By Seidlits H.B. No. 2985
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of certain staff leasing services;
1-3 providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1, Article 9104, Vernon's Texas Civil
1-6 Statutes, is amended to read as follows:
1-7 Sec. 1. DEFINITIONS. In this Act:
1-8 (1) "Applicant" means a business seeking to be
1-9 licensed under this Act or seeking the renewal of a license under
1-10 this Act.
1-11 (2) "Client company" means a person that contracts
1-12 with a licensee and is assigned employees by the licensee under
1-13 that contract.
1-14 (3) "Commission" means the Texas Commission of
1-15 Licensing and Regulation.
1-16 (4) "Commissioner" means the commissioner of licensing
1-17 and regulation.
1-18 (5) "Controlling person" means:
1-19 (A) any <an> officer or director of the
1-20 applicant or licensee, if a corporation, other than a public
1-21 company <seeking to offer staff leasing services, a shareholder
1-22 holding 10 percent or more of the voting stock of a corporation
1-23 seeking to offer staff leasing services, or a partner of a
2-1 partnership seeking to offer staff leasing services; or>
2-2 (B) those members, managers, or officers of the
2-3 applicant or licensee vested with authority to manage the business
2-4 of the company by the articles of organization or company
2-5 regulations, if a limited liability company <an individual who
2-6 possesses, directly or indirectly, the power to direct or cause the
2-7 direction of the management or policies of a company seeking to
2-8 offer staff leasing services through the ownership of voting
2-9 securities, by contract or otherwise.>
2-10 (C) a general or limited partner of the
2-11 applicant or licensee vested with authority to manage the business
2-12 of the partnership by the partnership agreement, if a partnership;
2-13 (D) a person with an ownership interest in the
2-14 applicant or licensee, if a proprietorship; or
2-15 (E) any officer of the applicant or licensee who
2-16 has direct management responsibility for the staff leasing
2-17 operations of the applicant or licensee in this state, if a
2-18 publicly-held corporation.
2-19 "Controlling person" does not mean an officer, director,
2-20 stockholder, partner, member, manager or owner of a parent company,
2-21 or other person related to an applicant or licensee through common
2-22 ownership or common management.
2-23 (6) "Department" means the Texas Department of
2-24 Licensing and Regulation.
2-25 (7) "Independent contractor" means a person who
3-1 contracts to perform work or provide a service for the benefit of
3-2 another and who:
3-3 (A) is paid by the job, not by the hour or some
3-4 other time-measured basis;
3-5 (B) is free to hire as many helpers as the
3-6 person desires and to determine what each helper will be paid; and
3-7 (C) is free to work for other contractors, or to
3-8 send helpers to work for other contractors, while under contract to
3-9 the hiring employer.
3-10 (8) "Licensee" means a person licensed under this Act
3-11 to provide staff leasing services.
3-12 (9) "Person" means an individual, association,
3-13 corporation, organization, government or governmental subdivision
3-14 or agency, business trust, estate trust, joint venture,
3-15 partnership, or other legal entity.
3-16 (10) "Public company" means a corporation or a
3-17 subsidiary of a corporation whose shares are listed on the New York
3-18 Stock Exchange, the American Stock Exchange or the automatic
3-19 quotation system of the National Association of Security Dealers
3-20 <and that has total assets that exceed $1 billion>.
3-21 (11) "Staff leasing services" means an arrangement by
3-22 which employees of a licensee are assigned to work at a client
3-23 company and in which employment responsibilities are in fact shared
3-24 by the licensee and the client company, the employee's assignment
3-25 is intended to be of a long-term or continuing nature, rather than
4-1 temporary or seasonal in nature, and a majority of the workforce at
4-2 a client company worksite or a specialized group within that
4-3 workforce consists of assigned employees of the licensee. The term
4-4 does not include:
4-5 (A) a temporary help service;
4-6 (B) an independent contractor;
4-7 (C) the provision of services in the nature of
4-8 staff leasing services by one person solely to other persons
4-9 related by bona fide common ownership. "Common ownership" means <a
4-10 public company or any other person in which that public company
4-11 has> a direct or indirect ownership interest in excess of 33 1/3
4-12 percent, including ownership through subsidiaries and affiliates.
