PRIOR PRINTER'S NOS. 2131, 3017 PRINTER'S NO. 3513
No. 1716 Session of 2001
INTRODUCED BY WILT, CAPPELLI, CLARK, J. EVANS, FLICK, LEH, LEWIS
AND R. STEVENSON, JUNE 11, 2001
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
MARCH 26, 2002
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 19. PREFERENCE FOR NONDISCRIMINATION IN ECONOMIC <--
8 DEVELOPMENT PROGRAMS.
9 Section 60. Effective date.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 Section 1. Short title.
13 This act shall be known and may be cited as the Professional
14 Employer Organization Registration Act.
15 Section 2. Legislative intent.
16 The General Assembly finds and declares that it is necessary
17 to do all of the following:
18 (1) Safeguard the rights of employees participating in a
19 professional employer arrangement.
20 (2) Preserve the rights of employees with regard to
21 unemployment compensation and workers' compensation.
22 (3) Protect the interest of the Commonwealth in the
23 financial security of the unemployment compensation and
24 workers' compensation systems.
25 (4) Recognize the professional employer organization as
26 an employer for certain purposes.
27 (5) Preserve the integrity of the collective bargaining
28 process by prohibiting the use of professional employer
29 arrangements to interfere with the right of any employee or
30 worker to organize and freely choose unions or associations
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1 which may represent them for the purpose of collective
2 bargaining.
3 Section 3. Definitions.
4 The following words and phrases when used in this act shall
5 have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Application." An application for registration.
8 "Client." A person that enters into a professional employer
9 arrangement with a professional employer organization.
10 "Covered employee." An employee who is assigned to a client
11 under a professional employer arrangement.
12 "Department." The Department of Labor and Industry of the
13 Commonwealth.
14 "Inside director." An individual who is both a director of
15 the corporation and any of the following:
16 (1) An employee or agent of or consultant to the
17 corporation.
18 (2) An individual who is involved in the daily
19 management of the corporation.
20 (3) A spouse, parent or child of an individual listed in
21 paragraph (1) or (2).
22 "Person." An individual, partnership, corporation, company,
23 firm, association, organization, joint venture, limited
24 liability company or any type of business entity.
25 "Professional employer arrangement." As follows:
26 (1) An arrangement between a professional employer
27 organization and a client under which all of the following
28 subparagraphs apply:
29 (i) One or more previously employed employees of the
30 client are placed on the payroll of the professional
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1 employer organization at the beginning of the arrangement
2 and assigned to perform services for the client. This
3 subparagraph does not apply to any of the following:
4 (A) If the client is a new business entity.
5 (B) If the employees are assigned to a new
6 worksite of the client.
7 (C) If employees are assigned to a worksite
8 where the client did not utilize employees of the
9 category or type assigned prior to the arrangement.
10 (ii) At EMPLOYEES ASSIGNED UNDER SUBPARAGRAPH (I) <--
11 CONSTITUTE AT least 25% of the client's work force or 25%
12 of the client's work force at a worksite consists of <--
13 previously employed employees of the client. The
14 percentage requirement of this subparagraph can be met by
15 employees not previously employed by the client but
16 assigned to the client after initiation of the
17 arrangement to perform services which are long term in
18 nature.
19 (iii) The assignment of employees to the client is
20 or is intended to be long term or ongoing rather than
21 temporary or seasonal.
22 (2) The term does not include any of the following:
23 (i) An arrangement in which a person shares employees
24 with a commonly owned company within the meaning of section
25 414(b) and (c) of the Internal Revenue Code of 1986 (Public
26 Law 99-514, 26 U.S.C. § 414(b) and (c)) and:
27 (A) the person does not make its services as a
28 professional employer organization available to the
29 public; and
30 (B) the principal business activity of the person is
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1 not entering into professional employer arrangements.
2 (ii) A temporary help arrangement in which a person
3 recruits, hires and assigns one or more employees to another
4 person to support or supplement the other person's work force
5 in special temporary work situations, including employee
6 absences, skill shortages, seasonal workloads and special
7 assignments.
8 (iii) A vendor arrangement in which:
9 (A) a person provides a product or service to
10 another person;
11 (B) the person providing the product or service is
12 fully responsible for it; and
13 (C) providing the product or service to the other
14 person, rather than assigning one or more employees to
15 the other person to constitute some or all of the other
16 person's work force, is the purpose of the arrangement.
