By: Gallegos S.B. No. 1630
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of certain staff leasing services;
1-2 providing penalties.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 1, Chapter 994, Acts of the 73rd
1-5 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
1-6 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)(A) "Controlling person" means:
1-19 (i) any <(A) an> officer or director of
1-20 the 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 (ii) those members, managers, or officers
2-3 of the applicant or licensee vested with authority to manage the
2-4 business of the company by the articles of organization or company
2-5 regulations, if a limited liability company;
2-6 (iii) a general or limited partner of the
2-7 applicant or licensee vested with authority to manage the business
2-8 of the partnership by the partnership agreement, if a partnership;
2-9 (iv) a person with an ownership interest
2-10 in the applicant or licensee, if a proprietorship; or
2-11 (v) any officer of the applicant or
2-12 licensee who has direct management responsibility for the staff
2-13 leasing operations of the applicant or licensee in this state, if a
2-14 publicly held corporation.
2-15 (B) "Controlling person" does not mean an
2-16 officer, director, stockholder, partner, member, manager, or owner
2-17 of a parent company or other person related to an applicant or
2-18 licensee through common ownership or common management <(B) an
2-19 individual who possesses, directly or indirectly, the power to
2-20 direct or cause the direction of the management or policies of a
2-21 company seeking to offer staff leasing services through the
2-22 ownership of voting securities, by contract or otherwise>.
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) "Net worth" means the assets minus the liabilities
3-13 as shown on either the applicant's financial statement or the
3-14 applicant's most recent federal tax return, plus the sum of any
3-15 other guarantees, letters of credit, or securities which may be
3-16 submitted to the department.
3-17 (10) "Person" means an individual, association,
3-18 corporation, organization, government or governmental subdivision
3-19 or agency, business trust, estate trust, joint venture,
3-20 partnership, or other legal entity.
3-21 (11) <(10)> "Public company" means a corporation or a
3-22 subsidiary of a corporation whose shares are listed on the New York
3-23 Stock Exchange, the American Stock Exchange or the automated
3-24 quotation system of the National Association of Securities Dealers
3-25 <and that has total assets that exceed $1 billion>.
4-1 (12) "Self insurance" does not mean an arrangement
4-2 under which an applicant or licensee obtains an insurance policy
4-3 with a deductible and under which the insurer is liable to any
4-4 claimant, such as an assigned employee, for the full amount of each
4-5 claim, to the extent of maximum policy benefits and subject to any
4-6 deductible required under the terms of the policy to be paid by the
4-7 claimant.
4-8 (13) <(11)> "Staff leasing services" means an
4-9 arrangement by which employees of a licensee are assigned to work
4-10 at a client company and in which employment responsibilities are in
4-11 fact shared by the licensee and the client company, the employee's
4-12 assignment is intended to be of a long-term or continuing nature,
4-13 rather than temporary or seasonal in nature, and a majority of the
4-14 workforce at a client company worksite or a specialized group
4-15 within that workforce consists of assigned employees of the
4-16 licensee. The term does not include:
4-17 (A) a temporary help service;
4-18 (B) an independent contractor;
4-19 (C) the provision of services in the nature of
4-20 staff leasing services by one person solely to other persons
4-21 related by bona fide common ownership. "Common ownership" means <a
4-22 public company or any other person in which that public company
4-23 has> a direct or indirect ownership interest in excess of 33 1/3
4-24 percent, including ownership through subsidiaries and affiliates.
4-25 This exception shall not apply if the ownership is acquired solely
5-1 or primarily to meet the requirements of this section; or
5-2 (D) a temporary common worker agency or employer
5-3 as defined in Volume 15, Article 5221a-10, Vernon's Texas Civil
5-4 Statutes.
5-5 (14) <(12)> "Staff leasing services company" means an
5-6 individual business entity that offers staff leasing services.
5-7 (15) <(13)> "Temporary employee" means an employee
5-8 hired for a temporary help service.