4-13 This exception shall not apply if the ownership is acquired solely
4-14 or primarily to meet the requirements of this section; or
4-15 (D) a temporary common worker agency or employer
4-16 as defined in Volume 15, Article 5221a-10, Vernon's Texas Civil
4-17 Statutes.
4-18 (12) "Staff leasing services company" means an
4-19 individual business entity that offers staff leasing services.
4-20 (13) "Temporary employee" means an employee hired for
4-21 a temporary help service.
4-22 (14) "Temporary help service" means an arrangement by
4-23 which an organization hires its own employees and assigns them to
4-24 clients to support or supplement the client's workforce in special
4-25 work situations such as employee absences, temporary skill
5-1 shortages, seasonal workloads, or special assignments and projects.
5-2 (15) "Net worth" means, for the purposes of this Act,
5-3 the assets minus the liabilities as shown on either the applicant's
5-4 financial statement or the applicant's most recent federal tax
5-5 return, plus the sum of any other guarantees, letters of credit, or
5-6 securities which may be submitted to the department.
5-7 (16) "Self insurance" does not mean an arrangement
5-8 under which an applicant or licensee obtains an insurance policy
5-9 with a deductible and under which the insurer is liable to any
5-10 claimant, such as an assigned employee, for the full amount of each
5-11 claim, to the extent of maximum policy benefits and subject to any
5-12 deductible required under the terms of the policy to be paid by the
5-13 claimant.
5-14 SECTION 2. Section 3, Article 9104, Vernon's Texas Civil
5-15 Statutes, is amended to read as follows:
5-16 Sec. 3. License Required; Application. (a) A person may
5-17 not engage in or offer staff leasing services in this state without
5-18 holding a license issued under this Act.
5-19 (b) Each person that desires an original <or renewal> staff
5-20 leasing services company license shall file with the department a
5-21 written application accompanied by the application fee.
5-22 (c) The department may require an applicant for a license to
5-23 provide information and certifications necessary to determine that
5-24 the applicant meets the licensing requirements of this Act. The
5-25 department may also require the applicant to provide information
6-1 and certifications necessary to determine whether individuals
6-2 affiliated with the applicant are qualified to serve as controlling
6-3 persons.
6-4 (d) If an application is denied, a licensee revoked, or a
6-5 license not renewed, the applicant or former licensee may apply for
6-6 a new license at any time. The department shall take into
6-7 consideration the extent to which the causes for the prior denial,
6-8 revocation or nonrenewal have been corrected <An applicant or
6-9 licensee is ineligible for a license for two years after the date
6-10 of final department action on the denial or revocation of a license
6-11 applied for or issued under this Act. This restriction does not
6-12 apply to a denial or revocation of a license if the basis of the
6-13 action was:>
6-14 <(1) an inadvertent error or omission in the
6-15 application if that error or omission is promptly corrected;>
6-16 <(2) the experience documented to the department was
6-17 insufficient at the time of the previous application; or>
6-18 <(3) the department was unable to complete the
6-19 criminal background investigation required under Section 4 of this
6-20 Act because of insufficient information received from a local,
6-21 state, or federal law enforcement agency>.
6-22 (e) Any order of the department denying, revoking, or not
6-23 renewing a license because of the alleged unsuitability of a
6-24 controlling person shall provide that the applicant or licensee may
6-25 avoid the action by removing such person as a controlling person.
