BILL REQ. #:  S-0715.1 

Read first time 01/12/2007.   Referred to Committee on Labor, Commerce, Research & Development.

     AN ACT Relating to defining employment and reporting requirements for third party payers, temporary staffing services companies, service referral agencies, and common paymasters; amending RCW 50.04.245 and 50.24.170; adding a new section to chapter 50.12 RCW; adding new sections to chapter 50.04 RCW; creating a new section; and providing an effective date.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 50.12 RCW to read as follows:
     (1) Third party payers as defined in section 2 of this act may not establish joint accounts under RCW 50.24.170.
     (2) A third party payer must:
     (a) Register with the department as provided in RCW 50.12.070;
     (b) Provide the department with the names, addresses, and employment security account numbers of its client companies employing Washington state employees at the time of registration and at other times when requested by the department, and provide the names and addresses of its client companies not employing Washington state employees at the time of registration and at other times when requested by the department;
     (c) Notify the department within thirty days each time it adds or terminates a client company;
     (d) Provide a power of attorney or confidential information authorization completed by the client company as required by the department for each client company, authorizing it to act on behalf of the client company for unemployment insurance purposes;
     (e) File separate quarterly wage and contribution reports with the department for each client company, using the employer account number and experience rate assigned to each client company; and
     (f) Maintain accurate payroll records for each client company and make these records available in Washington state for review or inspection upon request of the department.

NEW SECTION.  Sec. 2   A new section is added to chapter 50.04 RCW to read as follows:
     (1) Personal services performed for, or for the benefit of, a client under an agreement with a third party payer is employment for the client company. The client is considered both the employer as defined in RCW 50.04.080 and the employing unit as defined in RCW 50.04.090.
     (2) For the purposes of this section:
     (a)(i) "Third party payer" means an individual or business entity that enters into an agreement with one or more clients to provide professional employer services, human resource functions, or other payroll administration services that may or may not establish a coemployment relationship. "Professional employer services" means the service of entering into a coemployment relationship in which at least a majority of the employees providing services to a client or to a division or work unit of a client are covered employment as defined in RCW 50.04.100. A "coemployment relationship" means an ongoing relationship where the rights, duties, and obligations of an employer in an employment relationship are allocated between coemployers under a professional employer agreement and state law. "Professional employer agreement" means a written contract 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.
     (ii) "Third party payer" includes entities defined in this subsection that use the title "professional employer organization," "PEO," "staff leasing company," "registered staff leasing company," "employee leasing company," "administrative employer," "employer representative," or any other name.
     (iii) "Third party payer" does not include temporary staffing services companies or services referral agencies as defined in RCW 50.04.245, or labor organizations.
     (b) "Client" means an individual or entity that enters into a professional employer agreement with a third party payer for professional employer services, human resource functions, or other payroll administration services.
     (3) A third party payer is not considered a successor employer under RCW 50.29.062. Each client retains its experience rate as determined by RCW 50.29.020 and 50.29.021. The experience rate of a third party payer is determined solely on its own unemployment experience with its own nonclient company employees.

Sec. 3   RCW 50.04.245 and 1995 c 120 s 1 are each amended to read as follows:
     (1) Subject to the other provisions of this title, personal services performed for, or for the benefit of, a third party pursuant to a contract with a temporary staffing services ((agency, employee leasing agency)) company, services referral agency, or other entity ((shall be deemed to be)) not defined as a third party payer in section 2 of this act, constitutes employment for the temporary staffing services ((agency, employee leasing agency)) company, services referral agency, or other entity when the agency is responsible, under contract or in fact, for the payment of wages in remuneration for the services performed.
     (2) The temporary staffing services company, services referral agency, or other such entity is considered an employer as defined in RCW 50.04.080.
     (3) For the purposes of this section:
     (a) "Temporary staffing services ((agency)) company" means an individual or entity ((that is engaged in the business of furnishing individuals to perform services on a part-time or temporary basis for a third party)) other than a third party payer as defined in section 2 of this act, that engages in: Recruiting and hiring its own employees; finding other organizations that need the services of those employees; and assigning those employees on a temporary basis to perform work at or services for a client to support or supplement the client's work forces, or to provide assistance in special work situations, such as employee absences, skill shortages, and seasonal workloads, or to perform special assignments or projects, all under the direction and supervision of the client. "Temporary staffing services" does not include permanent employee leasing or permanent employee placement services.
     (b) (("Employee leasing agency" means an individual or entity that for a fee places the employees of a client onto its payroll and leases such employees back to the client.
     (c))) "Services referral agency" means an individual or entity other than a third party payer as defined in section 2 of this act that is engaged in the business of offering the services of an individual to perform specific tasks for a third party.

NEW SECTION.  Sec. 4   A new section is added to chapter 50.04 RCW to read as follows:
     (1) A common pay agent or common paymaster is not an employer as defined in RCW 50.04.080 or an employing unit as defined in RCW 50.04.090.
     (2) For the purposes of this section:
     (a) A common pay agent is an independent third party who contracts with and represents two or more employers and who files a combined tax report for those employers.
     (b) A common paymaster is two or more employers in which one of the employers is designated to disburse wages to concurrently employed individuals of any of the related companies.

Sec. 5   RCW 50.24.170 and 1945 c 35 s 105 are each amended to read as follows:
     (1) The commissioner shall prescribe regulations for the establishment, maintenance, and dissolution of joint accounts by two or more employers, and shall, in accordance with such regulations and upon application by two or more employers to establish such account, or to merge their several individual accounts in a joint account, maintain such joint account as if it constituted a single employer's account.
     (2) Joint accounts may not be established for individuals or entities described under section 2 or 4 of this act.

NEW SECTION.  Sec. 6   If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state or the eligibility of employers in this state for federal unemployment tax credits, the conflicting part of this act is inoperative solely to the extent of the conflict, and the finding or determination does not affect the operation of the remainder of this act. Rules adopted under this act must meet federal requirements that are a necessary condition to the receipt of federal funds by the state or the granting of federal unemployment tax credits to employers in this state.

NEW SECTION.  Sec. 7   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 8   This act takes effect January 1, 2008.