the department may withhold a
26 determination until the requirements of section 7(a)(1) and
27 (2) are met.
28 (b) Appeals.--If a professional employer organization has an
29 application for a registration denied or a registration revoked
30 or is charged a penalty, the organization may appeal the
20010H1716B2131 - 10 -
1 determination to the secretary. The appeal must specifically set
2 forth the factual and legal arguments on which it is based.
3 Arguments not contained in the appeal shall be waived. The
4 appeal must be filed within 30 days after the date of the
5 determination or the department's action shall be final.
6 (c) Supersedeas.--An appeal of a determination by the
7 department denying an application for a renewal registration,
8 revoking a registration or charging a penalty shall operate as a
9 supersedeas while the appeal under subsection (b) is pending.
10 The effective date of a denial, revocation or penalty subject to
11 this subsection shall not be prior to the expiration of the
12 appeal period under subsection (b).
13 (d) Burden of proof.--
14 (1) Except as set forth in paragraph (2), in an appeal
15 of a registration denial or revocation, the burden of proof
16 shall be on the professional employer organization.
17 (2) In an appeal of a registration denial or revocation
18 under section 7(b), the burden of proof shall be on the
19 department.
20 (3) In an appeal of a determination by the department
21 charging a penalty under section 12(c), the burden of proof
22 shall be on the department.
23 (e) Administrative agency law.--Proceedings under this
24 section are subject to 2 Pa.C.S. Ch. 5 Subch. A (relating to
25 practice and procedure of Commonwealth agencies) and Ch. 7
26 Subch. A (relating to judicial review of Commonwealth agency
27 action).
28 Section 9. Unemployment compensation.
29 (a) Report.--The professional employer organization shall
30 file a quarterly report which includes all contributions
20010H1716B2131 - 11 -
1 required to be paid for its covered employees. Unemployment
2 compensation contributions of covered employees shall be paid
3 utilizing the client company's experience rating. The department
4 shall maintain the experience record of each client company in
5 accordance with the provisions of the Unemployment Compensation
6 Law.
7 (b) Client liability.--If the professional employer
8 organization does not pay unemployment compensation
9 contributions, interest or penalties, in full and when due, on
10 wages paid to covered employees assigned to the client, the
11 client shall also be:
12 (1) liable for the unpaid, past due contributions,
13 interest and penalties; and
14 (2) subject to all enforcement and collection provisions
15 of the Unemployment Compensation Law.
16 (c) Limitations.--
17 (1) Notwithstanding section 4(l)(6) of the Unemployment
18 Compensation Law, services performed by a covered employee
19 assigned to a client shall not constitute employment for the
20 purposes of the Unemployment Compensation Law if any of the
21 following apply:
22 (i) The employee is the client.
23 (ii) The employee is a general partner in the
24 client.
25 (iii) The services would not constitute employment
26 if performed in the employ of the client.
27 (2) Notwithstanding section 4(x)(6) of the Unemployment
28 Compensation Law, remuneration paid by a professional
29 employer organization to a covered employee assigned to a
30 client shall not constitute wages within the meaning of the
20010H1716B2131 - 12 -
1 Unemployment Compensation Law if any of the following
2 subparagraphs apply:
3 (i) The employee is the client.
4 (ii) The employee is a general partner in the
5 client.
6 (iii) The remuneration would not constitute wages if
7 the client:
8 (A) was the employer of the employee for the
9 purposes of the Unemployment Compensation Law; and
10 (B) paid the remuneration.
11 (d) Transition provisions.--For professional employer
12 arrangements under which unemployment contributions for covered
13 employees were paid based on the professional employer
14 organization's experience rate on the effective date of this
15 subsection, the contribution rate utilized under subsection (a)
16 shall be the contribution rate that the client utilized prior to
17 entering into such professional employer arrangement,
18 irrespective of the limitations of section 301.1 of the
19 Unemployment Compensation Law. The department shall assign the
20 new employer rate to clients for which no rate can be
21 identified.