7-1 Removal, demotion, or discharge of a controlling person in response
7-2 to an order of the department shall be an affirmative defense to
7-3 any claim by the controlling person based on such removal,
7-4 demotion, or discharge. <An applicant or licensee is ineligible
7-5 for a license for one year after the date of final department
7-6 action on the denial or revocation of a license applied for or
7-7 issued under this Act if:>
7-8 <(1) the basis of the denial or revocation was that
7-9 one or more of the controlling persons affiliated with the
7-10 applicant or licensee was determined by the department to be
7-11 unsuitable; or>
7-12 <(2) that unsuitable controlling person has in fact
7-13 ceased to be a controlling person of the applicant or licensee>.
7-14 (f) A controlling person who has been evaluated by the
7-15 department under this Act is not required to be reevaluated if that
7-16 person changes affiliation from one applicant or licensee to
7-17 another applicant or licensee.
7-18 (g) The department may, by rule, require applicants or
7-19 licensees to disclose to the department the identity of persons
7-20 affiliated with the applicant or licensee, or affiliated with a
7-21 parent or related company of the applicant or licensee, who are not
7-22 controlling persons within the meaning of this Act, but who are
7-23 officers, directors, stockholders owning 10 percent or more of the
7-24 stock, or partners with 10 percent or more equity ownership of an
7-25 applicant or licensee. In specific cases, the department may for
8-1 good cause require one or more such persons to submit to the
8-2 background investigation required of controlling persons under this
8-3 Act.
8-4 (h) An applicant or licensee shall disclose to the
8-5 department the addition of any new controlling person not later
8-6 than 30 days after the person assumes the duties of a controlling
8-7 person. The person may serve as a controlling person while the
8-8 department is conducting any necessary investigations. If the
8-9 department proposes to disapprove of the new controlling person,
8-10 the department shall so notify the applicant or licensee and the
8-11 controlling person prior to taking action against the applicant or
8-12 licensee.
8-13 SECTION 3. Section 4, Article 9104, Vernon's Texas Civil
8-14 Statutes, is amended to read as follows:
8-15 Sec. 4. License Requirements. (a) To be qualified to serve
8-16 as a controlling person of a licensee under this Act, that person
8-17 must be at least 18 years of age, be of good moral character, and
8-18 have educational, managerial, or business experience relevant to:
8-19 (1) operation of a business entity offering staff
8-20 leasing services; or
8-21 (2) service as a controlling person of a staff leasing
8-22 services company.
8-23 (b) For the purposes of this section, "good moral character"
8-24 means a personal history of honesty, trustworthiness, fairness, a
8-25 good reputation for fair dealing, and respect for the rights of
9-1 others and for the laws of this state and nation.
9-2 (c) The department shall conduct a thorough background
9-3 investigation, upon receipt of an original application, of each
9-4 individual applicant and of each controlling person of each
9-5 applicant to determine whether that applicant or controlling person
9-6 is qualified under this Act. The department may deny an
9-7 application for the issuance or renewal of a license if it finds
9-8 that a controlling person is not qualified under this Act. The
9-9 investigation may <must> include:
9-10 (1) for an original application, the submission of
9-11 fingerprints for processing through appropriate local, state, and
9-12 federal law enforcement agencies; and
9-13 (2) examination by the department of police or other
9-14 law enforcement records maintained by local, state, or federal law
9-15 enforcement agencies.
9-16 (d) Department background investigations are governed by
9-17 this Act and by Article 6252-13c, Revised Statutes, and Sections
9-18 2-5, Acts of the 67th Legislature, Regular Session, 1981 (Article
9-19 6252-13d, Vernon's Texas Civil Statutes). Conviction of a crime
9-20 does not automatically disqualify a controlling person, require the
9-21 revocation of a license, or require the denial of an application
9-22 for a new or renewed license. The department shall consider
9-23 criminal convictions as provided by Article 6252-13c, Revised
9-24 Statutes, and Sections 2-5, Acts of the 67th Legislature, Regular
9-25 Session, 1981 (Article 6252-13d, Vernon's Texas Civil Statutes).