17 "Professional employer organization." A person that enters
18 into a professional employer arrangement with a client. The term
19 includes an applicant for a registration.
20 "Registration." A new registration or renewal registration.
21 A new registration shall include a registration for which a
22 renewal application is filed late.
23 "Responsible person." A person that:
24 (1) is the proprietor of a sole proprietorship;
25 (2) is a general partner in a partnership;
26 (3) is a shareholder who owns at least 15% of the voting
27 shares of a corporation;
28 (4) is an inside director or officer of a corporation;
29 or
30 (5) has the authority to establish and direct the
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1 policies or management of the organization.
2 "Secretary." The Secretary of Labor and Industry of the
3 Commonwealth.
4 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
5 known as the Tax Reform Code of 1971.
6 "Unemployment Compensation Law." The act of December 5, 1936
7 (2nd Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment
8 Compensation Law.
9 "Workers' Compensation Act." The act of June 2, 1915
10 (P.L.736, No.338), known as the Workers' Compensation Act.
11 Section 4. Registration required.
12 (a) Unregistered operation prohibited.--A professional
13 employer organization may not engage in a professional employer
14 arrangement without being registered if one or more of the
15 employees are assigned to the client to do any of the following:
16 (1) Perform services in this Commonwealth for the
17 client. This paragraph does not include services which are
18 isolated, transitory or incidental to services performed
19 outside this Commonwealth.
20 (2) Perform services for which the client's base of
21 operations is located in this Commonwealth.
22 (b) Term of registration.--Except as otherwise prescribed by
23 the department, registration shall be valid for two years unless
24 revoked.
25 (c) Transfer or assignment prohibited.--A registration is a
26 privilege which is not transferable or assignable.
27 Section 5. Application for registration.
28 An application for registration must include all information
29 and documentation required by the department, including
30 information on the professional employer organization's
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1 ownership, operations in other states and past and present
2 compliance with applicable law. The application must be made in
3 the manner prescribed by the department. The department may
4 include as an application requirement criminal background checks
5 and credit reporting investigations of responsible persons.
6 Section 6. Tax clearance.
7 (a) Waiver of confidentiality.--An application constitutes a
8 waiver of confidentiality with respect to the department for tax
9 information in the possession of the Department of Revenue or
10 the Office of Attorney General, regardless of the source and a
11 consent to providing the information to the department.
12 (b) Review.--Upon receipt of an application, the Department
13 of Revenue and the Office of Attorney General shall provide
14 information regarding the professional employer organization's
15 tax status to the department.
16 Section 7. Fees; issuance, denial and revocation of
17 registration.
18 (a) Issuance.--The department may register a professional
19 employer organization only if there is compliance with all of
20 the following:
21 (1) The professional employer organization pays to the
22 department a nonrefundable fee of $1,000 for a new
23 registration or $500 for a renewal registration.
24 (2) The professional employer organization provides
25 proof, in a manner satisfactory to the department, of
26 workers' compensation insurance coverage for existing clients
27 under section 10.
28 (3) The application and all required documents are
29 complete and accurate and meet the requirements of this act.
30 (4) The professional employer organization meets all
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1 requirements of sections 5 and 6 and this subsection.
2 (5) All fees are paid, all reports are filed and all
3 penalties are paid or are subject to a deferred payment plan
4 approved by the department.
5 (6) All tax returns due to the Commonwealth are filed.
6 (7) All taxes, interest and penalties owed to the
7 Commonwealth are:
8 (i) paid;
9 (ii) subject to a deferred payment plan approved by
10 the Commonwealth; or
11 (iii) under appeal unless the applicable statute
12 requires the payment of taxes while an appeal is pending.
13 (b) Denial or revocation.--The department may deny or revoke
14 registration for good cause associated with the legislative
15 intent of this act or if any of the following applies:
16 (1) The professional employer organization or a
17 responsible person in the organization violates this act or a
18 regulation or order under this act.
19 (2) The professional employer organization or a
20 responsible person in the organization fails to provide a
21 written response to a written inquiry from the department
22 within 30 days from the date of receipt of the inquiry.
23 (3) The professional employer organization or a
24 responsible person in the organization makes a
25 misrepresentation of material fact or fails to disclose a
26 material fact in any application, document or communication
27 under this act.
28 (4) The professional employer organization or a
29 responsible person in the organization obtains or attempts to
30 obtain a registration by fraud or bribery.