22 Section 10. Workers' compensation.
23 (a) Rights and duties.--Except as otherwise provided in this
24 section, for purposes of the Workers' Compensation Act, the
25 professional employer organization shall be an employer of
26 covered employees assigned to the client; and all of the
27 following provisions shall be applicable:
28 (1) The professional employer organization shall
29 maintain workers' compensation insurance coverage for covered
30 employees assigned to the client, and if coverage is so
20010H1716B2131 - 13 -
1 provided, the client shall be deemed to have met its
2 obligation under section 305 of the Workers' Compensation Act
3 for those employees. The professional employer organization
4 shall provide the client with a certificate of insurance
5 evidencing workers' compensation coverage annually and name
6 the client as a certificate holder.
7 (2) The professional employer organization shall pay
8 workers' compensation benefits in full and when due to
9 employees assigned to the client.
10 (3) Workers' compensation premiums for a professional
11 employer organization shall be based upon rules filed by an
12 approved rating organization under the Workers' Compensation
13 Act and rates approved by the Insurance Department.
14 (4) Workers' compensation insurance shall be obtained
15 from an insurance carrier licensed to write workers'
16 compensation insurance policies in this Commonwealth.
17 (5) The professional employer organization and the
18 client shall be jointly entitled to the exclusive remedy
19 provisions of section 303 of the Workers' Compensation Act.
20 (6) If the professional employer organization does not
21 meet its obligations and duties as an employer under the
22 Workers' Compensation Act, the client shall also be liable
23 for all the obligations and duties of an employer under the
24 Workers' Compensation Act and also for unpaid, past due
25 workers' compensation benefits owed to employees assigned to
26 the client by the professional employer organization. The
27 amount of benefits the employee may collect in the aggregate
28 may not exceed the amount of benefits which are unpaid and
29 past due.
30 (7) Notice to the client or the professional employer
20010H1716B2131 - 14 -
1 organization of an injury shall constitute notice to both
2 under Article III of the Workers' Compensation Act.
3 (b) Client.--The client shall be the employer of employees
4 assigned to it for purposes of the Workers' Compensation Act,
5 and the professional employer organization may not use the
6 exclusive remedy provisions of section 303 of the Workers'
7 Compensation Act if any of the following paragraphs apply:
8 (1) The professional employer organization is not
9 registered as required by this act.
10 (2) All of the following subparagraphs apply:
11 (i) The professional employer organization is owned
12 or controlled by or owns or controls the client, either
13 directly or indirectly, by legally enforceable means or
14 otherwise, or the professional employer organization and
15 the client are owned or controlled, either directly or
16 indirectly, by legally enforceable means or otherwise, by
17 the same person or persons.
18 (ii) All of the professional employer organization's
19 clients are covered by subparagraph (i) or the
20 professional employer organization does not make its
21 services as a professional employer organization
22 available to the public.
23 (c) Applicability.--This section shall apply to injuries
24 suffered on or after the effective date of this section.
25 (d) Definitions.--Subject to section 3 and unless the
26 context clearly indicates otherwise, words and phrases used in
27 this section shall have the meanings given to them in this
28 section shall have the meanings given to them in the Workers'
29 Compensation Act.
30 Section 11. Other responsibilities.
20010H1716B2131 - 15 -
1 (a) Taxes.--Subject to section 9, the professional employer
2 organization shall timely pay all payroll related taxes and
3 payroll withholding taxes, on wages paid, to the Commonwealth
4 and its political subdivisions with respect to covered employees
5 and shall timely file all corresponding tax reports.
6 (b) Report.--
7 (1) A professional employer organization shall file a
8 quarterly report with the department by the last day of the
9 month immediately following the calendar quarter. The report
10 shall:
11 (i) identify:
12 (A) names and addresses of clients to whom
13 employees were assigned during the quarter;
14 (B) names and addresses of new clients with whom
15 or which professional employer arrangements commenced
16 during the quarter; and
17 (C) names and addresses of clients with whom or
18 which professional employer arrangements ended during
19 the quarter;
20 (ii) provide for each client:
21 (A) the client's Federal employer identification
22 number and Pennsylvania unemployment compensation
23 account number;
24 (B) the address of each worksite where employees
25 are assigned to the client, the number of assigned
26 employees at each worksite and the standard
27 industrial classification code for each worksite; and
28 (C) the name of the workers' compensation
29 insurance carrier insuring employees assigned to the
30 client and the workers' compensation policy number;
20010H1716B2131 - 16 -
1 (iii) contain other information required by the
2 department; and
3 (iv) be made in the manner prescribed by the
4 department and be accompanied by proof, in a manner
5 satisfactory to the department, of workers' compensation
6 insurance coverage with respect to all new clients, as
7 required under section 10.
