PRIOR PRINTER'S NO. 2131 PRINTER'S NO. 3017
No. 1716 Session of 2001
INTRODUCED BY WILT, CAPPELLI, CLARK, J. EVANS, FLICK, LEH, LEWIS
AND R. STEVENSON, JUNE 11, 2001
AS REPORTED FROM COMMITTEE ON LABOR RELATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, DECEMBER 5, 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.
1 Section 13. Wages.
2 Section 14. Benefit plans.
3 Section 15. Department.
4 Section 16. Other laws.
5 Section 17. Collective bargaining protections.
6 SECTION 18. OTHER ARRANGEMENTS. <--
7 Section 60. Effective date.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Short title.
11 This act shall be known and may be cited as the Professional
12 Employer Organization Registration Act.
13 Section 2. Legislative intent.
14 The General Assembly finds and declares that it is necessary
15 to do all of the following:
16 (1) Safeguard the rights of employees participating in a
17 professional employer arrangement.
18 (2) Preserve the rights of employees with regard to
19 unemployment compensation and workers' compensation.
20 (3) Protect the interest of the Commonwealth in the
21 financial security of the unemployment compensation and
22 workers' compensation systems.
23 (4) Recognize the professional employer organization as
24 an employer FOR CERTAIN PURPOSES. <--
25 (5) Preserve the integrity of the collective bargaining
26 process by prohibiting the use of professional employer
27 arrangements to interfere with the right of any employee or
28 worker to organize and freely choose unions or associations
29 which may represent them for the purpose of collective
30 bargaining.
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1 Section 3. Definitions.
2 The following words and phrases when used in this act shall
3 have the meanings given to them in this section unless the
4 context clearly indicates otherwise:
5 "Application." An application for a registration. <--
6 "Client." A person that enters into a professional employer
7 arrangement with a professional employer organization.
8 "Covered employee." An employee covered WHO IS ASSIGNED TO A <--
9 CLIENT under a professional employer arrangement.
10 "Department." The Department of Labor and Industry of the
11 Commonwealth.
12 "Inside director." For a professional employer organization <--
13 organized as a corporation, an AN individual who is both a <--
14 director of the corporation and any of the following:
15 (1) An employee or agent of or consultant to the
16 corporation.
17 (2) An individual who is involved in the daily
18 management of the corporation.
19 (3) A spouse, parent or child of an individual listed in
20 paragraph (1) or (2).
21 "Person." An individual, partnership, corporation, company,
22 firm, association, organization, joint venture, limited
23 liability company or any type of business entity.
24 "Professional employer arrangement." An arrangement between <--
25 a professional employer organization and a client under which
26 the professional employer organization agrees to hire one or
27 more members of the client's work force and agrees to assign one
28 or more of those individuals to that client to perform services
29 for the client on a long-term, ongoing basis. The term includes
30 subsequent long-term, ongoing assignments to a client by a
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1 professional employer organization of individuals not previously
2 employed by the client; long-term, ongoing assignments to a
3 client, that is a newly formed business, by a professional
4 employer organization of individuals to constitute that client's
5 work force or distinct portion of that client's work force; and
6 long-term, ongoing assignments to a client by the professional
7 employer organization of individuals to constitute that client's
8 work force or distinct portion of that work force at a newly
9 instituted facility. The term does not include any of the
10 following: AS FOLLOWS: <--
11 (1) AN ARRANGEMENT BETWEEN A PROFESSIONAL EMPLOYER
12 ORGANIZATION AND A CLIENT UNDER WHICH ALL OF THE FOLLOWING
13 SUBPARAGRAPHS APPLY:
14 (I) ONE OR MORE PREVIOUSLY EMPLOYED EMPLOYEES OF THE
15 CLIENT ARE PLACED ON THE PAYROLL OF THE PROFESSIONAL
16 EMPLOYER ORGANIZATION AT THE BEGINNING OF THE ARRANGEMENT
17 AND ASSIGNED TO PERFORM SERVICES FOR THE CLIENT. THIS
18 SUBPARAGRAPH DOES NOT APPLY TO ANY OF THE FOLLOWING:
19 (A) IF THE CLIENT IS A NEW BUSINESS ENTITY.
