By: Gallegos S.B. No. 1537
A BILL TO BE ENTITLED
AN ACT
1-1 relating to staff leasing services.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 1, Chapter 994, Acts of the 73rd
1-4 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
1-5 amended by amending Subdivisions (10) and (11) and by adding
1-6 Subdivision (15) to read as follows:
1-7 (10) "Public company" means a corporation or a
1-8 subsidiary of a corporation whose shares are listed on the New York
1-9 Stock Exchange, the American Stock Exchange or the automated
1-10 quotation system of the National Association of Securities Dealers.
1-11 A public company that provides staff leasing services within the
1-12 meaning of this Act is required to obtain a license under this Act
1-13 <and that has total assets that exceed $1 billion>.
1-14 (11)(A) "Staff leasing services" means an arrangement
1-15 by which employees of a licensee are assigned to work at a client
1-16 company and in which employment responsibilities are in fact shared
1-17 by the licensee and the client company, the employee's assignment
1-18 is intended to be of a long-term or continuing nature, rather than
1-19 temporary or seasonal in nature, and a majority of the workforce at
1-20 a client company worksite or a specialized group within that
1-21 workforce consists of assigned employees of the licensee.
1-22 (B) "Staff leasing services" <The term> does not
1-23 include:
2-1 (i) services provided by <(A)> a temporary
2-2 help service;
2-3 (ii) services provided by <(B)> an
2-4 independent contractor;
2-5 (iii) services provided by <(C) a public
2-6 company or any other person in which that public company has a
2-7 direct or indirect ownership interest in excess of 33-1/3 percent,
2-8 including ownership through subsidiaries and affiliates; or>
2-9 <(D)> a temporary common worker agency or
2-10 employer as defined in Volume 15, Article 5221a-10, Vernon's Texas
2-11 Civil Statutes; or
2-12 (iv) the provision of services in the
2-13 nature of staff leasing services by one person solely to other
2-14 persons related by bona fide common ownership. Common ownership
2-15 means a direct or indirect ownership interest in excess of 33-1/3
2-16 percent, including ownership through subsidiaries and affiliates.
2-17 This exception shall not apply if the ownership is acquired solely
2-18 or primarily to meet the requirements of this subparagraph.
2-19 (15) For the purpose of this Act, "self-insurance"
2-20 does not include an arrangement under which an applicant or
2-21 licensee obtains an insurance policy with a deductible and under
2-22 which the insurer is liable to any claimant, such as an assigned
2-23 employee, for the full amount of each claim, to the extent of
2-24 maximum policy benefits and subject to any deductible to be paid by
2-25 the claimant.
3-1 SECTION 2. Section 2, Subsection (d), Chapter 994, Acts of
3-2 the 73rd Legislature, 1993 (Article 9104, Vernon's Texas Civil
3-3 Statutes), is amended to read as follows:
3-4 (d) Except as otherwise provided in <Notwithstanding any
3-5 other provision of> this Act, nothing in this Act preempts the
3-6 existing statutory or rulemaking authority of any other state
3-7 agency or entity to regulate staff leasing services in a manner
3-8 that is consistent with the statutory authority of that state
3-9 agency or entity.
3-10 SECTION 3. Section 4, Chapter 994, Acts of the 73rd
3-11 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
3-12 amended by amending Subsection (c) and by adding Subsection (k) to
3-13 read as follows:
3-14 (c)(1) The department shall evaluate <conduct a thorough
3-15 background investigation of> each <individual> applicant and <of>
3-16 each controlling person of each applicant to determine whether that
3-17 applicant or controlling person is qualified under this Act. The
3-18 department may deny an application for the issuance or renewal of a
3-19 license if it finds that a controlling person is not qualified
3-20 under this Act. A controlling person is not required to be
3-21 reevaluated by the department if that person changes employment
3-22 from one licensee or applicant to another licensee or applicant.
3-23 (2) In evaluating an original license application, the
3-24 department may review police or other law enforcement records
3-25 maintained by local, state, or federal law enforcement agencies.
4-1 When warranted by such review of an original application, the
4-2 department may require controlling persons to submit fingerprints
4-3 for processing through appropriate local, state, and federal law
4-4 enforcement agencies. The department may contract with a private
4-5 entity for the provision of services to assist the department in
4-6 obtaining information used in evaluating license applications or
4-7 renewals. <The investigation must include:>
4-8 <(1) the submission of fingerprints for processing
4-9 through appropriate local, state, and federal law enforcement
4-10 agencies; and>
4-11 <(2) examination by the department of police or other
4-12 law enforcement records maintained by local, state, or federal law
4-13 enforcement agencies.>
4-14 (k) Information or records submitted to a governmental body,
4-15 as defined in the open records law, Chapter 552, Government Code,
4-16 regarding or disclosing the identity of customers of an applicant
4-17 or licensee or concerning the net worth or financial condition,
4-18 including copies of federal tax returns or financial statements, of
4-19 an applicant or licensee are proprietary and confidential and are
4-20 exempt from disclosure to third parties. Such records or
4-21 information are confidential records within the meaning of the open
4-22 records law, Chapter 552, Government Code. Such records or
4-23 information may be disclosed to a governmental body, provided the
4-24 governmental body establishes that it has a reasonable, legitimate
4-25 purpose for obtaining the information.