8 (2) The department shall not be required to disclose the
9 contents of the report except for purposes of this act or
10 other laws of this Commonwealth.
11 (c) Operation under other name.--A professional employer
12 organization may not conduct business in this Commonwealth under
13 any name other than that specified in its application without
14 the written consent of the department.
15 (d) Change in information.--A professional employer
16 organization shall notify the department in writing of a change
17 in the information contained in its application or other
18 document within 30 days after the change occurs.
19 (e) Notice to employee.--
20 (1) A professional employer organization shall provide
21 written information to covered employees as required by the
22 department, including the following:
23 (i) If the professional employer organization does
24 not meet all of its obligations and duties as an employer
25 under the Workers' Compensation Act, the client shall
26 also be liable for:
27 (A) all the obligations and duties of an
28 employer under the Workers' Compensation Act; and
29 (B) unpaid, past due workers' compensation
30 benefits under section 10(a)(6).
20010H1716B2131 - 17 -
1 (ii) If the professional employer organization does
2 not pay wages in full and when due, the client shall also
3 be liable for unpaid, past due wages under section 13(b).
4 (iii) The name and address of the workers'
5 compensation insurance carrier insuring the employee.
6 (2) The information required under paragraph (1) shall
7 be provided to a covered employee at the time of hire and
8 thereafter at intervals not exceeding six months. An employee
9 shall be notified immediately of a change in the information.
10 (f) Notice to client.--Prior to commencing a professional
11 employer arrangement, a professional employer organization shall
12 provide all of the following information in writing to the
13 client:
14 (1) If the professional employer organization does not
15 meet all of its obligations and duties as an employer under
16 the Workers' Compensation Act, the client shall also be
17 liable for:
18 (i) all the obligations and duties of an employer
19 under the Workers' Compensation Act; and
20 (ii) unpaid, past due workers' compensation benefits
21 owed to employees assigned to the client under section
22 10(a)(6).
23 (2) If the professional employer organization does not
24 pay wages owed to employees assigned to the client in full
25 and when due, the client shall also be liable for the unpaid
26 past due wages under section 13(b).
27 Section 12. Criminal and civil penalties; injunctions.
28 (a) Operation without a registration.--
29 (1) A professional employer organization that violates
30 section 4(a) commits a misdemeanor of the third degree. Each
20010H1716B2131 - 18 -
1 day of proscribed conduct shall constitute a separate
2 offense.
3 (2) A person, other than a professional employer
4 organization, that knowingly authorizes, implements,
5 administers, supervises or participates in a professional
6 employer arrangement for which a registered is required, on
7 behalf of an unregistered professional employer organization,
8 commits a misdemeanor of the third degree. Each day of
9 proscribed conduct shall constitute a separate offense.
10 (b) Misrepresentation or nondisclosure.--
11 (1) A professional employer organization that makes a
12 misrepresentation of material fact or fails to disclose a
13 material fact in an application or other document or
14 communication under this act commits a misdemeanor of the
15 third degree.
16 (2) A person, other than a professional employer
17 organization, that knowingly makes a representation of
18 material fact or fails to disclose a material fact in an
19 application or other document or communication under this act
20 commits a misdemeanor of the third degree.
21 (c) Violations.--A professional employer organization that
22 violates this act shall be subject to a civil penalty of not
23 more than $1,000 per day for each violation.
24 (d) Injunction.--Upon petition by the department, a court of
25 competent jurisdiction may enjoin a professional employer
26 organization from violating this act.
27 Section 13. Wages.
28 (a) Professional employer organization.--The professional
29 employer organization shall be liable to pay wages owed to
30 covered employees in full and when due.
20010H1716B2131 - 19 -
1 (b) Client.--If the professional employer organization does
2 not pay wages owed to covered employees under subsection (a),
3 the client shall also be liable for the unpaid, past due wages.
