By: Williams S.B. No. 1365

(In the Senate - Filed March 7, 2007; March 20, 2007, read first time and referred to Committee on Business and Commerce; April 23, 2007, reported adversely, with favorable Committee Substitute by the following vote: Yeas 8, Nays 0; April 23, 2007, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 1365 By: Watson

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of staff leasing services.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 91.001, Labor Code, is amended by adding Subdivision (18) to read as follows:

(18) "Working capital" of an applicant means the applicant's current assets minus the applicant's current liabilities as determined by generally accepted accounting principles.

SECTION 2. Section 91.014, Labor Code, is amended to read as follows:

Sec. 91.014. WORKING CAPITAL [NET WORTH] REQUIREMENTS. (a) An applicant for an original or renewal license must demonstrate a positive working capital [net worth] as follows:

(1) $50,000 if the applicant employs fewer than 250 assigned employees;

(2) $75,000 if the applicant employs at least 250 but not more than 750 assigned employees; and

(3) $100,000 if the applicant employs more than 750 assigned employees.

(b) The applicant may demonstrate the applicant's working capital [net worth] to the department by providing the department with the applicant's financial statement [or a copy of the applicant's most recent federal tax return]. The applicant may also satisfy any deficiencies in the working capital [the net worth] requirement through guarantees, letters of credit, a bond in an amount that demonstrates compliance with the requirements of Subsection (a), or other security acceptable to the department. A guaranty is not acceptable to satisfy this subsection unless the applicant submits sufficient evidence to satisfy the department that the guarantor has adequate resources to satisfy the obligations of the guaranty.

(c) In computing working capital [net worth], an applicant shall include adequate reserves for all taxes and insurance, including reserves for claims incurred but not paid and for claims incurred but not reported under plans of self-insurance for health benefits. [The computation of net worth by an applicant is to be made according to Section 448, Internal Revenue Code (26 U.S.C. Section 448)].

(d) A document submitted to establish working capital [net worth] must show the working capital [net worth] on a date not earlier than nine months before the date on which the application is submitted. A document submitted to establish working capital [net worth] must be prepared or certified by an independent certified public accountant. After April 1, 2010, a document submitted to establish working capital must be reviewed or audited by an independent certified public accountant. Information submitted to or maintained by the department is subject to Chapter 552, Government Code, other than information related to:

(1) identification of client companies;

(2) working capital [net worth]; or

(3) financial statements[; or

[(4) federal tax returns].

SECTION 3. Section 91.015, Labor Code, is amended by adding Subsection (g) to read as follows:

(g) The department by rule may provide for the acceptance of an affidavit and related supporting information provided by a bonded, independent, and qualified assurance organization that has been approved by the department in lieu of the requirements of this section and Sections 91.012, 91.013, and 91.014.

SECTION 4. Section 91.016, Labor Code, is amended by adding Subsection (b-1) to read as follows:

(b-1) If a license holder submits a timely and sufficient application for renewal of a license issued or renewed by the department under this chapter, the license holder's existing staff leasing services license does not expire until the application has been finally determined by the department.

SECTION 5. Section 91.020, Labor Code, is amended to read as follows:

Sec. 91.020. GROUNDS FOR DISCIPLINARY ACTION. The department may take disciplinary action against a license holder on any of the following grounds:

(1) engaging in staff leasing services or offering to engage in the provision of staff leasing services without a license;

(2) transferring or attempting to transfer a license issued under this chapter;

(3) violating this chapter or any order or rule issued by the executive director or commission under this chapter;

(4) failing after the 31st day after the date on which a felony conviction of a controlling person is final to notify the department in writing of the conviction;

(5) failing to cooperate with an investigation, examination, or audit of the license holder's records conducted by the license holder's insurance company or the insurance company's designee, as allowed by the insurance contract or as authorized by law by the Texas Department of Insurance;

(6) failing after the 31st day after the effective date of a change in ownership, principal business address, or the address of accounts and records to notify the department and the Texas Department of Insurance of the change;

(7) failing to correct any tax filings or payment deficiencies within a reasonable time as determined by the executive director;

(8) refusing, after reasonable notice, to meet reasonable health and safety requirements within the license holder's control and made known to the license holder by a federal or state agency;

(9) being delinquent in the payment of the license holder's insurance premiums other than those subject to a legitimate dispute;

(10) being delinquent in the payment of any employee benefit plan premiums or contributions other than those subject to a legitimate dispute;

(11) knowingly making a material misrepresentation to an insurance company or to the department or other governmental agency;

(12) failing to maintain the working capital [net worth] requirements required under Section 91.014; or

(13) using staff leasing services to avert or avoid an existing collective bargaining agreement.

SECTION 6. Subdivision (12), Section 91.001, Labor Code, is repealed.

SECTION 7. The changes in law made by this Act apply to a staff leasing services license issued or renewed under Chapter 91, Labor Code, on or after the effective date of this Act. A license issued or renewed before the effective date of this Act is governed by the law in effect immediately before the effective date of this Act, and the former law is continued in effect for that purpose.

SECTION 8. This Act takes effect September 1, 2007.

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