Bill Text: FL S1360 | 2011 | Regular Session | Introduced
Bill Title: Employee Leasing Companies
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-05-07 - Indefinitely postponed and withdrawn from consideration [S1360 Detail]
Download: Florida-2011-S1360-Introduced.html
Florida Senate - 2011 SB 1360
By Senator Bogdanoff
25-00679A-11 20111360__
1 A bill to be entitled
2 An act relating to employee leasing companies;
3 amending s. 468.525, F.S.; revising the provisions
4 that must be addressed in a contractual arrangement
5 between an employee leasing company and a client
6 company; providing that the leasing company is
7 responsible for securing workers’ compensation
8 coverage; requiring the client company to identify its
9 contractors and nonleased employees to the leasing
10 company within specified times; requiring the leasing
11 company to give 10 days’ notice before terminating an
12 agreement; amending s. 468.529, F.S.; providing that
13 during the term of a leasing agreement, employees who
14 are directly hired by a client company or who commence
15 work for the client company become employees of the
16 leasing company; requiring a client company that
17 directly hires nonleased employees to have an in-force
18 workers’ compensation policy covering these employees;
19 providing that a leasing company’s insurer may recover
20 from a client company a certain amount of premium and
21 administrative costs in specified circumstances;
22 providing that responsibility for workers’
23 compensation for leased employees is by way of a
24 multiple coordinated policy issued to the leasing
25 company; providing for calculating the client
26 company’s workers’ compensation premium while under
27 contract with a leasing company; requiring a leasing
28 company to notify employees if the leasing agreement
29 is terminated; specifying when coverage ends after the
30 agreement is terminated; requiring a leasing company
31 to provide the client company with records relating to
32 its loss experience during the term of the agreement;
33 amending s. 627.192, F.S.; deleting provisions
34 relating to an employee leasing company and its
35 workers’ compensation insurer, to conform; providing
36 an effective date.
37
38 Be It Enacted by the Legislature of the State of Florida:
39
40 Section 1. Subsection (4) of section 468.525, Florida
41 Statutes, is amended to read:
42 468.525 License requirements.—
43 (4) The employee leasing company’s contractual arrangements
44 with its client companies must shall satisfy the following
45 conditions, whereby the leasing company:
46 (a) Reserves a right of direction and control over leased
47 employees assigned to the client’s location. However, a client
48 may retain such sufficient direction and control over the leased
49 employees as is necessary to conduct the client’s business and
50 without which the client would be unable to conduct its
51 business, discharge any fiduciary responsibility that it may
52 have, or comply with any applicable licensure, regulatory, or
53 statutory requirement of the client.
54 (b) Assumes responsibility for the payment of wages to the
55 leased employees without regard to payments by the client to the
56 leasing company.
57 (c) Assumes full responsibility for the payment of payroll
58 taxes and collection of taxes from payroll on leased employees.
59 (d) Is the entity that secures the workers’ compensation
60 coverage for the leased employees.
61 (e)(d) Retains authority to hire, terminate, discipline,
62 and reassign the leased employees. However, the client company
63 may have the right to accept or cancel the assignment of any
64 leased employee.
65 (f)(e) Retains a right of direction and control over
66 management of safety, risk, and hazard control at the worksite
67 or sites affecting its leased employees, including:
68 1. Responsibility for performing safety inspections of
69 client equipment and premises.
70 2. Responsibility for the promulgation and administration
71 of employment and safety policies.
72 3. Responsibility for the management of workers’
73 compensation claims, claims filings, and related procedures.
74 (g)(f) Gives Has given written notice of the relationship
75 between the employee leasing company and the client company to
76 each leased employee it assigns to perform services at the
77 client’s worksite.
78 (h) Requires the client company to provide to the leasing
79 company, in writing, the names and addresses of all parties with
80 whom it has a contractor relationship at the time of entering
81 into the employee leasing arrangement. The client company must
82 notify the leasing company within 48 hours after entering into a
83 subcontractor relationship with a third party or immediately
84 upon commencement of such contract work, whichever occurs first.
85 (i) Requires the client company to provide to the leasing
86 company, in writing, the names of any direct, nonleased
87 employees employed by the client company at the time of entering
88 into the employee leasing arrangement.
