1-1 By: Hilbert (Senate Sponsor - Gallegos) H.B. No. 1184
1-2 (In the Senate - Received from the House May 3, 1999;
1-3 May 4, 1999, read first time and referred to Committee on Economic
1-4 Development; May 14, 1999, reported favorably by the following
1-5 vote: Yeas 4, Nays 0; May 14, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the regulation of staff leasing services.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Sections 91.001(14) and (15), Labor Code, are
1-11 amended to read as follows:
1-12 (14) "Staff leasing services" means an arrangement by
1-13 which employees of a license holder are assigned to work at a
1-14 client company and in which employment responsibilities are in fact
1-15 shared by the license holder and the client company, the employee's
1-16 assignment is intended to be of a long-term or continuing nature,
1-17 rather than temporary or seasonal in nature, and a majority of the
1-18 work force at a client company worksite or a specialized group
1-19 within that work force consists of assigned employees of the
1-20 license holder. The term includes professional employer
1-21 organization services. The term does not include:
1-22 (A) temporary help;
1-23 (B) an independent contractor;
1-24 (C) the provision of services that otherwise
1-25 meet the definition of "staff leasing services" by one person
1-26 solely to other persons who are related to the service provider by
1-27 common ownership; or
1-28 (D) a temporary common worker employer as
1-29 defined by Chapter 92.
1-30 (15) "Staff leasing services company" means a business
1-31 entity that offers staff leasing services. The term includes a
1-32 professional employer organization.
1-33 SECTION 2. Section 91.002(b), Labor Code, is amended to read
1-34 as follows:
1-35 (b) Each person who offers staff leasing services [license
1-36 holder] is subject to this chapter and the rules adopted by the
1-37 commissioner.
1-38 SECTION 3. Subchapter A, Chapter 91, Labor Code, is amended
1-39 by adding Sections 91.005, 91.006, and 91.007 to read as follows:
1-40 Sec. 91.005. APPLICATION OF CERTAIN PROCUREMENT LAWS. With
1-41 respect to a bid, contract, purchase order, or agreement entered
1-42 into with the state or a political subdivision of the state, a
1-43 client company's status or certification as a small,
1-44 minority-owned, disadvantaged, or woman-owned business enterprise
1-45 or as a historically underutilized business is not affected because
1-46 the client company has entered into an agreement with a license
1-47 holder or uses the services of a license holder.
1-48 Sec. 91.006. WORKERS' COMPENSATION COVERAGE. (a) A
1-49 certificate of insurance coverage showing that a license holder
1-50 maintains a policy of workers' compensation insurance constitutes
1-51 proof of workers' compensation insurance coverage for the license
1-52 holder and the client company with respect to all employees of the
1-53 license holder assigned to the client company. The state and a
1-54 political subdivision of the state shall accept a certificate of
1-55 insurance coverage described by this section as proof of workers'
1-56 compensation coverage under Chapter 406.
1-57 (b) For a client company that has employees who are not
1-58 assigned employees under a staff leasing services agreement, the
1-59 state or a political subdivision of the state may require the
1-60 client company to furnish separate proof of workers' compensation
1-61 insurance coverage for those employees.
1-62 Sec. 91.007. APPLICATION OF LABOR RELATIONS LAWS. This
1-63 chapter does not relieve a client company of a right, obligation,
1-64 or duty under:
2-1 (1) Chapter 101;
2-2 (2) the federal National Labor Relations Act (29
2-3 U.S.C. Section 151 et seq.);
2-4 (3) the federal Railway Labor Act (45 U.S.C. Section
2-5 151 et seq.); or
2-6 (4) any other law governing labor relations.
2-7 SECTION 4. Sections 91.015(c) and (d), Labor Code, are
2-8 amended to read as follows:
2-9 (c) Before denying a license application, the department
2-10 shall provide written notice to an applicant specifying the reasons
2-11 for the denial. The department shall provide the applicant at
2-12 least 30 days after the date of the notice to address the reasons
2-13 for the denial. For good cause and on a showing of a good faith
2-14 effort to remedy the reasons for the denial, the commissioner may
2-15 grant an additional 30 days to remedy the reasons for denial.