5-9 (16) <(14)> "Temporary help service" means an
5-10 arrangement by which an organization hires its own employees and
5-11 assigns them to clients to support or supplement the client's
5-12 workforce in special work situations such as employee absences,
5-13 temporary skill shortages, seasonal workloads, or special
5-14 assignments and projects.
5-15 SECTION 2. Section 3, Chapter 994, Acts of the 73rd
5-16 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
5-17 amended to read as follows:
5-18 Sec. 3. License Required; Application. (a) A person may
5-19 not engage in or offer staff leasing services in this state without
5-20 holding a license issued under this Act.
5-21 (b) Each person that desires an original <or renewal> staff
5-22 leasing services company license shall file with the department a
5-23 written application accompanied by the application fee.
5-24 (c) The department may require an applicant for a license to
5-25 provide information and certifications necessary to determine that
6-1 the applicant meets the licensing requirements of this Act. The
6-2 department may also require the applicant to provide information
6-3 and certifications necessary to determine whether individuals
6-4 affiliated with the applicant are qualified to serve as controlling
6-5 persons.
6-6 (d) If an application is denied, a license revoked, or a
6-7 license not renewed, the applicant or former licensee may apply for
6-8 a new license at any time. The department shall take into
6-9 consideration the extent to which the causes of the prior denial,
6-10 revocation, or nonrenewal have been corrected <An applicant or
6-11 licensee is ineligible for a license for two years after the date
6-12 of final department action on the denial or revocation of a license
6-13 applied for or issued under this Act. This restriction does not
6-14 apply to a denial or revocation of a license if the basis of the
6-15 action was:>
6-16 <(1) an inadvertent error or omission in the
6-17 application if that error or omission is promptly corrected;>
6-18 <(2) the experience documented to the department was
6-19 insufficient at the time of the previous application; or>
6-20 <(3) the department was unable to complete the
6-21 criminal background investigation required under Section 4 of this
6-22 Act because of insufficient information received from a local,
6-23 state, or federal law enforcement agency>.
6-24 (e) Any order of the department denying, revoking, or not
6-25 renewing a license because of the alleged unsuitability of a
7-1 controlling person shall provide that the applicant or licensee may
7-2 avoid the action by removing such person as a controlling person.
7-3 Removal, demotion, or discharge of a controlling person in response
7-4 to an order of the department shall be an affirmative defense to
7-5 any claim by the controlling person based on such removal,
7-6 demotion, or discharge.
7-7 (f) A controlling person who has been evaluated by the
7-8 department under this Act is not required to be reevaluated if that
7-9 person changes affiliation from one applicant or licensee to
7-10 another applicant or licensee.
7-11 (g) The department by rule may require applicants or
7-12 licensees to disclose to the department the identity of persons
7-13 affiliated with the applicant or licensee, or affiliated with a
7-14 parent or related company of the applicant or licensee, who are not
7-15 controlling persons within the meaning of this Act, but who are
7-16 officers, directors, stockholders owning 10 percent or more of the
7-17 stock, or partners with 10 percent or more equity ownership of an
7-18 applicant or licensee. In specific cases, the department may for
7-19 good cause require one or more such persons to submit to the
7-20 background investigation required of controlling persons under this
7-21 Act.
7-22 (h) An applicant or licensee shall disclose to the
7-23 department the addition of any new controlling person not later
7-24 than 30 days after the person assumes the duties of a controlling
7-25 person. The person may serve as a controlling person while the
8-1 department is conducting any necessary investigations. If the
8-2 department proposes to disapprove of the new controlling person,
8-3 the department shall so notify the applicant or licensee and the
8-4 controlling person prior to taking action against the applicant or
8-5 licensee. <An applicant or licensee is ineligible for a license
8-6 for one year after the date of final department action on the
8-7 denial or revocation of a license applied for or issued under this
8-8 Act if:>
8-9 <(1) the basis of the denial or revocation was that
8-10 one or more of the controlling persons affiliated with the
8-11 applicant or licensee was determined by the department to be
8-12 unsuitable; or>
8-13 <(2) that unsuitable controlling person has in fact
8-14 ceased to be a controlling person of the applicant or licensee.>
8-15 SECTION 3. Section 4, Chapter 994, Acts of the 73rd
8-16 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
8-17 amended to read as follows:
8-18 Sec. 4. License Requirements. (a) To be qualified to serve
8-19 as a controlling person of a licensee under this Act, that person
8-20 must be at least 18 years of age, be of good moral character, and
8-21 have educational, managerial, or business experience relevant to:
8-22 (1) operation of a business entity offering staff
8-23 leasing services; or
8-24 (2) service as a controlling person of a staff leasing
8-25 services company.
