SSB 5373 -
By Senators Jacobsen, Clements
WITHDRAWN 03/12/2007
Beginning on page 13, line 10, after "Sec. 8." strike all material
through "act." on page 16, line 25, and insert "For the purposes of
this chapter:
(1) "Client" means any person who enters into a professional
employer agreement with a professional employer organization.
(2) "Coemployer" means either a professional employer organization
or a client.
(3) "Coemployment relationship" means a relationship that is
intended to be an ongoing relationship rather than a temporary or
project-specific one, wherein the rights, duties, and obligations of an
employer, which arise out of an employment relationship, have been
allocated between coemployers under a professional employer agreement
and applicable state law. In such a coemployment relationship:
(a) The professional employer organization is entitled to enforce
only such employer rights and is subject to only those obligations
specifically allocated to the professional employer organization by the
professional employer agreement or applicable state law;
(b) The client is entitled to enforce those rights and obligated to
provide and perform those employer obligations allocated to such client
by the professional employer agreement and applicable state law; and
(c) The client is entitled to enforce any right and obligated to
perform any obligation of an employer not specifically allocated to the
professional employer organization by the professional employer
agreement or applicable state law.
(4) "Covered employee" means an individual having a coemployment
relationship with a professional employer organization and a client who
meets all of the following criteria:
(a) The individual has received written notice of coemployment with
the professional employer organization; and
(b) The individual's coemployment relationship is pursuant to a
professional employer agreement.
Individuals who are officers, directors, shareholders, partners,
and managers of the client are covered employees to the extent the
professional employer organization and the client have expressly agreed
in the professional employer agreement that such individuals would be
covered employees and provided such individuals meet the criteria of
this subsection and act as operational managers or perform day-to-day
operational services for the client.
(5) "Department" means the employment security department.
(6) "Professional employer agreement" means a written contract by
and between a client and a professional employer organization that
provides for:
(a) The coemployment of covered employees; and
(b) The allocation of employer rights and obligations between the
client and the professional employer organization with respect to the
covered employees.
(7) "Professional employer organization" means any person engaged
in the business of providing professional employer services. The
following shall not be deemed to be professional employer organizations
or the provision of professional employer services for the purposes of
this section:
(a) Arrangements where a person, whose principal business activity
is not entering into professional employer arrangements and which does
not hold itself out as a professional employer organization, shares
employees with a commonly owned company within the meaning of section
414 (b) and (c) of the internal revenue code of 1986, as it exists on
the effective date of this section;
(b) Independent contractor arrangements by which a person assumes
responsibility for the product produced or service performed by such
person or his or her agents and retains and exercises primary direction
and control over the work performed by the individuals whose services
are supplied under such arrangements; or
(c) Providing staffing services.
(8) "Professional employer services" means the service of entering
into a coemployment relationship with a client in which all or a
majority of the employees providing services to a client or to a
division or work unit of a client are covered employees.
NEW SECTION. Sec. 9 (1) Notwithstanding other provisions of this
title to the contrary, personal services performed for, or for the
benefit of, a client company under a professional employer agreement
between a registered professional employer organization and a client
company, is deemed to be employment for the professional employer
organization when the professional employer organization is
responsible, under contract or in fact, for the payment of wages in
remuneration for the services performed.
(2) The registered professional employer organization is considered
the employer as defined in RCW 50.04.080.
NEW SECTION. Sec. 10 (1) No person shall provide, advertise, or
otherwise hold itself out as providing professional employer services
in this state, unless such person is registered with the department
under this title.
(2) Each applicant for registration under this title, shall provide
the department with the following information:
(a) The name or names under which the professional employer
organization conducts business;
(b) The address of the principal place of business of the
professional employer organization and the address of each office it
maintains in this state;
(c) The professional employer organization's taxpayer or employer
identification number;
(d) The professional employer organization's unemployment insurance
account number;
(e) A list by jurisdiction of each name under which the
professional employer organization has operated in the preceding five
years, including any alternative names, names of predecessors, and, if
known, successor business entities; and
(f) A statement of ownership, which must include the name and
business address of any controlling person. For the purposes of this
section, a controlling person is any person that, individually or
acting in concert with one or more other persons, owns or controls,
directly or indirectly, twenty-five percent or more of the equity
interests of the professional employer organization.