89 (j) Provides 10 days’ notice to the client company before
90 terminating the employee leasing agreement, during which time
91 the client company may cure any contract defaults or
92 deficiencies. If the deficiency is not cured within 10 days, the
93 contract is terminated.
94 Section 2. Section 468.529, Florida Statutes, is reordered
95 and amended to read:
96 468.529 Licensee’s insurance; employment tax; benefit
97 plans.—
98 (1) A licensed employee leasing company is the employer of
99 the leased employees, except that this provision does is not
100 intended to affect the determination of any issue arising under
101 Pub. L. No. 93-406, the Employee Retirement Income Security Act,
102 Pub. L. No. 93-406, as amended from time to time.
103 (a) An employee leasing company is solely shall be
104 responsible for the timely payment of unemployment taxes
105 pursuant to chapter 443, and shall be responsible for obtaining
106 providing workers’ compensation coverage pursuant to this part
107 and chapter 440. However, no
108 (b) A licensed employee leasing company may not shall
109 sponsor a plan of self-insurance for health benefits, except as
110 may be permitted by the provisions of the Florida Insurance Code
111 or, if applicable, by Pub. L. No. 93-406, the Employee
112 Retirement Income Security Act, Pub. L. No. 93-406, as amended
113 from time to time. For purposes of this section, a “plan of
114 self-insurance” excludes shall exclude any arrangement where an
115 admitted insurance carrier has issued a policy of insurance
116 which is primarily responsible for the obligations of the health
117 plan.
118 (2) An initial or renewal license may not be issued to an
119 any employee leasing company unless the employee leasing company
120 first files with the board evidence that the leasing company has
121 secured of workers’ compensation coverage for all leased
122 employees in this state. Each employee leasing company shall
123 maintain and make available to its workers’ compensation carrier
124 the following information:
125 (a) The correct name and federal identification number of
126 each client company.
127 (b) A listing of all covered employees provided to each
128 client company, by classification code.
129 (c) The total eligible wages by classification code and the
130 premiums due to the carrier for the employees provided to each
131 client company.
132 (4)(3) A licensed employee leasing company shall, within 30
133 days after initiation or termination of an employee leasing
134 agreement, notify its workers’ compensation insurance carrier,
135 the Division of Workers’ Compensation of the Department of
136 Financial Services, and the state agency providing unemployment
137 tax collection services under contract with the Agency for
138 Workforce Innovation through an interagency agreement pursuant
139 to s. 443.1316 of both the initiation or the termination of the
140 company’s relationship with a any client company.
141 (5) During the term of an employee leasing agreement with a
142 client company, a person becomes an employee of the leasing
143 company upon the direct hiring of such person by the client
144 company, the commencement of work for the client company by such
145 person, or the direct hiring of the person by the leasing
146 company, whichever occurs first. A client company that directly
147 hires nonleased employees must report those employees to the
148 employee leasing company within 48 hours after hiring, and the
149 client company must have an in-force workers’ compensation
150 policy covering such directly hired, nonleased employees. If an
151 employee leasing company becomes liable for the payment of
152 workers’ compensation benefits to an employee of the leasing
153 company who was directly hired by the client company and the
154 client company has failed to report such hiring within 48 hours
155 after hiring, the employee leasing company’s insurer, or the
156 leasing company if self-insured, may recover from the client
157 company the amount of premium and administrative costs that
158 would have been owed by the client company if the employee had
159 been reported.
160 (6) Responsibility for obtaining workers’ compensation
161 coverage for leased employees shall be by way of a multiple
162 coordinated policy issued to the employee leasing company.
163 (a) During the first year that a client company enters into
164 an employee leasing agreement with an employee leasing company,
165 the client company’s experience modification factor shall be
166 applied to the premium paid by the leasing company and charged
167 to the client company for workers’ compensation coverage.
168 (b) During the second year that a client company enters
169 into an employee leasing agreement with an employee leasing
170 company, the premium paid by the leasing company and charged to
171 the client company shall be based on the average of the leasing
172 company’s and client company’s experience modification factors.
173 (c) During the third year that a client company enters into
174 an employee leasing agreement with an employee leasing company,
175 and thereafter, the leasing company’s experience modification
176 factor shall be applied to the premium paid by the leasing
177 company and charged to the client company for workers’
178 compensation coverage.