5-1 SECTION 4. Section 6, Chapter 994, Acts of the 73rd
5-2 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
5-3 amended to read as follows:
5-4 Sec. 6. STAFF LEASING SERVICES AGREEMENT. A licensee shall
5-5 establish the terms of a staff leasing services agreement by a
5-6 written contract between the licensee and the client company. The
5-7 licensee shall give written notice of the agreement as it affects
5-8 assigned employees to each employee assigned to a client company
5-9 worksite. The written notice required by this section may be
5-10 provided in conspicuous print in an assigned employee application
5-11 form.
5-12 SECTION 5. Section 7, Chapter 994, Acts of the 73rd
5-13 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
5-14 amended by amending Subsection (a) and by adding Subsection (d) to
5-15 read as follows:
5-16 (a) A contract between a licensee and a client company must
5-17 provide that the licensee:
5-18 (1) reserves a <the> right of direction and control
5-19 over employees assigned to a client's worksites; provided, however,
5-20 that a contract between a licensee and a client company shall
5-21 provide that a licensee's right of direction and control shall
5-22 extend only to hiring, safety supervision, disciplining,
5-23 termination, and reassignment and that the client company shall
5-24 retain responsibility for direction and control over the details of
5-25 the daily work performed by the assigned employees;
6-1 (2) assumes responsibility for the payment of wages to
6-2 the assigned employees without regard to payments by the client to
6-3 the licensee;
6-4 (3) assumes responsibility for the payment of payroll
6-5 taxes and collection of taxes from payroll on assigned employees;
6-6 (4) retains the right to hire, fire, discipline, and
6-7 reassign the assigned employees; and
6-8 (5) retains the right of direction and control over
6-9 the adoption of employment and safety policies and the management
6-10 of workers' compensation claims, claim filings, and related
6-11 procedures.
6-12 (d) A licensee shall not be liable to third parties for
6-13 personal injury, death, or damage to property not due to the acts,
6-14 omissions, or negligence of the licensee and shall not be liable
6-15 for personal injury, death, or property damage claims due solely to
6-16 the required contractual provisions of this section.
6-17 SECTION 6. Section 10, Chapter 994, Acts of the 73rd
6-18 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
6-19 amended by amending Subsections (b) and (c) and by adding
6-20 Subsections (d) and (e) to read as follows:
6-21 (b) With respect to any insurance or benefit plan provided
6-22 by the licensee for the benefit of its assigned employees, a
6-23 licensee shall disclose the following information to the
6-24 department, to each client company, and to the assigned employees
6-25 <Each licensee shall disclose to the department, each client
7-1 company, and its assigned employees information relating to any
7-2 insurance or benefit plan provided for the benefit of its assigned
7-3 employees. The information must include>:
7-4 (1) the type of coverage;
7-5 (2) the identity of each insurer for each type of
7-6 coverage;
7-7 (3) the amount of benefits provided for each type of
7-8 coverage and to whom or on whose behalf benefits are to be paid;
7-9 (4) the policy limits on each insurance policy; and
7-10 (5) whether the coverage is fully insured, partially
7-11 insured, or fully self-funded.
7-12 (c) The department <commissioner> by rule may require the
7-13 filing by licensees of other reports that are reasonably necessary
7-14 to the implementation of this Act.
7-15 (d) Each state agency that, in performing duties under this
7-16 Act or other laws, has promulgated regulations governing the
7-17 activities of staff leasing services or requiring submission of
7-18 reports or information to that agency shall as promptly as possible
7-19 after the effective date of this Act and no later than January 1,
7-20 1996, review its regulations for the purpose of simplifying and
7-21 streamlining all staff leasing service reporting requirements.
7-22 (e) The disclosures required by this section may be provided
7-23 in conspicuous print in an assigned employee application form.
7-24 SECTION 7. Section 11, Chapter 994, Acts of the 73rd
7-25 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
8-1 amended by adding Subsection (g) to read as follows:
8-2 (g) Notwithstanding any contrary provision of law or agency
8-3 regulation, licensees procuring workers' compensation insurance for
8-4 the benefit of its assigned employees on a negotiated basis through
8-5 an insurance company in the voluntary insurance market where the
8-6 provision for coverage is not based strictly on the experience
8-7 rating of the client company without discount shall not be required
8-8 to complete and provide the insurance company with Texas Department
8-9 of Insurance Employee Provider Form EP-1, Employer Provider Form
8-10 EP-1A, or Employee Provider/Client Company Endorsement WC 420406A
8-11 or to otherwise comply with Rule IX of the 1994 Texas Basic Manual
8-12 of Rules, Classifications and Experience Rating Plans for Workers
8-13 Compensation and Employers Liability or any other similar forms or
8-14 regulations; provided, however, that the experience rating
8-15 information required by such forms and such rule shall be made
8-16 available to the Texas Department of Insurance or the insurance
8-17 company if requested. The provisions of this subsection shall not
8-18 apply to any licensee obtaining workers' compensation insurance
8-19 from the Texas Workers' Compensation Insurance Fund. Nothing in
8-20 this subsection shall be construed to alter or limit the audit
8-21 power of any state agency relating to a licensee.
8-22 SECTION 8. This Act takes effect September 1, 1995.
8-23 SECTION 9. The importance of this legislation and the
8-24 crowded condition of the calendars in both houses create an
8-25 emergency and an imperative public necessity that the
9-1 constitutional rule requiring bills to be read on three several
9-2 days in each house be suspended, and this rule is hereby suspended.