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1 (5) The professional employer organization or a
2 responsible person in the organization was sentenced for:
3 (i) a Federal or state offense involving dishonesty
4 or fraud; or
5 (ii) for an offense under the Tax Reform Code, the
6 Unemployment Compensation Law, section 305 of the
7 Workers' Compensation Act or this act.
8 (6) The professional employer organization defaults on a
9 deferred payment plan under subsection (a)(5) or (7)(ii).
10 (7) The professional employer organization owes tax
11 returns, taxes, interest or penalties to any state or a
12 responsible person in the organization is or was a
13 responsible person in another professional employer
14 organization which owes tax returns, taxes, interest or
15 penalties to any state. This paragraph does not apply to
16 taxes which are subject to a:
17 (i) deferred payment plan approved by the taxing
18 agency; or
19 (ii) timely administrative or judicial appeal unless
20 the applicable statute requires the payment of taxes
21 while an appeal is pending.
22 (c) Subsequent information.--The department may revoke
23 registration based on information which would have been a basis
24 to deny the application if the department had known the
25 information at the time the professional employer organization
26 was registered.
27 (d) Termination of professional employer arrangements.--
28 (1) A professional employer organization that ceases to
29 be registered shall do all of the following:
30 (i) Terminate professional employer arrangements
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1 within 45 days.
2 (ii) Provide written notice to clients within five
3 business days that it is no longer registered.
4 (2) The professional employer organization shall
5 immediately provide proof to the department of the notice to
6 clients required by paragraph (1)(ii). Absent such proof, the
7 department may notify the clients that the professional
8 employer organization is no longer registered.
9 (3) During the 45 days specified in paragraph (1)(i),
10 the professional employer organization:
11 (i) shall notify clients of the requirements of
12 section 305(a)(1) of the Workers' Compensation Act and
13 assist clients in obtaining replacement workers'
14 compensation insurance coverage;
15 (ii) shall assist clients in obtaining replacement
16 benefit plans, if any;
17 (iii) shall notify each covered employee that the
18 employee's relationship with the professional employer
19 organization is being terminated; and
20 (iv) may not commence professional employer
21 arrangements with new clients.
22 (4) The 45 days and five business days specified in
23 paragraph (1) shall be calculated as prescribed by the
24 department.
25 (e) Limitation.--If the department denies an application or
26 revokes registration under subsection (b)(1) through (6), the
27 professional employer organization may not reapply for a
28 registration for one year. If a responsible person in the
29 organization is a responsible person in another professional
30 employer organization, the other organization also may not apply
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1 or reapply for a registration for one year. The one-year period
2 shall be calculated as prescribed by the department.
3 Section 8. Determinations and appeals.
4 (a) Determinations.--
5 (1) A determination denying an application, revoking a
6 registration or charging a penalty, and any decision on an
7 appeal, must be sent by certified mail to the professional
8 employer organization at the address designated in the
9 application and must designate the effective date of the
10 determination.
11 (2) The department shall grant or deny a completed
12 application for a new registration within 90 days after it is
13 filed, except that the department may withhold a
14 determination until the requirements of section 7(a)(1) and
15 (2) are met.
16 (b) Appeals.--If a professional employer organization has a
17 registration denied or revoked or is charged a penalty, the
18 organization may appeal the determination to the secretary. The
19 appeal must specifically set forth the factual and legal
20 arguments on which it is based. Arguments not contained in the
21 appeal shall be waived. The appeal must be filed within 30 days
22 after the date of the determination or the department's action
23 shall be final.
24 (c) Supersedeas.--An appeal of a determination by the
25 department denying an application for a renewal registration
26 under section 7(b), revoking registration or charging a penalty
27 shall operate as a supersedeas while the appeal under subsection
28 (b) is pending. The effective date of a denial, revocation or
29 penalty subject to this subsection shall not be prior to the
30 expiration of the appeal period under subsection (b).
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1 (d) Burden of proof.--
2 (1) Except as set forth in paragraph (2), in an appeal
3 of a registration denial or revocation, the burden of proof
4 shall be on the professional employer organization.
5 (2) In an appeal of a registration denial or revocation
6 under section 7(b)(1) through (6), the burden of proof shall
7 be on the department.
8 (3) In an appeal of a determination by the department
9 charging a penalty under section 12(c), the burden of proof
10 shall be on the department.