179 (7) If an employee leasing arrangement is terminated, the
180 leasing company must send notice of such termination by first
181 class mail to the last known address of each leased employee who
182 was assigned to the terminated client company. The notification
183 must state the date the employee leasing arrangement was
184 terminated. If the client company is a contractor or involved in
185 the construction industry, the employee leasing company must
186 send notice of the termination to all contractors with whom the
187 client company contracted.
188 (a) A leased employee who continues to be employed by a
189 terminated client company is not covered by the workers’
190 compensation policy of the employee leasing company as of the
191 11th day after the leasing company terminated its relationship
192 with the client company.
193 (b) Upon termination of the employee leasing agreement, the
194 employee leasing company shall provide to the client company the
195 records regarding the loss experience of the workers’
196 compensation insurance for the company during the term of the
197 employee leasing agreement.
198 (8) Subject to any limitation set forth in chapter 440 or
199 s. 627.192(7), s. 440.11(2) applies to the employee leasing
200 company, the client company, and all other persons set forth s.
201 440.11(2) only if workers’ compensation coverage is secured for
202 leased employees by the leasing company.
203 (3)(4) An initial or renewal license may not be issued to
204 any employee leasing company unless the employee leasing company
205 first provides evidence to the board, as required by board rule,
206 that the employee leasing company has paid all of the employee
207 leasing company’s obligations for payroll, payroll-related
208 taxes, workers’ compensation insurance, and employee benefits.
209 All disputed amounts must be disclosed in the application.
210 (9)(5) The provisions of this section are subject to
211 verification by department or board audit.
212 Section 3. Section 627.192, Florida Statutes, is amended to
213 read:
214 627.192 Workers’ compensation insurance; employee leasing
215 arrangements.—
216 (1) The purpose of this section is to ensure that an
217 employer who leases some or all of its workers properly obtains
218 workers’ compensation insurance coverage for all of its
219 employees, including those leased from or coemployed with
220 another entity, and that the premium paid by an employee leasing
221 company is commensurate with exposure and anticipated claim
222 experience for all employees.
223 (2) For purposes of the Florida Insurance Code:
224 (a) “Employee leasing” has shall have the same meaning as
225 set forth in s. 468.520(4).
226 (b) “Experience rating modification” means a factor applied
227 to a premium to reflect a risk’s variation from the average
228 risk. The experience modification is determined by comparing
229 actual losses to expected losses, using the risk’s own past
230 experience.
231 (c) “Leased employee” means a person performing services
232 for a lessee under an employee leasing arrangement.
233 (d) “Lessee” means an entity that which obtains all or part
234 of its workforce from another entity through an employee leasing
235 arrangement or which employs the services of an entity through
236 an employee leasing arrangement.
237 (e) “Lessor” means an employee leasing company, as set
238 forth in part XI of chapter 468, engaged in the business of or
239 holding itself out as being in the business of employee leasing.
240 A lessor may also be referred to as an employee leasing company.
241 (f) “Premium subject to dispute” means that the insured has
242 provided a written notice of dispute to the insurer or service
243 carrier, has initiated a any applicable proceeding for resolving
244 such disputes as prescribed by law or rating organization
245 procedures approved by the office, or has initiated litigation
246 regarding the premium dispute. The insured must have detailed
247 the specific areas of dispute and provided an estimate of the
248 premium the insured believes to be correct. The insured must
249 have paid any undisputed portion of the bill.
250 (3) A lessor that obtains coverage in the voluntary
251 workers’ compensation market may elect, with the voluntary
252 market insurer’s knowledge and consent, to secure the coverage
253 on leased employees through a workers’ compensation policy
254 issued to the lessor. The insurer of the lessor may, in its
255 discretion, take all reasonable steps to ascertain exposure
256 under the policy and collect the appropriate premium by:
257 (a) Requiring the lessor to provide a complete description
258 of lessor’s operations.
259 (b) Requiring periodic reporting by the lessor of covered
260 lessees’ payroll, classifications, claims information, loss
261 data, and jurisdictions with exposure. This reporting may be
262 supplemented by a requirement for lessees to submit to the
263 carrier Internal Revenue Service Form 941 or its equivalent on a
264 quarterly basis.
265 (c) Auditing the lessor’s operations.
266 (d) Using other reasonable measures to determine the
267 appropriate premium.