10-1 (e) Each licensee shall maintain a registered agent for the
10-2 service of process in this state.
10-3 (f) An applicant for an original or renewal license must
10-4 demonstrate a net worth as follows:
10-5 (1) $50,000 if the applicant employs fewer than 250
10-6 assigned employees;
10-7 (2) $75,000 if the applicant employs at least 250 but
10-8 not more than 750 assigned employees;
10-9 (3) $100,000 if the applicant employs more than 750
10-10 assigned employees.
10-11 (g) For purposes of Subsection (f) of this section,
10-12 "assigned employee" means a full-time employee whose normal work
10-13 week is at least 30 <25> hours per week and whose work is performed
10-14 in this state. The term does not include an employee hired to
10-15 support or supplement the client's workforce in special work
10-16 situations, such as employee absences, temporary skill shortages,
10-17 seasonal workloads, or special assignments and projects.
10-18 (h) The applicant shall demonstrate the net worth to the
10-19 department by providing the department with the applicant's
10-20 financial statement or a copy of the applicant's most recent
10-21 federal tax return. <The net worth requirement may also be
10-22 satisfied through guarantees, letters of credit, or other security
10-23 acceptable to the department. A guaranty is not acceptable to
10-24 satisfy this subsection unless the applicant submits sufficient
10-25 evidence to satisfy the department that the guarantor has adequate
11-1 resources to satisfy the obligations of the guaranty.>
11-2 (i) In calculating net worth, an applicant shall include
11-3 adequate reserves for all taxes and insurance, including reserves
11-4 for claims incurred but not paid and for claims incurred but not
11-5 reported under plans of self-insurance for health benefits. The
11-6 calculation of net worth by an applicant shall be made according to
11-7 Section 448, Internal Revenue Code (26 U.S.C. Section 448).
11-8 (j) A document submitted to establish net worth must reflect
11-9 the net worth as of a date not earlier than six months before the
11-10 date on which the application is submitted. A document submitted
11-11 to establish net worth must be prepared or certified by an
11-12 independent certified public accountant. <Information supplied
11-13 regarding net worth, including copies of federal tax returns, is
11-14 proprietary and confidential and is exempt from disclosure to third
11-15 parties, other than to other governmental agencies with a
11-16 reasonable legitimate purpose for obtaining the information.>
11-17 (k) Information or records submitted to a governmental body,
11-18 as defined in Chapter 552, Government Code, regarding or disclosing
11-19 the identity of customers of an applicant or licensee or concerning
11-20 the net worth or financial condition, including copies of federal
11-21 tax returns or financial statements, of an applicant or licensee
11-22 are proprietary and confidential and are exempt from disclosure to
11-23 third parties. Such records or information are confidential
11-24 records within the meaning of Chapter 552, Government Code. All
11-25 disclosures of information submitted to a governmental body
12-1 pursuant to this Act are governed by Chapter 522, Government Code,
12-2 including disclosures to a governmental body.
12-3 SECTION 4. Section 7, Article 9104, Vernon's Texas Civil
12-4 Statutes, is amended to read as follows:
12-5 Sec. 7. Contract Requirements. (a) A contract between a
12-6 licensee and a client company must provide that the licensee:
12-7 (1) reserves a <the> right of direction and control
12-8 over employees assigned to a client's worksites;
12-9 (2) assumes responsibility for the payment of wages to
12-10 the assigned employees without regard to payments by the client to
12-11 the licensee;
12-12 (3) assumes responsibility for the payment of payroll
12-13 taxes and collection of taxes from payroll on assigned employees;
12-14 (4) retains a <the> right to hire, fire, discipline,
12-15 and reassign the assigned employees; and
12-16 (5) retains a <the> right of direction and control
12-17 over the adoption of employment and safety policies and the
12-18 management of workers' compensation claims, claim filings, and
12-19 related procedures.