11 (e) Administrative agency law.--Proceedings under this
12 section are subject to 2 Pa.C.S. Ch. 5 Subch. A (relating to
13 practice and procedure of Commonwealth agencies) and Ch. 7
14 Subch. A (relating to judicial review of Commonwealth agency
15 action).
16 Section 9. Unemployment compensation.
17 (a) Employer.--For purposes of the Unemployment Compensation
18 Law, the client shall be the employer of covered employees.
19 (b) Actions for client.--The professional employer
20 organization may file unemployment compensation reports and pay
21 unemployment compensation contributions, penalties, and interest
22 on behalf of the client. A report filed or a payment made under
23 this subsection by a professional employer organization shall be
24 filed or made on the client's unemployment compensation account.
25 A payment of contributions under this subsection by a
26 professional employer organization shall be made at the client's
27 contribution rate. An authorization, filing or payment under
28 this subsection shall be made in the manner prescribed by the
29 department. This subsection shall not be construed to allow
30 multiple reports to be filed on a client's unemployment
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1 compensation account for a calendar quarter.
2 (c) Excluded services.--Notwithstanding section 4(1)(6) of
3 the Unemployment Compensation Law, whether services performed by
4 a covered employee constitute employment within the meaning of
5 the Unemployment Compensation Law shall be determined in
6 accordance with subsection (a).
7 (d) Excluded remuneration.--Notwithstanding section 4(x)(6)
8 of the Unemployment Compensation Law, whether remuneration paid
9 to a covered employee by a professional employer organization
10 constitutes wages within the meaning of the Unemployment
11 Compensation Law shall be determined in accordance with
12 subsection (a).
13 (e) Transfer of experience.--A transfer of experience record
14 and reserve account balance under section 301(d) of the
15 Unemployment Compensation Law from a professional employer
16 organization to a client may not occur.
17 (f) Applicability.--
18 (1) Subsection (a) shall apply to services for which
19 wages are paid on or after the effective date of subsection
20 (a).
21 (2) Subsection (b) shall apply to reports and payments
22 for calendar quarters beginning on or after the effective
23 date of subsection (b).
24 (g) 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 the
27 Unemployment Compensation Law.
28 Section 10. Workers' compensation.
29 (a) Rights and duties.--Except as otherwise provided in this
30 section, for purposes of the Workers' Compensation Act, the
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1 professional employer organization shall be an employer of
2 covered employees assigned to the client; and all of the
3 following provisions shall be applicable:
4 (1) The professional employer organization shall
5 maintain workers' compensation insurance coverage for covered
6 employees assigned to the client, and if coverage is so
7 provided, the client shall be deemed to have met its
8 obligation under section 305 of the Workers' Compensation Act
9 for those employees. The professional employer organization
10 shall provide the client with a certificate of insurance
11 evidencing workers' compensation coverage annually and name
12 the client as a certificate holder.
13 (2) The professional employer organization shall pay
14 workers' compensation benefits in full and when due to
15 employees assigned to the client.
16 (3) Workers' compensation premiums for a professional
17 employer organization shall be based upon rules filed by an
18 approved rating organization under the Workers' Compensation
19 Act and rates approved by the Insurance Department. Workers'
20 compensation premiums shall be paid based on the client's
21 experience rate. An approved rating organization shall
22 promulgate rules which account for a client's experience,
23 which maintain each client's experience and which ensure that
24 premiums are based on a client's actual risk.
25 (4) Workers' compensation insurance shall be obtained
26 from an insurance carrier licensed to write workers'
27 compensation insurance policies in this Commonwealth.
28 (5) The professional employer organization and the
29 client shall be jointly entitled to the exclusive remedy
30 provisions of section 303 of the Workers' Compensation Act.
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1 (6) If the professional employer organization does not
2 meet its obligations and duties as an employer under the
3 Workers' Compensation Act, the client shall also be liable
4 for all the obligations and duties of an employer under the
5 Workers' Compensation Act and also for unpaid, past due
6 workers' compensation benefits owed to covered employees. The
7 amount of benefits the employee may collect in the aggregate
8 may not exceed the amount of benefits which are unpaid and
9 past due.
10 (7) Notice to the client or the professional employer
11 organization of an injury shall constitute notice to both
12 under Article III of the Workers' Compensation Act.
13 (b) Client.--The client shall be the employer of covered
14 employees for purposes of the Workers' Compensation Act, and the
15 professional employer organization may not use the exclusive
16 remedy provisions of section 303 of the Workers' Compensation
17 Act if any of the following paragraphs apply:
18 (1) The professional employer organization is not
19 registered as required by this act.
