By: Hunter, Harless (Senate Sponsor - Williams) H.B. No. 2249

(In the Senate - Received from the House April 27, 2009; April 27, 2009, read first time and referred to Committee on Business and Commerce; May 6, 2009, reported favorably by the following vote: Yeas 7, Nays 0; May 6, 2009, sent to printer.)

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 Subdivisions (2-a) and (18) to read as follows:

(2-a) "Assurance organization" means an independent entity approved by the commission that:

(A) provides a national program of accreditation and financial assurance for staff leasing services companies;

(B) has documented qualifications, standards, and procedures acceptable to the department; and

(C) agrees to provide information, compliance monitoring services, and financial assurance useful to the department in accomplishing the provisions of this chapter.

(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 positive working capital in the following amounts [a 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 shall [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 financial statement must be prepared in accordance with generally accepted accounting principles, be audited by an independent certified public accountant, and be without qualification as to the going concern status of the applicant. An applicant that has not had sufficient operating history to have audited financial statements based on at least 12 months of operations must meet the financial capacity requirements required by Subsection (a) and provide the department with financial statements that have been reviewed by a certified public accountant. 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 amounts required under [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 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 net worth must show the net worth on a date not earlier than nine months before the date on which the application is submitted. A document submitted to establish net worth must be prepared or certified 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];

(3) financial statements; or

(4) federal tax returns.

SECTION 3. 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 4. Subchapter B, Chapter 91, Labor Code, is amended by adding Section 91.021 to read as follows:

Sec. 91.021. ELECTRONIC FILING AND COMPLIANCE. (a) The commission may adopt rules to permit the acceptance of electronic filings under this chapter, including the filing of applications, documents, reports, and other documents required by this chapter. The rules may provide for the acceptance of electronic filing and other assurance by an assurance organization, qualified and approved by the commission, that provides satisfactory assurance and documentation of compliance acceptable to the department that meets or exceeds the requirements of this chapter.

(b) A staff leasing services company may authorize an assurance organization that is qualified and approved by the commission to act on its behalf in complying with the licensing requirements of this chapter, including the electronic filing of information and the payment of application and licensing fees. Use of an assurance organization is optional and is not mandatory for a staff leasing services company.

(c) Nothing in this section may be construed to change or affect the department's authority to issue licenses, revoke licenses, conduct investigations, or enforce any provision of this chapter.

SECTION 5. Subchapter D, Chapter 91, Labor Code, is amended by adding Section 91.050 to read as follows:

Sec. 91.050. TAX CREDITS AND OTHER INCENTIVES. (a) For the purpose of determining tax credits, grants, and other economic incentives provided by this state or other governmental entities that are based on employment, assigned employees are considered employees of the client and the client is solely entitled to the benefit of any tax credit, economic incentive, or other benefit arising from the employment of assigned employees of the client. This subsection applies even if the staff leasing services company is the reporting employer for federal income tax purposes.

(b) If a grant or the amount of any incentive described by Subsection (a) is based on the number of employees, each client shall be treated as employing only those assigned employees co-employed by the client. Assigned employees working for other clients of the staff leasing services company may not be included in the computation.

(c) Each staff leasing services company shall provide, on the request of a client or an agency of this state, employment information reasonably required by the state agency responsible for the administration of any tax credit or economic incentive described by Subsection (a) and necessary to support a request, claim, application, or other action by a client seeking the tax credit or economic incentive.

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

SECTION 7. The changes in law made by this Act regarding the qualifications for or the issuance or renewal of a license apply to a staff leasing services license issued or renewed under Chapter 91, Labor Code, on or after December 31, 2010. A license issued or renewed before December 31, 2010, is governed by the law as it existed immediately before that date, and that law is continued in effect for that purpose.

SECTION 8. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2009.

(b) Section 91.014, Labor Code, as amended by this Act, takes effect December 31, 2011.

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