9-1 (b) For the purposes of this section, "good moral character"
9-2 means a personal history of honesty, trustworthiness, fairness, a
9-3 good reputation for fair dealing, and respect for the rights of
9-4 others and for the laws of this state and nation.
9-5 (c) The department shall conduct a thorough background
9-6 investigation, on receipt of an original application, of each
9-7 individual applicant and of each controlling person of each
9-8 applicant to determine whether that applicant or controlling person
9-9 is qualified under this Act. The department may deny an
9-10 application for the issuance or renewal of a license if it finds
9-11 that a controlling person is not qualified under this Act. The
9-12 investigation may <must> include:
9-13 (1) for an original application, the submission of
9-14 fingerprints for processing through appropriate local, state, and
9-15 federal law enforcement agencies; and
9-16 (2) examination by the department of police or other
9-17 law enforcement records maintained by local, state, or federal law
9-18 enforcement agencies.
9-19 (d) Department background investigations are governed by
9-20 this Act and by Article 6252-13c, Revised Statutes, and Sections
9-21 2-5, Acts of the 67th Legislature, Regular Session, 1981 (Article
9-22 6252-13d, Vernon's Texas Civil Statutes). Conviction of a crime
9-23 does not automatically disqualify a controlling person, require the
9-24 revocation of a license, or require the denial of an application
9-25 for a new or renewed license. The department shall consider
10-1 criminal convictions as provided by Article 6252-13c, Revised
10-2 Statutes, and Sections 2-5, Acts of the 67th Legislature, Regular
10-3 Session, 1981 (Article 6252-13d, Vernon's Texas Civil Statutes).
10-4 (e) Each licensee shall maintain a registered agent for the
10-5 service of process in this state.
10-6 (f) An applicant for an original or renewal license must
10-7 demonstrate a net worth as follows:
10-8 (1) $50,000 if the applicant employs fewer than 250
10-9 assigned employees;
10-10 (2) $75,000 if the applicant employs at least 250 but
10-11 not more than 750 assigned employees;
10-12 (3) $100,000 if the applicant employs more than 750
10-13 assigned employees.
10-14 (g) For purposes of Subsection (f) of this section,
10-15 "assigned employee" means a full-time employee whose normal work
10-16 week is at least 30 <25> hours per week and whose work is performed
10-17 in this state. The term does not include an employee hired to
10-18 support or supplement the client's workforce in special work
10-19 situations, such as employee absences, temporary skill shortages,
10-20 seasonal workloads, or special assignments and projects.
10-21 (h) The applicant shall demonstrate the net worth to the
10-22 department by providing the department with the applicant's
10-23 financial statement or a copy of the applicant's most recent
10-24 federal tax return. <The net worth requirement may also be
10-25 satisfied through guarantees, letters of credit, or other security
11-1 acceptable to the department. A guaranty is not acceptable to
11-2 satisfy this subsection unless the applicant submits sufficient
11-3 evidence to satisfy the department that the guarantor has adequate
11-4 resources to satisfy the obligations of the guaranty.>
11-5 (i) In calculating net worth, an applicant shall include
11-6 adequate reserves for all taxes and insurance, including reserves
11-7 for claims incurred but not paid and for claims incurred but not
11-8 reported under plans of self-insurance for health benefits. The
11-9 calculation of net worth by an applicant shall be made according to
11-10 Section 448, Internal Revenue Code (26 U.S.C. Section 448).