20 (B) IF THE EMPLOYEES ARE ASSIGNED TO A NEW
21 WORKSITE OF THE CLIENT.
22 (C) IF EMPLOYEES ARE ASSIGNED TO A WORKSITE
23 WHERE THE CLIENT DID NOT UTILIZE EMPLOYEES OF THE
24 CATEGORY OR TYPE ASSIGNED PRIOR TO THE ARRANGEMENT.
25 (II) AT LEAST 25% OF THE CLIENT'S WORK FORCE OR 25%
26 OF THE CLIENT'S WORK FORCE AT A WORKSITE CONSISTS OF
27 PREVIOUSLY EMPLOYED EMPLOYEES OF THE CLIENT. THE
28 PERCENTAGE REQUIREMENT OF THIS SUBPARAGRAPH CAN BE MET BY
29 EMPLOYEES NOT PREVIOUSLY EMPLOYED BY THE CLIENT BUT
30 ASSIGNED TO THE CLIENT AFTER INITIATION OF THE
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1 ARRANGEMENT TO PERFORM SERVICES WHICH ARE LONG TERM IN
2 NATURE.
3 (III) THE ASSIGNMENT OF EMPLOYEES TO THE CLIENT IS
4 OR IS INTENDED TO BE LONG TERM OR ONGOING RATHER THAN
5 TEMPORARY OR SEASONAL.
6 (2) THE TERM DOES NOT INCLUDE ANY OF THE FOLLOWING:
7 (1) (I) An arrangement in which a person shares <--
8 employees with a commonly owned company within the meaning of
9 section 414(b) and (c) of the Internal Revenue Code of 1986
10 (Public Law 99-514, 26 U.S.C. § 414 (b) and (c)) but AND: <--
11 (i) (A) the person does not make its services as a <--
12 professional employer organization available to the
13 public; and
14 (ii) (B) the principal business activity of the <--
15 person is not entering into professional employer
16 arrangements.
17 (2) (II) A temporary help arrangement in which a person <--
18 RECRUITS, HIRES AND assigns one or more employees to another <--
19 person to support or supplement the other persons PERSON'S <--
20 work force in special temporary work situations, such as <--
21 INCLUDING employee absences, skill shortages, seasonal <--
22 workloads and special assignments.
23 (3) (III) A vendor arrangement in which: <--
24 (i) (A) a person provides a product or service to <--
25 another person;
26 (ii) (B) the person providing the product or service <--
27 is fully responsible for it; and
28 (iii) (C) providing the product or service to the <--
29 other person, rather than assigning one or more employees
30 to the other person to constitute some or all of the
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1 other person's work force, is the purpose of the
2 arrangement.
3 "Professional employer organization." A person that enters
4 into a professional employer arrangement with a client. The term
5 includes an applicant for a registration.
6 "Registration." A new registration or renewal registration.
7 A new registration shall include a registration for which a
8 renewal application is filed late.
9 "Responsible person." An individual who A PERSON THAT: <--
10 (1) is the proprietor of a sole proprietorship;
11 (2) is a general partner in a partnership;
12 (3) is a shareholder who owns at least 15% of the voting
13 shares of a corporation;
14 (4) is an inside director or officer of a corporation;
15 or
16 (5) has the authority to establish and direct the
17 policies or management of the organization.
18 "Secretary." The Secretary of Labor and Industry of the
19 Commonwealth.
20 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
21 known as the Tax Reform Code of 1971.
22 "Unemployment Compensation Law." The act of December 5, 1936
23 (2nd Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment
24 Compensation Law.
25 "Workers' Compensation Act." The act of June 2, 1915
26 (P.L.736, No.338), known as the Workers' Compensation Act.
27 Section 4. Registration required.
28 (a) Unregistered operation prohibited.--A professional
29 employer organization may not engage in a professional employer
30 arrangement without being registered if an employee is ONE OR <--
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1 MORE OF THE EMPLOYEES ARE assigned to the client to do any of
2 the following:
3 (1) Perform services in this Commonwealth for the
4 client. This paragraph does not include services which are
5 isolated, transitory or incidental to services performed
6 outside this Commonwealth.
7 (2) Perform services for which the client's base of
8 operations is located in this Commonwealth.
9 (b) Term of registration.--Except as otherwise prescribed by
10 the department, a registration shall be valid for two years <--
11 unless revoked.
12 (c) Transfer or assignment prohibited.--A registration is a
13 privilege which is not transferable or assignable.
14 Section 5. Application for registration.
15 An application for a registration must include all <--
16 information and documentation required by the department,
17 including information on the professional employer
18 organization's ownership, operations in other states and past
19 and present compliance with applicable law. The application must
20 be made in the manner prescribed by the department. The
21 department may include as an application requirement criminal
22 background checks and credit reporting investigations of
23 responsible persons.
24 Section 6. Tax clearance.
25 (a) Waiver of confidentiality.--An application constitutes a
26 waiver of confidentiality with respect to the department for tax
27 information in the possession of the Department of Revenue or
28 the Office of Attorney General, regardless of the source and a
29 consent to the providing of PROVIDING the information to the <--
30 department.
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1 (b) Review.--Upon receipt of an application, the Department
2 of Revenue and the Office of Attorney General shall provide
3 information regarding the professional employer organization's
4 tax status to the department.
5 Section 7. Fees; issuance, denial and revocation of
6 registration.