20 (2) All of the following subparagraphs apply:
21 (i) The professional employer organization is owned
22 or controlled by or owns or controls the client, either
23 directly or indirectly, by legally enforceable means or
24 otherwise, or the professional employer organization and
25 the client are owned or controlled, either directly or
26 indirectly, by legally enforceable means or otherwise, by
27 the same person or persons.
28 (ii) All of the professional employer organization's
29 clients are covered by subparagraph (i) or the
30 professional employer organization does not make its
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1 services as a professional employer organization
2 available to the public.
3 (c) Applicability.--This section shall apply to injuries
4 suffered on or after the effective date of this section.
5 (d) Definitions.--Subject to section 3 and unless the
6 context clearly indicates otherwise, words and phrases used in
7 this section shall have the meanings given to them in this
8 section shall have the meanings given to them in the Workers'
9 Compensation Act.
10 Section 11. Other responsibilities.
11 (a) Taxes.--Subject to section 9, the professional employer
12 organization shall timely pay all payroll related taxes and
13 payroll withholding taxes to the Commonwealth and its political
14 subdivisions with respect to covered employees and shall timely
15 file all corresponding tax reports.
16 (b) Report.--
17 (1) A professional employer organization shall file a
18 quarterly report with the department by the last day of the
19 month immediately following the calendar quarter. The report
20 shall:
21 (i) identify:
22 (A) names and addresses of clients to whom
23 employees were assigned during the quarter;
24 (B) names and addresses of new clients with whom
25 professional employer arrangements commenced during
26 the quarter; and
27 (C) names and addresses of clients with whom
28 professional employer arrangements ended during the
29 quarter;
30 (ii) provide for each client:
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1 (A) the client's Federal employer identification
2 number and Pennsylvania unemployment compensation
3 account number;
4 (B) the address of each worksite where employees
5 are assigned to the client, the number of assigned
6 employees at each worksite and the industrial
7 classification code for each worksite;
8 (C) the amount of wages paid during the quarter
9 for each worksite; and
10 (D) the name of the workers' compensation
11 insurance carrier insuring employees assigned to the
12 client and the workers' compensation policy number;
13 (iii) contain other information required by the
14 department; and
15 (iv) be made in the manner prescribed by the
16 department and be accompanied by proof, in a manner
17 satisfactory to the department, of workers' compensation
18 insurance coverage with respect to all new clients, as
19 required under section 10.
20 (2) The department shall not be required to disclose the
21 contents of the report except:
22 (i) for purposes of this act or other laws of this
23 Commonwealth; or
24 (ii) to an approved workers' compensation insurance
25 rating organization for use as authorized by law, under
26 confidentiality restrictions established by the
27 department.
28 (c) Operation under other name.--A professional employer
29 organization may not conduct business in this Commonwealth under
30 any name other than that specified in its application without
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1 the written consent of the department.
2 (d) Change in information.--A professional employer
3 organization shall notify the department in writing of a change
4 in the information contained in its application or other
5 document within 30 days after the change occurs.
6 (e) Notice to employee.--
7 (1) A professional employer organization shall provide
8 written information to covered employees as required by the
9 department, including the following:
10 (i) If the professional employer organization does
11 not meet all of its obligations and duties as an employer
12 under the Workers' Compensation Act, the client shall
13 also be liable for:
14 (A) all the obligations and duties of an
15 employer under the Workers' Compensation Act; and
16 (B) unpaid, past due workers' compensation
17 benefits under section 10(a)(6).
18 (ii) If the professional employer organization does
19 not pay wages in full and when due, the client shall also
20 be liable for unpaid, past due wages under section 13(b).
21 (iii) The name and address of the workers'
22 compensation insurance carrier insuring the employee.
23 (2) The information required under paragraph (1) shall
24 be provided to a covered employee at the time of hire and
25 thereafter at intervals not exceeding six months. An employee
26 shall be notified immediately of a change in the information.
27 (f) Notice to client.--Prior to commencing a professional
28 employer arrangement, a professional employer organization shall
29 provide all of the following information in writing to the
30 client:
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1 (1) If the professional employer organization does not
2 meet all of its obligations and duties as an employer under
3 the Workers' Compensation Act, the client shall also be
4 liable for:
5 (i) all the obligations and duties of an employer
6 under the Workers' Compensation Act; and
7 (ii) unpaid, past due workers' compensation benefits
8 owed to covered employees under section 10(a)(6).