11-11 (j) A document submitted to establish net worth must reflect
11-12 the net worth as of a date not earlier than six months before the
11-13 date on which the application is submitted. A document submitted
11-14 to establish net worth must be prepared or certified by an
11-15 independent certified public accountant.
11-16 (k) Information or records submitted to a governmental body,
11-17 as defined in Chapter 552, Government Code, <supplied> regarding or
11-18 disclosing the identity of customers of an applicant or licensee or
11-19 concerning the net worth or financial condition, including copies
11-20 of federal tax returns or financial statements, of an applicant or
11-21 licensee are<, is> proprietary and confidential and are <is> exempt
11-22 from disclosure to third parties. Such records or information are
11-23 confidential records within the meaning of Chapter 552, Government
11-24 Code. All disclosures of information submitted to a governmental
11-25 body pursuant to this Act are governed by Chapter 522, Government
12-1 Code, including disclosures to a governmental body<, other than to
12-2 other governmental agencies with a reasonable legitimate purpose
12-3 for obtaining the information>.
12-4 SECTION 4. Section 7, Chapter 994, Acts of the 73rd
12-5 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
12-6 amended to read as follows:
12-7 Sec. 7. Contract Requirements. (a) A contract between a
12-8 licensee and a client company must provide that the licensee:
12-9 (1) reserves a <the> right of direction and control
12-10 over employees assigned to a client's worksites;
12-11 (2) assumes responsibility for the payment of wages to
12-12 the assigned employees without regard to payments by the client to
12-13 the licensee;
12-14 (3) assumes responsibility for the payment of payroll
12-15 taxes and collection of taxes from payroll on assigned employees;
12-16 (4) retains a <the> right to hire, fire, discipline,
12-17 and reassign the assigned employees; and
12-18 (5) retains a <the> right of direction and control
12-19 over the adoption of employment and safety policies and the
12-20 management of workers' compensation claims, claim filings, and
12-21 related procedures.
12-22 (b) A licensee is responsible for its contractual duties and
12-23 responsibilities to manage, maintain, collect, and make timely
12-24 payments for:
12-25 (1) insurance premiums;
13-1 (2) benefit and welfare plans;
13-2 (3) other employee withholding; and
13-3 (4) any other expressed responsibility within the
13-4 scope of the contract for fulfilling the duties imposed under this
13-5 section.
13-6 (c) A licensee shall:
13-7 (1) comply with all appropriate state and federal laws
13-8 relating to reporting, sponsoring, filing, and maintaining benefit
13-9 and welfare plans;
13-10 (2) maintain adequate books and records regarding its
13-11 duties and responsibilities;
13-12 (3) maintain and make available at all times to the
13-13 commissioner the following information, which shall be treated as
13-14 proprietary and confidential and is exempt from disclosure to third
13-15 parties, except other governmental agencies with a reasonable and
13-16 legitimate purpose for obtaining the information:
13-17 (A) the correct name, address, and telephone
13-18 number of each client company;
13-19 (B) each client company contract; and
13-20 (C) a listing by classification code as
13-21 described in the "Standard Industrial Classification Manual,"
13-22 published by the United States Office of Management and Budget, of
13-23 each client company;
13-24 (4) notify the department of any <addition or>
13-25 deletion of a controlling person as listed on the license
14-1 application or renewal form by providing the name of the person not
14-2 later than the 30th day after the date on which the person is
14-3 <added or> deleted as a controlling person; and
14-4 (5) provide a notarized biographical history to the
14-5 department in connection with the proposed addition of a new
14-6 controlling person.
14-7 (d) Notwithstanding any other provision of this Act, a
14-8 client company may retain and exercise such right of direction and
14-9 control over the assigned employees as is necessary to conduct the
14-10 business of the client and without which the client would be unable
14-11 to conduct its business, discharge any fiduciary responsibility
14-12 that it may have, or comply with any licensure, regulatory, or
14-13 statutory requirements applicable to the client. A client who
14-14 retains such right is solely responsible for the goods and services
14-15 produced by the client and the acts or omissions of the assigned
14-16 employees.