7 (a) Issuance.--The department may issue a registration to <--
8 REGISTER a professional employer organization only if there is <--
9 compliance with all of the following:
10 (1) The professional employer organization pays to the
11 department a nonrefundable fee of $1,000 for a first-time <--
12 application NEW REGISTRATION or $500 for a renewal <--
13 application REGISTRATION. <--
14 (2) The professional employer organization provides
15 proof, in a manner satisfactory to the department, of
16 workers' compensation insurance coverage for existing clients
17 under section 10.
18 (3) The application and all required documents are
19 complete and accurate and meet the requirements of this act.
20 (4) The professional employer organization meets all
21 requirements of sections 5 and 6 and this subsection.
22 (5) All fees are paid, all reports are filed and all
23 penalties are paid or are subject to a deferred payment plan
24 approved by the department.
25 (6) All tax returns due to the Commonwealth are filed.
26 (7) All taxes, interest and penalties owed to the
27 Commonwealth are:
28 (i) paid;
29 (ii) subject to a deferred payment plan approved by
30 the Commonwealth; or
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1 (iii) under appeal unless the applicable statute
2 requires the payment of taxes while an appeal is pending.
3 (b) Denial or revocation.--The department may deny an <--
4 application for a registration or revoke a registration for good <--
5 cause associated with the legislative intent of this act or if
6 any of the following applies:
7 (1) The professional employer organization or a
8 responsible person IN THE ORGANIZATION violates this act or a <--
9 regulation or order under this act.
10 (2) The professional employer organization or a
11 responsible person IN THE ORGANIZATION fails to provide a <--
12 written response to a written inquiry from the department
13 within 30 days from the date of receipt of the inquiry.
14 (3) The professional employer organization or a
15 responsible person IN THE ORGANIZATION makes a <--
16 misrepresentation of material fact or fails to disclose a
17 material fact in any application, document or communication
18 under this act.
19 (4) The professional employer organization or a
20 responsible person IN THE ORGANIZATION obtains or attempts to <--
21 obtain a registration by fraud or bribery.
22 (5) The professional employer organization or a
23 responsible person IN THE ORGANIZATION was sentenced for: <--
24 (i) a Federal or state offense involving dishonesty
25 or fraud; or
26 (ii) for an offense under the Tax Reform Code, the
27 Unemployment Compensation Law, section 305 of the
28 Workers' Compensation Act or this act.
29 (6) The professional employer organization or <--
30 responsible person defaults on a deferred payment plan under
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1 subsection (a)(5) or (7)(ii).
2 (7) The professional employer organization owes TAX <--
3 RETURNS, taxes, interest or penalties to any state or a
4 responsible person IN THE ORGANIZATION is or was a <--
5 responsible person in another professional employer
6 organization which owes TAX RETURNS, taxes, interest or <--
7 penalties to any state. This paragraph does not apply to
8 taxes which are subject to a:
9 (i) deferred payment plan approved by the taxing
10 agency; or
11 (ii) timely administrative or judicial appeal unless
12 the applicable statute requires the payment of taxes
13 while an appeal is pending.
14 (c) Subsequent information.--The department may revoke a <--
15 registration based on information which would have been a basis
16 to deny the application if the department had known the
17 information at the time the registration was issued PROFESSIONAL <--
18 EMPLOYER ORGANIZATION WAS REGISTERED.
19 (d) Termination of professional employer arrangements.--
20 (1) A professional employer organization that ceases to
21 be registered shall do all of the following:
22 (i) Terminate professional employer arrangements
23 within 45 days.
24 (ii) Provide written notice to clients within five
25 business days that it is no longer registered.
26 (2) The professional employer organization shall
27 immediately provide proof to the department of the notice to
28 clients required by paragraph (1)(ii). Absent such proof, the
29 department may notify the clients that the professional
30 employer organization is no longer registered.
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1 (3) During the 45 days specified in paragraph (1)(i),
2 the professional employer organization:
3 (i) shall notify clients of the requirements of
4 section 305(a)(1) of the Workers' Compensation Act and
5 assist clients in obtaining replacement workers'
6 compensation insurance coverage;
7 (ii) shall assist clients in obtaining replacement
8 benefit plans, if any;
9 (iii) shall notify each covered employee that the
10 employee's relationship with the professional employer
11 organization is being terminated; and
12 (iv) may not commence professional employer
13 arrangements with new clients.
14 (4) The 45 days and five business days specified in
15 paragraph (1)(i) shall be calculated as prescribed by the <--
16 department.
17 (e) Limitation.--If the department denies an application or
18 revokes a registration under subsection (b) or (c), the (B)(1) <--
19 THROUGH (6), THE PROFESSIONAL EMPLOYER organization may not
20 reapply for a registration for one year. IF A RESPONSIBLE PERSON <--
21 IN THE ORGANIZATION IS A RESPONSIBLE PERSON IN ANOTHER
22 PROFESSIONAL EMPLOYER ORGANIZATION, THE OTHER ORGANIZATION ALSO
23 MAY NOT APPLY OR REAPPLY FOR A REGISTRATION FOR ONE YEAR. The
24 one-year period shall be calculated as prescribed by the
25 department.