NEW SECTION. Sec. 11 (1) Each professional employer organization
operating within this state as of the effective date of this section
shall complete its initial registration not later than one hundred
eighty days after the effective date of this section. This initial
registration is valid until the end of the professional employer
organization's first fiscal year end that is more than one year after
the effective date of this section.
(2) Upon initial registration, each professional employer
organization must provide the department with a full and complete list
of client companies engaged in a coemployment relationship operating in
the state of Washington.
(3) Each professional employer organization not operating within
this state as of the effective date of this section shall complete its
initial registration prior to commencement of operations within this
state.
NEW SECTION. Sec. 12 (1) Not more than ten days after the end of
each calendar quarter, a professional employer organization must
provide to the department a complete list of any new client companies
that have entered into a professional employer agreement and a list of
any client companies that have terminated a professional employer
agreement.
(2) Professional employer organizations must report the following
information:
(a) The name or names under which the client conducts business;
(b) The address of the principal place of business of the client
company;
(c) The inception date of the professional employer agreement;
(d) The client company's taxpayer or employer identification
number;
(e) The client company's unemployment insurance account number
prior to entering the professional employer agreement; and
(f) A detailed list of the coemployees year-to-date wages and
unemployment taxes paid prior to entering the professional employer
agreement.
(3) The department shall maintain a list of professional employer
organizations registered under this title. The department shall also
maintain a list of client companies engaged in a professional employer
agreement.
(4) The department may prescribe forms necessary to promote the
efficient administration of this section.
NEW SECTION. Sec. 13 All records, reports, and other information
obtained from a professional employer organization under this title,
except to the extent necessary for the proper administration of this
title by the department, are confidential and shall not be published or
open to public inspection other than to public employees in the
performance of their public duties.
NEW SECTION. Sec. 14 (1) Upon the renewal of a professional
employer organization's rate notice each year, the department shall:
(a) List client companies that entered the professional employer
agreement over the prior twelve calendar months on the professional
employer organization's rate notice; and
(b) Apply each new client company's unemployment insurance rate
immediately prior to entering the professional employer agreement with
the professional employer organization's unemployment insurance rate
proportionally on the basis of covered employees from that client to
the total covered employees of the professional employer organization
to arrive at a new rate for the professional employer organization to
be used for all twelve months of the following rate year.
(2) Upon the inception of a professional employer agreement, a
professional employer organization shall carry over the year-to-date
wages paid and year-to-date unemployment tax remitted to the state for
each coemployee and continue to pay unemployment tax up to the wage
base limit set by the department.
(3) A professional employer organization is not liable for errors
in reporting, payment, delinquent payments, or any other unemployment
insurance liability for a client company prior to the inception date of
the professional employer agreement. A client company is not liable
for errors in reporting, payment, delinquent payments, or any other
unemployment insurance liability for a professional employer
organization during the contract period of the professional employer
agreement.
NEW SECTION. Sec. 15 (1) If a client company and a professional
employer organization terminate a professional employer agreement for
any reason up to thirty months from the inception date of the contract,
the department shall assign the client company the same unemployment
insurance rate it held prior to entering into the professional employer
agreement.
(2) If a client company and a professional employer organization
terminate a professional employer agreement for any reason after thirty
months from the inception date of the contract, the department shall
assign the client employer a rate based on the professional employer
organization's rate."
Renumber the remaining sections consecutively and correct any internal references accordingly.
On page 21, line 14, after "Sec. 24." strike "Sections 5, 6, and 10 through 12" and insert "Sections 5 and 6"
On page 21, after line 15, insert the following:
"NEW SECTION. Sec. 25 Sections 8 through 15 of this act
constitute a new chapter in Title
SSB 5373 -
By Senators Jacobsen, Clements
WITHDRAWN 03/12/2007
On page 1, line 2 of the title, after "system;" strike the remainder of the title and insert "amending RCW 50.12.070, 50.29.021, 50.12.220, 50.04.165, 50.04.310, 50.24.160, 50.20.070, 50.04.245, 50.24.170, 50.04.080, and 50.04.090; adding new sections to chapter 50.04 RCW; adding a new section to chapter 50.24 RCW; adding a new chapter to Title 50 RCW; creating new sections; prescribing penalties; and providing effective dates."