14-17 SECTION 5. Section 8, Chapter 994, Acts of the 73rd
14-18 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
14-19 amended to read as follows:
14-20 Sec. 8. Limited License. (a) The department shall
14-21 <commissioner> by rule <shall> provide for the issuance of a
14-22 limited license for a person that offers staff leasing services in
14-23 this state on a limited basis and that is primarily engaged in
14-24 offering staff leasing services in another state. The principal
14-25 place of business of a person offering staff leasing services that
15-1 applies for a license under this section must be located in a state
15-2 other than this state.
15-3 (b) For the purposes of this section, a person offers staff
15-4 leasing services on a limited basis if the person employs fewer
15-5 than 50 <20> assigned employees at any time within this state.
15-6 (c) Applicants for a limited license shall complete
15-7 application forms provided by the department. Neither background
15-8 investigation nor fingerprints shall be routinely required for the
15-9 issuance or renewal of a limited license. Applicants for a limited
15-10 license and licensees holding a limited license are not subject to
15-11 Section 4(f) of this Act. A limited license shall be valid for a
15-12 period of one year and may be renewed annually on submission of a
15-13 renewal application.
15-14 (d) Except as otherwise provided in this section, a <A>
15-15 person holding or applying for <offering staff leasing services on>
15-16 a limited license shall <basis must> comply with all provisions of
15-17 this Act with respect to <those> services performed within this
15-18 state.
15-19 SECTION 6. Section 9, Chapter 994, Acts of the 73rd
15-20 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
15-21 amended to read as follows:
15-22 Sec. 9. Issuance and Term of Licenses. (a) The department
15-23 shall promptly issue a license to any <an> applicant who meets
15-24 <determined to meet> the requirements of this Act. The department
15-25 shall issue or renew the license not later than the 90th day after
16-1 the date on which substantially complete <the completed>
16-2 application forms are <is> filed with the department. The
16-3 department shall promptly notify an applicant of any deficiencies
16-4 in its application.
16-5 (b) An applicant or licensee who has submitted a new or
16-6 renewal application to the department shall be treated as a
16-7 licensee for the purpose of this Act until the department acts on
16-8 the application. The applicant or licensee shall disclose in
16-9 writing to each client company that it is operating under temporary
16-10 authority subject to termination if the application is denied.
16-11 (c) A license issued by the department under this Act is
16-12 valid for five years <one year>.
16-13 (d) The department shall renew a license on receipt of a
16-14 completed renewal application form <approved by the department> and
16-15 the payment of a license <the required> renewal fee <fees>.
16-16 Background investigations for controlling persons shall not be
16-17 required for the renewal of a license. The department's evaluation
16-18 of a renewal application shall be limited to determining whether
16-19 there have been any material changes in the information supplied in
16-20 connection with the original license application. The license of a
16-21 licensee that applies for renewal more than 90 days prior to the
16-22 expiration date of its license shall be valid until 90 days after
16-23 the department acts on the application for renewal.
16-24 (e) The department by rule shall provide for the issuance
16-25 and renewal of licenses on a reciprocal basis for applicants who
17-1 are licensed in another state which has a licensing law
17-2 substantially similar or comparable to this Act.
17-3 (f) The department may exchange information concerning
17-4 applicants, licensees, or controlling persons with staff leasing
17-5 licensing authorities in other states for the purpose of reciprocal
17-6 licensing. Issuance of a license on a reciprocal basis shall not
17-7 require background investigations of persons or entities previously
17-8 evaluated in connection with licensing in another state.
17-9 (g) Any license issued prior to the effective date of this
17-10 Act shall expire five years from the original issue date. The
17-11 department shall issue replacement licenses reflecting the correct
17-12 expiration date.