26 Section 8. Determinations and appeals.
27 (a) Determinations.--
28 (1) A determination denying an application, revoking a
29 registration or charging a penalty, and any decision on an
30 appeal, must be sent by certified mail to the professional
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1 employer organization at the address designated in the
2 application and must designate the effective date of the
3 determination.
4 (2) The department shall grant or deny a completed
5 application for a new registration within 90 days after it is
6 filed, except that the department may withhold a
7 determination until the requirements of section 7(a)(1) and
8 (2) are met.
9 (b) Appeals.--If a professional employer organization has an <--
10 application for a registration denied or a registration revoked <--
11 or is charged a penalty, the organization may appeal the
12 determination to the secretary. The appeal must specifically set
13 forth the factual and legal arguments on which it is based.
14 Arguments not contained in the appeal shall be waived. The
15 appeal must be filed within 30 days after the date of the
16 determination or the department's action shall be final.
17 (c) Supersedeas.--An appeal of a determination by the
18 department denying an application for a renewal registration
19 UNDER SECTION 7(B), revoking a registration or charging a <--
20 penalty shall operate as a supersedeas while the appeal under
21 subsection (b) is pending. The effective date of a denial,
22 revocation or penalty subject to this subsection shall not be
23 prior to the expiration of the appeal period under subsection
24 (b).
25 (d) Burden of proof.--
26 (1) Except as set forth in paragraph (2), in an appeal
27 of a registration denial or revocation, the burden of proof
28 shall be on the professional employer organization.
29 (2) In an appeal of a registration denial or revocation
30 under section 7(b)(1) THROUGH (6), the burden of proof shall <--
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1 be on the department.
2 (3) In an appeal of a determination by the department
3 charging a penalty under section 12(c), the burden of proof
4 shall be on the department.
5 (e) Administrative agency law.--Proceedings under this
6 section are subject to 2 Pa.C.S. Ch. 5 Subch. A (relating to
7 practice and procedure of Commonwealth agencies) and Ch. 7
8 Subch. A (relating to judicial review of Commonwealth agency
9 action).
10 Section 9. Unemployment compensation.
11 (a) Report.--The professional employer organization shall <--
12 file a quarterly report which includes all contributions
13 required to be paid for its covered employees. Unemployment
14 compensation contributions of covered employees shall be paid
15 utilizing the client company's experience rating. The department
16 shall maintain the experience record of each client company in
17 accordance with the provisions of the Unemployment Compensation
18 Law.
19 (b) Client liability.--If the professional employer
20 organization does not pay unemployment compensation
21 contributions, interest or penalties, in full and when due, on
22 wages paid to covered employees assigned to the client, the
23 client shall also be:
24 (1) liable for the unpaid, past due contributions,
25 interest and penalties; and
26 (2) subject to all enforcement and collection provisions
27 of the Unemployment Compensation Law.
28 (c) Limitations.--
29 (1) Notwithstanding section 4(l)(6) of the Unemployment
30 Compensation Law, services performed by a covered employee
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1 assigned to a client shall not constitute employment for the
2 purposes of the Unemployment Compensation Law if any of the
3 following apply:
4 (i) The employee is the client.
5 (ii) The employee is a general partner in the
6 client.
7 (iii) The services would not constitute employment
8 if performed in the employ of the client.
9 (2) Notwithstanding section 4(x)(6) of the Unemployment
10 Compensation Law, remuneration paid by a professional
11 employer organization to a covered employee assigned to a
12 client shall not constitute wages within the meaning of the
13 Unemployment Compensation Law if any of the following
14 subparagraphs apply:
15 (i) The employee is the client.
16 (ii) The employee is a general partner in the
17 client.
18 (iii) The remuneration would not constitute wages if
19 the client:
20 (A) was the employer of the employee for the
21 purposes of the Unemployment Compensation Law; and
22 (B) paid the remuneration.
23 (d) Transition provisions.--For professional employer
24 arrangements under which unemployment contributions for covered
25 employees were paid based on the professional employer
26 organization's experience rate on the effective date of this
27 subsection, the contribution rate utilized under subsection (a)
28 shall be the contribution rate that the client utilized prior to
29 entering into such professional employer arrangement,
30 irrespective of the limitations of section 301.1 of the
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1 Unemployment Compensation Law. The department shall assign the
2 new employer rate to clients for which no rate can be
3 identified.