268 (3)(4) A lessor that applies for coverage or is covered by
269 a workers’ compensation insurance policy must through the
270 voluntary market shall also maintain and furnish to the insurer
271 on an annual basis, and as the insurer may otherwise reasonably
272 require, sufficient information to permit the calculation of an
273 experience modification factor for each lessee upon termination
274 of the employee leasing relationship. Information accruing
275 during the term of the leasing arrangement which is used to
276 calculate an experience modification factor for a lessee upon
277 termination of the leasing relationship shall continue to be
278 used in the future experience ratings of the lessor. Such
279 information includes shall include:
280 (a) The lessee’s corporate name.
281 (b) The lessee’s taxpayer or employer identification
282 number.
283 (c) Payroll summaries and class codes applicable to each
284 lessee, and, if requested by the insurer, a listing of all
285 leased employees associated with a given lessee.
286 (d) Claims information grouped by lessee, and any other
287 information maintained by or readily available to the lessor
288 which that is necessary for the calculation of an experience
289 modification factor for each lessee.
290 (4)(5) In addition to any other provision of law, any
291 material violation of this section by a lessor an employee
292 leasing company is grounds for cancellation or nonrenewal of the
293 lessor’s insurance policy provided that the lessor employee
294 leasing company has been provided a reasonable opportunity to
295 cure the violation. If a lessor an employee leasing company has
296 received notice that its workers’ compensation insurance policy
297 will be canceled or nonrenewed, the lessor must leasing company
298 shall notify by certified mail, within 5 15 days after receipt
299 of the notice, notify by certified mail all of the lessees for
300 which there is an employee leasing arrangement covered under the
301 policy to be canceled., except Notice is not required if the
302 lessor employee leasing company has obtained another insurance
303 policy with an effective date that is the same as the date of
304 cancellation or nonrenewal.
305 (5)(6) If the employee leasing arrangement with a lessee is
306 terminated, the lessee shall be assigned an experience
307 modification factor that which reflects its experience during
308 the experience period specified by the approved experience
309 rating plan, including, if applicable, experience incurred for
310 leased employees under the employee leasing arrangements. The
311 lessor employee leasing company shall notify the insurer of its
312 intent to terminate any lessee relationship before prior to
313 termination when feasible. When prior notice is not feasible,
314 the employee leasing company shall notify its insurer within 5
315 working days following actual termination.
316 (6)(7) This section does shall not affect have any effect
317 on the statutory obligation, if any, of a lessee to secure
318 workers’ compensation coverage for employees that the lessee
319 does not coemploy or lease pursuant to an employee leasing
320 arrangement.
321 (7)(8) A lessee may shall not enter into an employee
322 leasing relationship or be eligible for workers’ compensation
323 coverage in the voluntary market if the lessee owes its current
324 or a prior insurer any premium for workers’ compensation
325 insurance, or if the lessee owes its current or prior lessor
326 employee leasing company amounts due under the service
327 agreement, except for premium or amounts due that are subject to
328 dispute. For the purposes of this section and compliance with
329 other laws and regulations, a lessor may rely on a sworn
330 statement by the lessee that the lessee has met any and all
331 prior premium or fee obligations, unless the lessor has actual
332 knowledge to the contrary.
333 (8)(9) Insurers shall conduct annual audits of payroll and
334 classifications of lessors employee leasing companies in order
335 to ensure that the appropriate premium is charged for workers’
336 compensation coverage. The audits shall be conducted to ensure
337 that all sources of payment by lessors to employees,
338 subcontractors, and independent contractors have been reviewed
339 and the accuracy of classifications of employees has been
340 verified. Insurers may provide for more frequent audits of
341 lessors based on such factors as amount of premium, type of
342 business, loss ratios, or other relevant factors. Payroll and
343 classification verification audit rules of insurers must
344 include, but need not be limited to, use by the insurer of state
345 and federal reports of employee income, payroll and other
346 accounting records, certificates of insurance maintained by
347 subcontractors, and duties of employees.
348 (9)(10) If a lessor or a lessee fails to provide reasonable
349 access to payroll and classification records for a payroll and
350 classification audit, the insured shall pay a premium to the
351 insurer a premium not to exceed three times the most recent
352 estimated annual premium. However, the lessor is not subject to
353 such penalty if the failure to obtain the needed records is the
354 direct result of the acts or omissions of the lessee.
355 Section 4. This act shall take effect upon becoming a law.