17-13 SECTION 7. Section 10, Chapter 994, Acts of the 73rd
17-14 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
17-15 amended to read as follows:
17-16 Sec. 10. Employee Benefit Plans; Required Disclosure.
17-17 (a) A licensee may sponsor and maintain employee benefit plans for
17-18 the benefit of assigned employees. A client company may include
17-19 assigned employees in any benefit plan sponsored by the client
17-20 company.
17-21 (b) With respect to any insurance or benefit plan provided
17-22 by a licensee for the benefit of its assigned employees, a <Each>
17-23 licensee shall disclose the following information to the
17-24 department, to each client company, and to its assigned employees
17-25 <information relating to any insurance or benefit plan provided for
18-1 the benefit of its assigned employees. The information must
18-2 include>:
18-3 (1) the type of coverage;
18-4 (2) the identity of each insurer for each type of
18-5 coverage;
18-6 (3) the amount of benefits provided for each type of
18-7 coverage and to whom or on whose behalf benefits are to be paid;
18-8 (4) the policy limits on each insurance policy; and
18-9 (5) whether the coverage is fully insured, partially
18-10 insured, or fully self-funded.
18-11 (c) The department <commissioner> by rule may require the
18-12 filing by licensees of other reports that are reasonably necessary
18-13 to the implementation of this Act.
18-14 SECTION 8. Section 12, Chapter 994, Acts of the 73rd
18-15 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
18-16 amended to read as follows:
18-17 Sec. 12. Health Benefit Plans. (a) An applicant or a <A>
18-18 licensee may not sponsor a plan of self-insurance for health
18-19 benefits except as permitted by the Employee Retirement Income
18-20 Security Act of 1974 (29 U.S.C. Section 1001 et seq.).
18-21 (b) For purposes of this section, a "plan for
18-22 self-insurance" includes any arrangement except an arrangement
18-23 under which an insurance carrier authorized to do business in this
18-24 state has issued an insurance policy that covers all of the
18-25 obligations of the health benefits plan.
19-1 (c) Self-funded or partially self-funded health insurance
19-2 plans are prohibited as allowed herein.
19-3 SECTION 9. Section 13, Chapter 994, Acts of the 73rd
19-4 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
19-5 amended to read as follows:
19-6 Sec. 13. Unemployment Taxes; Payroll. (a) An applicant or
19-7 a <A> licensee is the employer of an assigned employee for purposes
19-8 of the Texas Unemployment Compensation Act (Article 5221b-1 et
19-9 seq., Vernon's Texas Civil Statutes) and Article 5155, Revised
19-10 Statutes. In addition to any other reports required to be filed by
19-11 law, a licensee shall report quarterly to the Texas Employment
19-12 Commission the name, address, telephone number, federal income tax
19-13 identification number, and classification code as described in the
19-14 "Standard Industrial Classification Manual" as published by the
19-15 United States Office of Management and Budget of each client
19-16 company on a form prescribed by the Texas Employment Commission.
19-17 (b) On contracting with a client company, a licensee shall
19-18 notify the Texas Employment Commission of the contract. The
19-19 notification shall be made in the form prescribed by the Texas
19-20 Employment Commission.
19-21 (c) For purposes of the Texas Unemployment Compensation Act
19-22 (Article 5221b-1 et seq., Vernon's Texas Civil Statutes), in the
19-23 event of the termination of a contract between a licensee and a
19-24 client company or the failure by a staff leasing entity to submit
19-25 reports or make tax payments as required by that Act, the
20-1 contracting client company shall be treated as a new employer
20-2 without a previous experience record unless that client company is
20-3 otherwise eligible for an experience rating.
20-4 SECTION 10. Section 17, Chapter 994, Acts of the 73rd
20-5 Legislature, 1993 (Article 9104, Vernon's Texas Civil Statutes), is
20-6 amended to read as follows:
20-7 Sec. 17. Disciplinary Actions. (a) For purposes of this
20-8 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 not 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. The importance of this legislation and the
24-9 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.