4 (A) EMPLOYER.--FOR PURPOSES OF THE UNEMPLOYMENT COMPENSATION <--
5 LAW, THE CLIENT SHALL BE THE EMPLOYER OF COVERED EMPLOYEES.
6 (B) ACTIONS FOR CLIENT.--THE PROFESSIONAL EMPLOYER
7 ORGANIZATION MAY FILE UNEMPLOYMENT COMPENSATION REPORTS AND PAY
8 UNEMPLOYMENT COMPENSATION CONTRIBUTIONS, PENALTIES, AND INTEREST
9 ON BEHALF OF THE CLIENT. A REPORT FILED OR A PAYMENT MADE UNDER
10 THIS SUBSECTION BY A PROFESSIONAL EMPLOYER ORGANIZATION SHALL BE
11 FILED OR MADE ON THE CLIENT'S UNEMPLOYMENT COMPENSATION ACCOUNT.
12 A PAYMENT OF CONTRIBUTIONS UNDER THIS SUBSECTION BY A
13 PROFESSIONAL EMPLOYER ORGANIZATION SHALL BE MADE AT THE CLIENT'S
14 CONTRIBUTION RATE. AN AUTHORIZATION, FILING OR PAYMENT UNDER
15 THIS SUBSECTION SHALL BE MADE IN THE MANNER PRESCRIBED BY THE
16 DEPARTMENT. THIS SUBSECTION SHALL NOT BE CONSTRUED TO ALLOW
17 MULTIPLE REPORTS TO BE FILED ON A CLIENT'S UNEMPLOYMENT
18 COMPENSATION ACCOUNT FOR A CALENDAR QUARTER.
19 (C) EXCLUDED SERVICES.--NOTWITHSTANDING SECTION 4(1)(6) OF
20 THE UNEMPLOYMENT COMPENSATION LAW, WHETHER SERVICES PERFORMED BY
21 A COVERED EMPLOYEE CONSTITUTE EMPLOYMENT WITHIN THE MEANING OF
22 THE UNEMPLOYMENT COMPENSATION LAW SHALL BE DETERMINED IN
23 ACCORDANCE WITH SUBSECTION (A).
24 (D) EXCLUDED REMUNERATION.--NOTWITHSTANDING SECTION 4(X)(6)
25 OF THE UNEMPLOYMENT COMPENSATION LAW, WHETHER REMUNERATION PAID
26 TO A COVERED EMPLOYEE BY A PROFESSIONAL EMPLOYER ORGANIZATION
27 CONSTITUTES WAGES WITHIN THE MEANING OF THE UNEMPLOYMENT
28 COMPENSATION LAW SHALL BE DETERMINED IN ACCORDANCE WITH
29 SUBSECTION (A).
30 (E) TRANSFER OF EXPERIENCE.--A TRANSFER OF EXPERIENCE RECORD
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1 AND RESERVE ACCOUNT BALANCE UNDER SECTION 301(D) OF THE
2 UNEMPLOYMENT COMPENSATION LAW FROM A PROFESSIONAL EMPLOYER
3 ORGANIZATION TO A CLIENT MAY NOT OCCUR.
4 (F) APPLICABILITY.--
5 (1) SUBSECTION (A) SHALL APPLY TO SERVICES FOR WHICH
6 WAGES ARE PAID ON OR AFTER THE EFFECTIVE DATE OF SUBSECTION
7 (A).
8 (2) SUBSECTION (B) SHALL APPLY TO REPORTS AND PAYMENTS
9 FOR CALENDAR QUARTERS BEGINNING ON OR AFTER THE EFFECTIVE
10 DATE OF SUBSECTION (B).
11 (G) DEFINITIONS.--SUBJECT TO SECTION 3 AND UNLESS THE
12 CONTEXT CLEARLY INDICATES OTHERWISE, WORDS AND PHRASES USED IN
13 THIS SECTION SHALL HAVE THE MEANINGS GIVEN TO THEM IN THE
14 UNEMPLOYMENT COMPENSATION LAW.
15 Section 10. Workers' compensation.
16 (a) Rights and duties.--Except as otherwise provided in this
17 section, for purposes of the Workers' Compensation Act, the
18 professional employer organization shall be an employer of
19 covered employees assigned to the client; and all of the
20 following provisions shall be applicable:
21 (1) The professional employer organization shall
22 maintain workers' compensation insurance coverage for covered
23 employees assigned to the client, and if coverage is so
24 provided, the client shall be deemed to have met its
25 obligation under section 305 of the Workers' Compensation Act
26 for those employees. The professional employer organization
27 shall provide the client with a certificate of insurance
28 evidencing workers' compensation coverage annually and name
29 the client as a certificate holder.
30 (2) The professional employer organization shall pay
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1 workers' compensation benefits in full and when due to
2 employees assigned to the client.