2-16 (d) Removal, demotion, or discharge of a controlling person
2-17 in response to notice from [an order of] the department of the
2-18 alleged unsuitability of that controlling person is an affirmative
2-19 defense to any claim by that individual based on the removal,
2-20 demotion, or discharge.
2-21 SECTION 5. Section 91.019(a), Labor Code, is amended to read
2-22 as follows:
2-23 (a) The commissioner by rule shall provide for the issuance
2-24 of a limited license to a person who seeks to offer limited staff
2-25 leasing services in this state [and is domiciled in another state
2-26 and licensed or registered as a staff leasing services company in
2-27 the state in which the person is domiciled].
2-28 SECTION 6. Section 91.021, Labor Code, is amended by adding
2-29 Subsection (d) to read as follows:
2-30 (d) In assessing an administrative penalty, the department
2-31 shall consider the severity of the violation, whether the violation
2-32 was wilful or intentional, whether the license holder acted in good
2-33 faith to avoid or mitigate the violation, whether the license
2-34 holder has engaged in similar violations in the past, and the
2-35 penalties previously assessed by the department against other
2-36 license holders under this chapter. The department by rule shall
2-37 establish a written enforcement plan that provides notice to
2-38 license holders of the specific ranges of penalties that apply to
2-39 specific alleged violations and the criteria by which the
2-40 department determines the amount of a proposed administrative
2-41 penalty.
2-42 SECTION 7. Section 91.032, Labor Code, is amended to read as
2-43 follows:
2-44 Sec. 91.032. CONTRACT REQUIREMENTS. (a) A contract between
2-45 a license holder and a client company must provide that the license
2-46 holder:
2-47 (1) shares, as provided by Subsection (b), with the
2-48 client company [reserves] the right of direction and control over
2-49 employees assigned to a client's worksites;
2-50 (2) assumes responsibility for the payment of wages to
2-51 the assigned employees without regard to payments by the client to
2-52 the license holder;
2-53 (3) assumes responsibility for the payment of payroll
2-54 taxes and collection of taxes from payroll on assigned employees;
2-55 (4) shares, as provided by Subsection (b), with the
2-56 client company [retains] the right to hire, fire, discipline, and
2-57 reassign the assigned employees; and
2-58 (5) shares, as provided by Subsection (b), with the
2-59 client company [retains] the right of direction and control over
2-60 the adoption of employment and safety policies and the management
2-61 of workers' compensation claims, claim filings, and related
2-62 procedures.
2-63 (b) Notwithstanding any other provision of this chapter, a
2-64 client company retains responsibility for:
2-65 (1) the direction and control of assigned employees as
2-66 necessary to conduct the client company's business, discharge any
2-67 applicable fiduciary duty, or comply with any licensure,
2-68 regulatory, or statutory requirement;
2-69 (2) goods and services produced by the client company;
3-1 and
3-2 (3) the acts, errors, and omissions of assigned
3-3 employees committed within the scope of the client company's
3-4 business.
3-5 SECTION 8. (a) This Act takes effect September 1, 1999.
3-6 (b) The change in law made by this Act to Section 91.015(c),
3-7 Labor Code, applies only to the denial of a license application
3-8 that occurs on or after the effective date of this Act. A license
3-9 denial that occurs before the effective date of this Act is
3-10 governed by the law in effect on the date the license denial
3-11 occurred, and the former law is continued in effect for that
3-12 purpose.
3-13 (c) Section 91.021(d), Labor Code, as added by this Act,
3-14 applies to an administrative penalty assessed on or after the
3-15 effective date of this Act. An administrative penalty assessed
3-16 before the effective date of this Act is governed by the law in
3-17 effect on the date the penalty was assessed, and the former law is
3-18 continued in effect for that purpose.
3-19 (d) The change in law made by this Act to Section 91.032,
3-20 Labor Code, applies only to a contract between a staff leasing
3-21 service license holder and a client company entered into on or
3-22 after the effective date of this Act. A contract entered into
3-23 before that date is governed by the law in effect on the date the
3-24 contract was entered into, and the former law is continued in
3-25 effect for that purpose.
3-26 SECTION 9. The importance of this legislation and the
3-27 crowded condition of the calendars in both houses create an
3-28 emergency and an imperative public necessity that the
3-29 constitutional rule requiring bills to be read on three several
3-30 days in each house be suspended, and this rule is hereby suspended.
3-31 * * * * *