4 (c) Collection of wages.--Unpaid, past due wages owed to a
5 covered employee may be collected from the professional employer
6 organization under subsection (a) or the client under subsection
7 (b), or both. The amount of wages the employee may collect in
8 the aggregate may not exceed the unpaid amount. It shall not be
9 necessary to pursue or exhaust legal remedies against one before
10 pursuing legal remedies against the other. A professional
11 employer organization shall not be liable for wages for any
12 period for which the client has failed to make full payment in
13 accordance with its contractual obligations for such wages.
14 (d) Rights and obligations.--Rights and obligations under
15 this section shall exist in addition to other legal rights and
16 obligations with respect to wages.
17 (e) Applicability.--This section shall apply to wages which
18 become due on or after the effective date of this section.
19 (f) Definition.--As used in this section, the term "wages"
20 has the meaning given in section 2.1 of the act of July 14, 1961
21 (P.L.637, No.329), known as the Wage Payment and Collection Law.
22 Section 14. Benefit plans.
23 (a) Employment.--A professional employer organization shall
24 be deemed an employer under Commonwealth law for the purposes of
25 sponsoring pension and health care benefit plans for covered
26 employees.
27 (b) Inclusion.--Nothing in this section shall preclude a
28 client from including covered employees in any benefit plan
29 sponsored by the client or any affiliated company.
30 Section 15. Department.
20010H1716B2131 - 20 -
1 (a) Regulations.--The department shall promulgate
2 regulations to implement and administer this act.
3 (b) General enforcement.--The department may conduct audits,
4 inspections and investigations as necessary to administer and
5 enforce this act. The books and records of a professional
6 employer organization and a client shall be available to the
7 department for inspection and copying at reasonable times. The
8 department may examine an individual under oath or affirmation
9 and issue subpoenas to compel the attendance of witnesses and
10 the production of documents.
11 Section 16. Other laws.
12 (a) No exemption.--This act does not exempt a client or a
13 professional employer organization from other Federal, State or
14 local laws. Rights and obligations conferred and imposed by this
15 act shall exist in addition to rights, responsibilities and
16 liabilities which otherwise exist, except where the result would
17 be inconsistent with this act.
18 (b) Insurance.--Subject to any contrary provisions contained
19 in the written professional employer agreement between the
20 professional employer organization and the client, a
21 professional employer arrangement shall be interpreted for the
22 purposes of insurance and bonding as follows:
23 (1) A professional employer organization shall not be
24 liable for the acts, errors or omissions of a client of a
25 covered employee when the employee is acting under the
26 direction and control of the client.
27 (2) A client shall not be liable for the acts, errors or
28 omissions of a professional employer organization or of any
29 covered employee assigned to the client who is acting under
30 the direction and control of the professional employer
20010H1716B2131 - 21 -
1 organization.
2 (3) Covered employees shall not be construed to be
3 employees of the professional employer organization for the
4 purposes of general liability insurance, automobile
5 insurance, fidelity bonds, surety bonds, employers liability
6 which is not covered by workers' compensation or liquor
7 liability insurance unless the covered employees are included
8 as such in the professional employer arrangement or other
9 contract.
10 Section 17. Collective bargaining protections.
11 (a) Interference prohibited.--Professional employer
12 arrangements shall not be established or otherwise utilized, in
13 whole or in part, to interfere with the right of any employee or
14 worker to organize or freely choose unions or associations which
15 represent them for the purpose of collective bargaining.
16 (b) Assignment prohibited.--A professional employer
17 organization shall not assign or reassign covered employees for
18 the purpose, in whole or in part, of interfering with the terms
19 and conditions of an existing collective bargaining agreement or
20 an effort on the part of any employee or worker to organize or
21 freely choose unions or associations which do or may represent
22 them for the purpose of collective bargaining.
23 Section 60. Effective date.
24 This act shall take effect as follows:
25 (1) The following provisions shall take effect in 60
26 days:
27 (i) Section 10.
28 (ii) Section 11(e) and (f).
29 (2) The following provisions shall take effect on
30 January 1, 2002:
20010H1716B2131 - 22 -
1 (i) Section 4(a).
2 (ii) Section 9(a).
3 (iii) Section 11(b).
4 (3) The remainder of this act shall take effect
5 immediately.
F5L43MRD/20010H1716B2131 - 23 -