3 (3) Workers' compensation premiums for a professional
4 employer organization shall be based upon rules filed by an
5 approved rating organization under the Workers' Compensation
6 Act and rates approved by the Insurance Department. WORKERS' <--
7 COMPENSATION PREMIUMS SHALL BE PAID BASED ON THE CLIENT'S
8 EXPERIENCE RATE. AN APPROVED RATING ORGANIZATION SHALL
9 PROMULGATE RULES WHICH ACCOUNT FOR A CLIENT'S EXPERIENCE,
10 WHICH MAINTAIN EACH CLIENT'S EXPERIENCE AND WHICH ENSURE THAT
11 PREMIUMS ARE BASED ON A CLIENT'S ACTUAL RISK.
12 (4) Workers' compensation insurance shall be obtained
13 from an insurance carrier licensed to write workers'
14 compensation insurance policies in this Commonwealth.
15 (5) The professional employer organization and the
16 client shall be jointly entitled to the exclusive remedy
17 provisions of section 303 of the Workers' Compensation Act.
18 (6) If the professional employer organization does not
19 meet its obligations and duties as an employer under the
20 Workers' Compensation Act, the client shall also be liable
21 for all the obligations and duties of an employer under the
22 Workers' Compensation Act and also for unpaid, past due
23 workers' compensation benefits owed to employees assigned to <--
24 the client by the professional employer organization. The
25 COVERED EMPLOYEES. THE amount of benefits the employee may <--
26 collect in the aggregate may not exceed the amount of
27 benefits which are unpaid and past due.
28 (7) Notice to the client or the professional employer
29 organization of an injury shall constitute notice to both
30 under Article III of the Workers' Compensation Act.
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1 (b) Client.--The client shall be the employer of COVERED <--
2 employees assigned to it for purposes of the Workers' <--
3 Compensation Act, and the professional employer organization may
4 not use the exclusive remedy provisions of section 303 of the
5 Workers' Compensation Act if any of the following paragraphs
6 apply:
7 (1) The professional employer organization is not
8 registered as required by this act.
9 (2) All of the following subparagraphs apply:
10 (i) The professional employer organization is owned
11 or controlled by or owns or controls the client, either
12 directly or indirectly, by legally enforceable means or
13 otherwise, or the professional employer organization and
14 the client are owned or controlled, either directly or
15 indirectly, by legally enforceable means or otherwise, by
16 the same person or persons.
17 (ii) All of the professional employer organization's
18 clients are covered by subparagraph (i) or the
19 professional employer organization does not make its
20 services as a professional employer organization
21 available to the public.
22 (c) Applicability.--This section shall apply to injuries
23 suffered on or after the effective date of this section.
24 (d) Definitions.--Subject to section 3 and unless the
25 context clearly indicates otherwise, words and phrases used in
26 this section shall have the meanings given to them in this
27 section shall have the meanings given to them in the Workers'
28 Compensation Act.
29 Section 11. Other responsibilities.
30 (a) Taxes.--Subject to section 9, the professional employer
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1 organization shall timely pay all payroll related taxes and
2 payroll withholding taxes, on wages paid, to the Commonwealth <--
3 and its political subdivisions with respect to covered employees
4 and shall timely file all corresponding tax reports.
5 (b) Report.--
6 (1) A professional employer organization shall file a
7 quarterly report with the department by the last day of the
8 month immediately following the calendar quarter. The report
9 shall:
10 (i) identify:
11 (A) names and addresses of clients to whom
12 employees were assigned during the quarter;
13 (B) names and addresses of new clients with whom
14 or which professional employer arrangements commenced <--
15 during the quarter; and
16 (C) names and addresses of clients with whom or <--
17 which professional employer arrangements ended during
18 the quarter;
19 (ii) provide for each client:
20 (A) the client's Federal employer identification
21 number and Pennsylvania unemployment compensation
22 account number;
23 (B) the address of each worksite where employees
24 are assigned to the client, the number of assigned
25 employees at each worksite and the standard <--
26 industrial classification code for each worksite; and <--
27 (C) the name of the workers' compensation
28 (C) THE AMOUNT OF WAGES PAID DURING THE QUARTER <--
29 FOR EACH WORKSITE; AND
30 (D) THE NAME OF THE WORKERS' COMPENSATION
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1 insurance carrier insuring employees assigned to the
2 client and the workers' compensation policy number;
3 (iii) contain other information required by the
4 department; and
5 (iv) be made in the manner prescribed by the
6 department and be accompanied by proof, in a manner
7 satisfactory to the department, of workers' compensation
8 insurance coverage with respect to all new clients, as
9 required under section 10.
10 (2) The department shall not be required to disclose the
11 contents of the report except for purposes of this act or <--
12 other laws of this Commonwealth. CONTENTS OF THE REPORT <--
13 EXCEPT:
14 (I) FOR PURPOSES OF THIS ACT OR OTHER LAWS OF THIS
15 COMMONWEALTH; OR
16 (II) TO AN APPROVED WORKERS' COMPENSATION INSURANCE
17 RATING ORGANIZATION FOR USE AS AUTHORIZED BY LAW, UNDER
18 CONFIDENTIALITY RESTRICTIONS ESTABLISHED BY THE
19 DEPARTMENT.
20 (c) Operation under other name.--A professional employer
21 organization may not conduct business in this Commonwealth under
22 any name other than that specified in its application without
23 the written consent of the department.