9 (2) If the professional employer organization does not
10 pay wages owed to covered employees in full and when due, the
11 client shall also be liable for the unpaid past due wages
12 under section 13(b).
13 (3) The client shall be the employer for the purposes of
14 the unemployment compensation law requirements of section
15 9(a).
16 (g) Applicability.--
17 (1) Subsection (a) shall apply to taxes on remuneration
18 paid on or after the effective date of subsection (a).
19 (2) Subsection (b) shall apply to calendar quarters
20 beginning on or after the effective date of subsection (b).
21 Section 12. Criminal and civil penalties; injunctions.
22 (a) Operation without registration.--
23 (1) A professional employer organization that violates
24 section 4(a) commits a misdemeanor of the third degree. Each
25 day of proscribed conduct shall constitute a separate
26 offense.
27 (2) A person, other than a professional employer
28 organization, that knowingly authorizes, implements,
29 administers, supervises or participates in a professional
30 employer arrangement for which registration is required, on
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1 behalf of an unregistered professional employer organization,
2 commits a misdemeanor of the third degree. Each day of
3 proscribed conduct shall constitute a separate offense.
4 (b) Misrepresentation or nondisclosure.--
5 (1) A professional employer organization that makes a
6 misrepresentation of material fact or fails to disclose a
7 material fact in an application or other document or
8 communication under this act commits a misdemeanor of the
9 third degree.
10 (2) A person, other than a professional employer
11 organization, that knowingly makes a representation of
12 material fact or fails to disclose a material fact in an
13 application or other document or communication under this act
14 commits a misdemeanor of the third degree.
15 (c) Violations.--A professional employer organization that
16 violates this act shall be subject to a civil penalty of not
17 more than $1,000 per day for each violation.
18 (d) Injunction.--Upon petition by the department, a court of
19 competent jurisdiction may enjoin a professional employer
20 organization from violating this act.
21 Section 13. Wages.
22 (a) Professional employer organization.--The professional
23 employer organization shall be liable to pay wages owed to
24 covered employees in full and when due.
25 (b) Client.--If the professional employer organization does
26 not pay wages owed to covered employees under subsection (a),
27 the client shall also be liable for the unpaid, past due wages.
28 (c) Collection of wages.--Unpaid, past due wages owed to a
29 covered employee may be collected from the professional employer
30 organization under subsection (a) or the client under subsection
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1 (b), or both. The amount of wages the employee may collect in
2 the aggregate may not exceed the unpaid amount. It shall not be
3 necessary to pursue or exhaust legal remedies against one before
4 pursuing legal remedies against the other.
5 (d) Rights and obligations.--Rights and obligations under
6 this section shall exist in addition to other legal rights and
7 obligations with respect to wages.
8 (e) Applicability.--This section shall apply to wages which
9 become due on or after the effective date of this section.
10 (f) Definition.--As used in this section, the term "wages"
11 has the meaning given in section 2.1 of the act of July 14, 1961
12 (P.L.637, No.329), known as the Wage Payment and Collection Law.
13 Section 14. Benefit plans.
14 (a) Employment.--A professional employer organization shall
15 be deemed an employer under Commonwealth law for the purposes of
16 sponsoring pension and health care benefit plans for covered
17 employees.
18 (b) Inclusion.--Nothing in this section shall preclude a
19 client from including covered employees in any benefit plan
20 sponsored by the client or any affiliated company.
21 (C) INSURANCE PRODUCTS.--IF BENEFITS ARE CLASSIFIED AS <--
22 INSURANCE PRODUCTS BY THE INSURANCE DEPARTMENT, THE FOLLOWING
23 APPLY:
24 (1) THE BENEFITS SHALL BE GOVERNED BY STATUTES AND
25 REGULATIONS RELATING TO SALES, NEGOTIATION AND SOLICITATION.
26 (2) THE BENEFITS SHALL BE HANDLED ONLY BY INSURANCE
27 CARRIERS AUTHORIZED TO CONDUCT INSURANCE BUSINESS IN THIS
28 COMMONWEALTH.
29 Section 15. Department.
30 (a) Regulations.--The department may promulgate regulations
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1 to implement and administer this act.