12-20 (b) A licensee is responsible for its contractual duties and
12-21 responsibilities to manage, maintain, collect, and make timely
12-22 payments for:
12-23 (1) insurance premiums;
12-24 (2) benefit and welfare plans;
12-25 (3) other employee withholding; and
13-1 (4) any other expressed responsibility within the
13-2 scope of the contract for fulfilling the duties imposed under this
13-3 section.
13-4 (c) A licensee shall:
13-5 (1) comply with all appropriate state and federal laws
13-6 relating to reporting, sponsoring, filing, and maintaining benefit
13-7 and welfare plans;
13-8 (2) maintain adequate books and records regarding its
13-9 duties and responsibilities;
13-10 (3) maintain and make available at all times to the
13-11 commissioner the following information, which shall be treated as
13-12 proprietary and confidential and is exempt from disclosure to third
13-13 parties, except other governmental agencies with a reasonable and
13-14 legitimate purpose for obtaining the information:
13-15 (A) the correct name, address, and telephone
13-16 number of each client company;
13-17 (B) each client company contract; and
13-18 (C) a listing by classification code as
13-19 described in the "Standard Industrial Classification Manual,"
13-20 published by the United States Office of Management and Budget, of
13-21 each client company;
13-22 (4) notify the department of any <addition or>
13-23 deletion of a controlling person as listed on the license
13-24 application or renewal form by providing the name of the person not
13-25 later than the 30th day after the date on which the person is
14-1 <added or> deleted as a controlling person; and
14-2 (5) provide a notarized biographical history to the
14-3 department in connection with the proposed addition of a new
14-4 controlling person.
14-5 (d) Not withstanding any other provision of this Act, a
14-6 client company may retain and exercise such right of direction and
14-7 control over the assigned employees as is necessary to conduct the
14-8 business of the client and without which the client would be unable
14-9 to conduct its business, discharge any fiduciary responsibility
14-10 that it may have, or comply with any licensure, regulatory, or
14-11 statutory requirements applicable to the client. A client who
14-12 retains such right is solely responsible for the goods and services
14-13 produced by the client and the acts or omissions of the assigned
14-14 employees.
14-15 SECTION 5. Section 8, Article 9104, Vernon's Texas Civil
14-16 Statutes, is amended to read as follows:
14-17 Sec. 8. Limited License. (a) The department <commissioner>
14-18 shall by rule <shall> provide for the issuance of a limited license
14-19 for a person that offers staff leasing services in this state on a
14-20 limited basis and that is primarily engaged in offering staff
14-21 leasing services in another state. The principal place of business
14-22 of a person offering staff leasing services that applies for a
14-23 license under this section must be located in a state other than
14-24 this state.
14-25 (b) For the purposes of this section, a person offers staff
15-1 leasing services on a limited basis if the person employs fewer
15-2 than 50 <20> assigned employees at any time within this state.
15-3 (c) Applicants for a limited license shall complete
15-4 application forms provided by the department. Neither background
15-5 investigation nor fingerprints shall be routinely required for the
15-6 issuance or renewal of a limited license. Applicants for a limited
15-7 license and licensees holding a limited license are not subject to
15-8 Section 4(f) of this act. A limited license shall be valid for a
15-9 period of one year, and may be renewed annually on submission of a
15-10 renewal application.
15-11 (d) <(c)> Except as otherwise provided in this section, a
15-12 <A> person holding or applying for a <offering staff leasing
15-13 services on a> limited license shall <basis must> comply with all
15-14 provisions of this Act with respect to <those> services performed
15-15 within this state.
15-16 SECTION 6. Section 9, Article 9104, Vernon's Texas Civil
15-17 Statutes, is amended to read as follows:
15-18 Sec. 9. Issuance and Term of Licenses. (a) The department
15-19 shall promptly issue a license to any <an> applicant who meets
15-20 <determined to meet> the requirements of this Act. The department
15-21 shall issue or renew the license not later than the 90th day after
15-22 the date on which substantially complete <the completed>
15-23 application forms are <is> filed with the department. The
15-24 department shall promptly notify an applicant of any deficiencies
15-25 in its application.