24 (d) Change in information.--A professional employer
25 organization shall notify the department in writing of a change
26 in the information contained in its application or other
27 document within 30 days after the change occurs.
28 (e) Notice to employee.--
29 (1) A professional employer organization shall provide
30 written information to covered employees as required by the
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1 department, including the following:
2 (i) If the professional employer organization does
3 not meet all of its obligations and duties as an employer
4 under the Workers' Compensation Act, the client shall
5 also be liable for:
6 (A) all the obligations and duties of an
7 employer under the Workers' Compensation Act; and
8 (B) unpaid, past due workers' compensation
9 benefits under section 10(a)(6).
10 (ii) If the professional employer organization does
11 not pay wages in full and when due, the client shall also
12 be liable for unpaid, past due wages under section 13(b).
13 (iii) The name and address of the workers'
14 compensation insurance carrier insuring the employee.
15 (2) The information required under paragraph (1) shall
16 be provided to a covered employee at the time of hire and
17 thereafter at intervals not exceeding six months. An employee
18 shall be notified immediately of a change in the information.
19 (f) Notice to client.--Prior to commencing a professional
20 employer arrangement, a professional employer organization shall
21 provide all of the following information in writing to the
22 client:
23 (1) If the professional employer organization does not
24 meet all of its obligations and duties as an employer under
25 the Workers' Compensation Act, the client shall also be
26 liable for:
27 (i) all the obligations and duties of an employer
28 under the Workers' Compensation Act; and
29 (ii) unpaid, past due workers' compensation benefits
30 owed to employees assigned to the client COVERED <--
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1 EMPLOYEES under section 10(a)(6).
2 (2) If the professional employer organization does not
3 pay wages owed to employees assigned to the client COVERED <--
4 EMPLOYEES in full and when due, the client shall also be
5 liable for the unpaid past due wages under section 13(b).
6 (3) THE CLIENT SHALL BE THE EMPLOYER FOR THE PURPOSES OF <--
7 THE UNEMPLOYMENT COMPENSATION LAW REQUIREMENTS OF SECTION
8 9(A).
9 (G) APPLICABILITY.--
10 (1) SUBSECTION (A) SHALL APPLY TO TAXES ON REMUNERATION
11 PAID ON OR AFTER THE EFFECTIVE DATE OF SUBSECTION (A).
12 (2) SUBSECTION (B) SHALL APPLY TO CALENDAR QUARTERS
13 BEGINNING ON OR AFTER THE EFFECTIVE DATE OF SUBSECTION (B).
14 Section 12. Criminal and civil penalties; injunctions.
15 (a) Operation without a registration.-- <--
16 (1) A professional employer organization that violates
17 section 4(a) commits a misdemeanor of the third degree. Each
18 day of proscribed conduct shall constitute a separate
19 offense.
20 (2) A person, other than a professional employer
21 organization, that knowingly authorizes, implements,
22 administers, supervises or participates in a professional
23 employer arrangement for which a registered REGISTRATION is <--
24 required, on behalf of an unregistered professional employer
25 organization, commits a misdemeanor of the third degree. Each
26 day of proscribed conduct shall constitute a separate
27 offense.
28 (b) Misrepresentation or nondisclosure.--
29 (1) A professional employer organization that makes a
30 misrepresentation of material fact or fails to disclose a
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1 material fact in an application or other document or
2 communication under this act commits a misdemeanor of the
3 third degree.
4 (2) A person, other than a professional employer
5 organization, that knowingly makes a representation of
6 material fact or fails to disclose a material fact in an
7 application or other document or communication under this act
8 commits a misdemeanor of the third degree.
9 (c) Violations.--A professional employer organization that
10 violates this act shall be subject to a civil penalty of not
11 more than $1,000 per day for each violation.
12 (d) Injunction.--Upon petition by the department, a court of
13 competent jurisdiction may enjoin a professional employer
14 organization from violating this act.
15 Section 13. Wages.
16 (a) Professional employer organization.--The professional
17 employer organization shall be liable to pay wages owed to
18 covered employees in full and when due.
19 (b) Client.--If the professional employer organization does
20 not pay wages owed to covered employees under subsection (a),
21 the client shall also be liable for the unpaid, past due wages.
22 (c) Collection of wages.--Unpaid, past due wages owed to a
23 covered employee may be collected from the professional employer
24 organization under subsection (a) or the client under subsection
25 (b), or both. The amount of wages the employee may collect in
26 the aggregate may not exceed the unpaid amount. It shall not be
27 necessary to pursue or exhaust legal remedies against one before
28 pursuing legal remedies against the other. A professional <--
29 employer organization shall not be liable for wages for any
30 period for which the client has failed to make full payment in
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1 accordance with its contractual obligations for such wages.