2 (b) General enforcement.--The department may conduct audits,
3 inspections and investigations as necessary to administer and
4 enforce this act. The books and records of a professional
5 employer organization and a client shall be available to the
6 department for inspection and copying at reasonable times. The
7 department may examine an individual under oath or affirmation
8 and issue subpoenas to compel the attendance of witnesses and
9 the production of documents.
10 Section 16. Other laws.
11 (a) No exemption.--This act does not exempt a client or a
12 professional employer organization from other Federal, State or
13 local laws. Rights and obligations conferred and imposed by this
14 act shall exist in addition to rights and obligations which
15 otherwise exist, except where the result would be inconsistent
16 with this act. In case of an inconsistent result, the rights and
17 obligations conferred and imposed by this act shall prevail.
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) The professional employer organization shall not be
24 liable for the acts, errors or omissions of a covered
25 employee when the employee is acting under the direction and
26 control of the client.
27 (2) The client shall not be liable for the acts, errors
28 or omissions of the professional employer organization or of
29 any covered employee who is acting under the direction and
30 control of the professional employer organization.
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1 (3) Covered employees shall not be construed to be
2 employees of the professional employer organization for the
3 purposes of general liability insurance, automobile
4 insurance, fidelity bonds, surety bonds, employers liability
5 which is not covered by workers' compensation or liquor
6 liability insurance.
7 Section 17. Collective bargaining protections.
8 (a) Interference prohibited.--Professional employer
9 arrangements shall not be established or otherwise utilized, in
10 whole or in part, to interfere with the right of any employee or
11 worker to organize or freely choose unions or associations which
12 represent them for the purpose of collective bargaining.
13 (b) Assignment prohibited.--A professional employer
14 organization shall not assign or reassign covered employees for
15 the purpose, in whole or in part, of interfering with the terms
16 and conditions of an existing collective bargaining agreement or
17 an effort on the part of any employee or worker to organize or
18 freely choose unions or associations which do or may represent
19 them for the purpose of collective bargaining.
20 Section 18. Other arrangements.
21 None of the reporting requirements or other obligations which
22 are required under this act for professional employer
23 arrangements shall apply to other arrangements or services, in
24 which a professional employer organization may be engaged.
25 SECTION 19. PREFERENCE FOR NONDISCRIMINATION IN ECONOMIC <--
26 DEVELOPMENT PROGRAMS.
27 (A) GENERAL RULE.--WHEN A COMMONWEALTH AGENCY ISSUES OR
28 APPROVES GRANTS, LOANS OR TAX CREDITS FOR THE CREATION OR
29 RETENTION OF JOBS WITHIN THIS COMMONWEALTH AND ACCEPTS
30 APPLICATIONS FROM CLIENTS WHO PROPOSE TO COUNT EMPLOYEES OF A
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1 PROFESSIONAL EMPLOYER ORGANIZATION TOWARD THE JOB CREATION AND
2 RETENTION GOALS OF THE GRANT, LOAN OR TAX CREDIT PROGRAM, THE
3 COMMONWEALTH AGENCY SHALL GIVE PREFERENCE TO ANY CLIENT WHO
4 AGREES TO THE NONDISCRIMINATION PROVISION SET FORTH IN
5 SUBSECTION (B) IF THE APPLICATION IS APPROVED, OVER OTHER
6 CLIENTS WHO DO NOT AGREE TO SUCH NONDISCRIMINATION.
7 (B) NONDISCRIMINATION PROVISION.--THE NONDISCRIMINATION
8 PROVISION SHALL PROVIDE THAT THE CLIENT AGREES NOT TO
9 DISCRIMINATE IN WAGES, BENEFITS AND SEVERANCE PAY FOR PEOPLE
10 WITH SIMILAR JOBS AND SENIORITY ON THE BASIS OF WHETHER THEY ARE
11 AN EMPLOYEE OF THE CLIENT OR AN EMPLOYEE OF THE PROFESSIONAL
12 EMPLOYER ORGANIZATION.
13 Section 60. Effective date.
14 This act shall take effect as follows:
15 (1) The following provisions shall take effect in 60
16 days:
17 (i) Section 10.
18 (ii) Section 11(e) and (f).
19 (iii) Section 13.
20 (2) The following provisions shall take effect on
21 January 1, 2003:
22 (i) Section 4(a).
23 (ii) Section 9(a), (b), (c) and (d).
24 (iii) Section 11(a) and (b).
25 (3) The remainder of this act shall take effect
26 immediately.
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