16-1 (b) An applicant or licensee who has submitted a new or
16-2 renewal application to the department shall be treated as a
16-3 licensee for the purpose of this Act until the department acts on
16-4 the application. The applicant or licensee shall disclose in
16-5 writing to each client company that it is operating under temporary
16-6 authority, subject to termination of such temporary authority if
16-7 the application is denied.
16-8 (c) <(b)> A license issued by the department under this Act
16-9 is valid for five years <one year>. <The department shall renew a
16-10 license on receipt of a renewal application approved by the
16-11 department and payment of the required renewal fees.>
16-12 (d) The department shall renew a license on receipt of a
16-13 completed renewal application form and the payment of a license
16-14 renewal fee. Background investigations for controlling persons
16-15 shall not be required for the renewal of a license. The
16-16 department's evaluation of a renewal application shall be limited
16-17 to determining whether there have been any material changes in the
16-18 information supplied in connection with the original license
16-19 application. The license of a licensee that applies for renewal
16-20 more than 90 days prior to the expiration date of its license shall
16-21 be valid until 90 days after the department acts on the application
16-22 for renewal.
16-23 (e) The department shall, by rule, provide for the issuance
16-24 and renewal of licenses on a reciprocal basis for applicants who
16-25 are licensed in another state which has a licensing law generally
17-1 similar or comparable to this Act.
17-2 (f) The department may exchange information concerning
17-3 applicants, licensees or controlling persons with staff leasing
17-4 licensing authorities in other states for the purpose of reciprocal
17-5 licensing. Issuance of a license on a reciprocal basis shall not
17-6 require background investigations of persons or entities previously
17-7 evaluated in connection with licensing in another state.
17-8 (g) Any license issued prior to the effective date of this
17-9 amendment shall expire five years from the original issue date.
17-10 The department shall issue replacement licenses reflecting the
17-11 correct expiration date.
17-12 SECTION 7. Section 10, Article 9104, Vernon's Texas Civil
17-13 Statutes, is amended to read as follows:
17-14 Sec. 10. Employee Benefit Plans; Required Disclosure.
17-15 (a) A licensee may sponsor and maintain employee benefit plans for
17-16 the benefit of assigned employees. A client company may include
17-17 assigned employees in any benefit plan sponsored by the client
17-18 company.
17-19 (b) With respect to any insurance or benefit plan provided
17-20 by a licensee for the benefit of its assigned employees, a <Each>
17-21 licensee shall disclose the following information to the
17-22 department, to each client company, and to its assigned employees
17-23 <information relating to any insurance or benefit plan provided for
17-24 the benefit of its assigned employees. The information must
17-25 include>:
18-1 (1) the type of coverage;
18-2 (2) the identity of each insurer for each type of
18-3 coverage;
18-4 (3) the amount of benefits provided for each type of
18-5 coverage and to whom or on whose behalf benefits are to be paid;
18-6 (4) the policy limits on each insurance policy; and
18-7 (5) whether the coverage is fully insured, partially
18-8 insured, or fully self-funded.
18-9 (c) The department <commissioner> by rule may require the
18-10 filing by licensees of other reports that are reasonably necessary
18-11 to the implementation of this Act.
18-12 SECTION 8. Section 12, Article 9104, Vernon's Texas Civil
18-13 Statutes, is amended to read as follows:
18-14 Sec. 12. Health Benefit Plans. (a) An applicant or a <A>
18-15 licensee may not sponsor a plan of self-insurance for health
18-16 benefits except as permitted by the Employee Retirement Income
18-17 Security Act of 1974 (29 U.S.C. Section 1001 et seq.).
18-18 (b) For purposes of this section, a "plan for
18-19 self-insurance" includes any arrangement except an arrangement
18-20 under which an insurance carrier authorized to do business in this
18-21 state has issued an insurance policy that covers all of the
18-22 obligations of the health benefits plan.