2 (d) Rights and obligations.--Rights and obligations under
3 this section shall exist in addition to other legal rights and
4 obligations with respect to wages.
5 (e) Applicability.--This section shall apply to wages which
6 become due on or after the effective date of this section.
7 (f) Definition.--As used in this section, the term "wages"
8 has the meaning given in section 2.1 of the act of July 14, 1961
9 (P.L.637, No.329), known as the Wage Payment and Collection Law.
10 Section 14. Benefit plans.
11 (a) Employment.--A professional employer organization shall
12 be deemed an employer under Commonwealth law for the purposes of
13 sponsoring pension and health care benefit plans for covered
14 employees.
15 (b) Inclusion.--Nothing in this section shall preclude a
16 client from including covered employees in any benefit plan
17 sponsored by the client or any affiliated company.
18 Section 15. Department.
19 (a) Regulations.--The department shall MAY promulgate <--
20 regulations to implement and administer this act.
21 (b) General enforcement.--The department may conduct audits,
22 inspections and investigations as necessary to administer and
23 enforce this act. The books and records of a professional
24 employer organization and a client shall be available to the
25 department for inspection and copying at reasonable times. The
26 department may examine an individual under oath or affirmation
27 and issue subpoenas to compel the attendance of witnesses and
28 the production of documents.
29 Section 16. Other laws.
30 (a) No exemption.--This act does not exempt a client or a
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1 professional employer organization from other Federal, State or
2 local laws. Rights and obligations conferred and imposed by this
3 act shall exist in addition to rights, responsibilities and <--
4 liabilities AND OBLIGATIONS which otherwise exist, except where <--
5 the result would be inconsistent with this act. IN CASE OF AN <--
6 INCONSISTENT RESULT, THE RIGHTS AND OBLIGATIONS CONFERRED AND
7 IMPOSED BY THIS ACT SHALL PREVAIL.
8 (b) Insurance.--Subject to any contrary provisions contained
9 in the written professional employer agreement between the
10 professional employer organization and the client, a
11 professional employer arrangement shall be interpreted for the
12 purposes of insurance and bonding as follows:
13 (1) A THE professional employer organization shall not <--
14 be liable for the acts, errors or omissions of a client of a <--
15 covered employee when the employee is acting under the
16 direction and control of the client.
17 (2) A THE client shall not be liable for the acts, <--
18 errors or omissions of a THE professional employer <--
19 organization or of any covered employee assigned to the <--
20 client who is acting under the direction and control of the
21 professional employer organization.
22 (3) Covered employees shall not be construed to be
23 employees of the professional employer organization for the
24 purposes of general liability insurance, automobile
25 insurance, fidelity bonds, surety bonds, employers liability
26 which is not covered by workers' compensation or liquor
27 liability insurance unless the covered employees are included <--
28 as such in the professional employer arrangement or other
29 contract LIABILITY INSURANCE. <--
30 Section 17. Collective bargaining protections.
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1 (a) Interference prohibited.--Professional employer
2 arrangements shall not be established or otherwise utilized, in
3 whole or in part, to interfere with the right of any employee or
4 worker to organize or freely choose unions or associations which
5 represent them for the purpose of collective bargaining.
6 (b) Assignment prohibited.--A professional employer
7 organization shall not assign or reassign covered employees for
8 the purpose, in whole or in part, of interfering with the terms
9 and conditions of an existing collective bargaining agreement or
10 an effort on the part of any employee or worker to organize or
11 freely choose unions or associations which do or may represent
12 them for the purpose of collective bargaining.
13 SECTION 18. OTHER ARRANGEMENTS. <--
14 NONE OF THE REPORTING REQUIREMENTS OR OTHER OBLIGATIONS WHICH
15 ARE REQUIRED UNDER THIS ACT FOR PROFESSIONAL EMPLOYER
16 ARRANGEMENTS SHALL APPLY TO OTHER ARRANGEMENTS OR SERVICES, IN
17 WHICH A PROFESSIONAL EMPLOYER ORGANIZATION MAY BE ENGAGED.
18 Section 60. Effective date.
19 This act shall take effect as follows:
20 (1) The following provisions shall take effect in 60
21 days:
22 (i) Section 10.
23 (ii) Section 11(e) and (f).
24 (III) SECTION 13. <--
25 (2) The following provisions shall take effect on
26 January 1, 2002 2003: <--
27 (i) Section 4(a).
28 (ii) Section 9(a), (B), (C) AND (D). <--
29 (iii) Section 11(b) 11(A) AND (B). <--
30 (3) The remainder of this act shall take effect
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1 immediately.
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