18-23 (c) Self-funded or partially self-funded health insurance
18-24 plans are prohibited as allowed herein.
18-25 <(c) A licensee that has a plan of self-insurance for health
19-1 benefits for its leased employees in effect as of March 1, 1993,
19-2 has until March 1, 1994, to bring its plan into compliance with the
19-3 requirement of this section. This subsection expires March 31,
19-4 1994.>
19-5 SECTION 9. Section 13, Article 9104, Vernon's Texas Civil
19-6 Statute, is amended to read as follows:
19-7 Sec. 13. Unemployment Taxes; Payroll. (a) An applicant or
19-8 a <A> licensee is the employer of an assigned employee for purposes
19-9 of the Texas Unemployment Compensation Act (Article 5221b-1 et
19-10 seq., Vernon's Texas Civil Statutes) and Article 5155, Revised
19-11 Statutes. In addition to any other reports required to be filed by
19-12 law, a licensee shall report quarterly to the Texas Employment
19-13 Commission the name, address, telephone number, federal income tax
19-14 identification number and classification code as described in the
19-15 "Standard Industrial Classification Manual" as published by the
19-16 United States Office of Management and Budget of each client
19-17 company on a form prescribed by the Texas Employment Commission.
19-18 (b) On contracting with a client company, a licensee shall
19-19 notify the Texas Employment Commission of the contract. The
19-20 notification shall be made on a form prescribed by the Texas
19-21 Employment Commission.
19-22 (c) For purposes of the Texas Unemployment Compensation Act
19-23 (Article 5221b-1 et seq., Vernon's Texas Civil Statutes), in the
19-24 event of the termination of a contract between a licensee and a
19-25 client company or the failure by a staff leasing entity to submit
20-1 reports or make tax payments as required by that Act, the
20-2 contracting client company shall be treated as a new employer
20-3 without a previous experience record unless that client company is
20-4 otherwise eligible for an experience rating.
20-5 SECTION 10. Section 17, Article 9104, Vernon's Texas Civil
20-6 Statutes, is amended to read as follows:
20-7 Sec. 17. Disciplinary Actions. (a) For the purposes of
20-8 this section, "conviction" includes a plea of nolo contendere or a
20-9 finding of guilt, regardless of adjudication.
20-10 (b) Disciplinary action may be taken against a licensee by
20-11 the department on any of the following grounds:
20-12 (1) the conviction of a licensee or any controlling
20-13 person of a licensee of bribery, fraud, or intentional or material
20-14 misrepresentation in obtaining, attempting to obtain, or renewing a
20-15 license;
20-16 (2) the conviction of a licensee or any controlling
20-17 person of a licensee of a crime that relates to the operation of a
20-18 staff leasing service or the ability of the licensee or any
20-19 controlling person of a licensee to operate a staff leasing
20-20 service;
20-21 (3) the conviction of a licensee or any controlling
20-22 person of a licensee of a crime that relates to the classification,
20-23 misclassification, or under-reporting of employees under the Texas
20-24 Workers' Compensation Act (Article 8308-1.01 et seq., Vernon's
20-25 Texas Civil Statutes);
21-1 (4) the conviction of a licensee or any controlling
21-2 person of a licensee of a crime that relates to the establishment
21-3 or maintenance of a self-insurance program, whether health
21-4 insurance, workers' compensation insurance, or other insurance;
21-5 (5) the conviction of a licensee or any controlling
21-6 person of a licensee of a crime that relates to fraud, deceit, or
21-7 misconduct in the operation of a staff leasing service;
21-8 (6) engaging in staff leasing services without a
21-9 license;
21-10 (7) transferring or attempting to transfer a license
21-11 issued under this Act;
21-12 (8) violating this Act or any order or rule issued by
21-13 the department or commissioner under this Act;
21-14 (9) failing to notify the department, in writing, of
21-15 the felony conviction of any controlling person not later than the
21-16 30th day after the date on which that conviction is final;
21-17 (10) failing to cooperate with an investigation,
21-18 examination, or audit of the licensee's records conducted by the
21-19 licensee's insurance company or the insurance company's designee,
21-20 as allowed by the insurance contract or as authorized by law by the
21-21 Texas Department of Insurance;
21-22 (11) failing to notify the department and the Texas
21-23 Department of Insurance not later than the 30th day after the
21-24 effective date of the change of any change in ownership, principal
21-25 business address, or the address of accounts and records;
22-1 (12) failing to correct any tax filings or payment
22-2 deficiencies within a reasonable time as determined by the
22-3 commissioner;
22-4 (13) refusing, after reasonable notice, to meet
22-5 reasonable health and safety requirements within the licensee's
22-6 control and made known to the licensee by a federal or state
22-7 agency;
22-8 (14) a delinquency in the payment of the licensee's
22-9 insurance premiums other than those subject to a legitimate
22-10 dispute;
22-11 (15) a delinquency in the payment of any employee
22-12 benefit plan premiums or contributions other than those subject to
22-13 a legitimate dispute;
22-14 (16) knowingly making a material misrepresentation to
22-15 an insurance company, or to the department or other governmental
22-16 agency;
22-17 (17) failing to maintain the net worth requirements
22-18 required under Section 4 of this Act; or
22-19 (18) using staff leasing services to avert or avoid an
22-20 existing collective bargaining agreement.
22-21 (c) On a finding that an applicant or a licensee has
22-22 violated one or more provisions of Subsection (b) of this section,
22-23 the department may:
22-24 (1) deny an application for a license;
22-25 (2) revoke, restrict, or refuse to renew a license;
23-1 (3) impose an administrative penalty in an amount not
23-2 less than $1,000 per violation, but not more than $50,000;
23-3 (4) issue a reprimand; or
23-4 (5) place the licensee on probation for the period and
23-5 subject to conditions that the department specifies.
23-6 (d) On revocation of a license, the licensee shall
23-7 immediately return the revoked license to the department.
23-8 (e) Disciplinary action may be taken, a denial of an
23-9 application for a new or renewal license or a revocation of a
23-10 license may be done, or a determination that a controlling person
23-11 is unqualified may be made by the department only subject to the
23-12 Administrative Procedure and Texas Register Act (Article 6252-13a,
23-13 Vernon's Texas Civil Statutes), with notice to, and an opportunity
23-14 for a hearing by, the affected applicant, licensee, or controlling
23-15 person.
23-16 (f) If a license is revoked or renewal is denied, the
23-17 affected licensee may request a reinstatement hearing at any time
23-18 <after a minimum of one year>. The licensee shall bear the burden
23-19 of proof to establish that the cause for the revocation or denial
23-20 of license has been corrected. The department shall take into
23-21 consideration the extent to which the causes <may reinstate or
23-22 renew the license only if the cause> of the nonrenewal or
23-23 revocation have <has> been corrected.
23-24 (g) Prior to taking disciplinary action against an
23-25 applicant, licensee, or controlling person, the department shall
24-1 notify the applicant or licensee and all affected controlling
24-2 persons in detail of the specific reasons for the proposed action,
24-3 and provide an opportunity to cure the alleged violations.
24-4 (h) In any action to deny, revoke, or non-renew a license or
24-5 to take other disciplinary action, the department shall bear the
24-6 burden of proof to establish that the applicant or licensee does
24-7 not meet the requirements of this act.
24-8 SECTION 11. EMERGENCY. The importance of this legislation
24-9 and the crowded condition of the calendars in both houses create an
24-10 emergency and an imperative public necessity that the
24-11 constitutional rule requiring bills to be read on three several
24-12 days in each house be suspended, and this rule is hereby suspended.