Source: https://www.capitol.hawaii.gov/session2012/bills/SB2424_CD1_.HTM
Timestamp: 2020-02-24 13:21:26
Document Index: 156175200

Matched Legal Cases: ['§373', '§373', '§373', '§373', '§373', '§373', '§373', '§373', '§373', '§373', '§373']

SB2424 CD1.DOC
SECTION 2. Chapter 373L, Hawaii Revised Statutes, is amended by adding eleven new sections to be appropriately designated and to read as follows:
"§373L-A Professional employer organization special fund. There is established in the state treasury a special fund to be known as the professional employer organization special fund to be administered by the department to implement and operate the registration of professional employer organizations established by this chapter. Moneys collected as fees or penalties under sections 373L-C, 373L-D, 373L-E, and 373L-H shall be deposited in the fund. Interest earned from the balance of the fund shall become a part of the fund. Moneys in the fund may be expended for personnel and operating expenses and staff training.
§373L-B Registration required. No person within the purview of this chapter shall use the terms "professional employer organization," "PEO", "staff leasing company", "registered staff leasing company", "employee leasing company", "administrative employer", or other similar name unless the person is registered and in compliance with this chapter and the rules and regulations of the director.
§373L-C Notice of judgments, penalties. (a) Each registered professional employer organization shall provide written notice within thirty days to the department of any judgment, award, or disciplinary sanction imposed against the organization for violating a statutory provision in an action brought by any state or federal regulatory agency.
In addition to any other penalties provided by law, the failure of a professional employer organization to comply with this subsection is a violation punishable by a penalty established by the director pursuant to section 373L-F. Any action taken to impose or collect the penalty provided for in this subsection shall not be considered a criminal action.
§373L-D Denial, suspension, revocation, denial of renewal of registration, or penalty. In addition to any other actions authorized by law, the director may deny, suspend, revoke, or deny renewal of registration of any professional employer organization or impose a penalty when the professional employer organization, including its controlling persons:
§373L-E Fees. No applicant shall be allowed to register pursuant to this chapter unless the appropriate fees have been paid. Effective July 1, 2012, the director shall collect fees pursuant to this chapter as follows:
0 – 100 covered employees $2,500
251 – 499 covered employees $5,000
500 or more covered employees $10,000
(3) Restoration fee $500
§373L-F Responsibilities and duties of the director. The general duties and powers of the director shall include but not be limited to:
§373L-G Professional employer agreements; notification to covered employees; notification to department. (a) During the term of the agreement between a professional employer organization and its client company, the professional employer organization shall be deemed the employer for purposes of unemployment insurance, workers' compensation, temporary disability insurance, and prepaid health care coverage.
(b) The professional employer organization shall provide written notice of the relationship between the professional employer organization and the client company to each covered employee of the client company when assigned to the worksite of the client company.
(c) The professional employer organization shall provide written notice to the department on a form provided by the department of the relationship between the professional employer organization and the client company within five business days of the initiation of the relationship and within five business days of the termination of the relationship. The department shall keep the notice provided by the professional employer organization confidential, including the names of the client companies and information that may identify the client companies.
§373L-H Failure to comply; penalty; injunction. (a) If a professional employer organization fails to comply with this chapter or any rule or final order of the director, the professional employer organization shall be liable for a penalty in an amount:
whichever sum is greater. The director may, in the director's discretion, for good cause shown, remit all or any part of the penalty in excess of $1,000 to the professional employer organization; provided that the professional employer organization complies with this chapter, rules adopted pursuant to chapter 91, and final orders of the director.
§373L-I Hearings. Unless otherwise provided by law, in every case in which the director denies, suspends, revokes, or denies renewal of registration, or proposes to impose a penalty on a professional employer organization, the proceeding shall be conducted in accordance with chapter 91 by the director or an appointed hearings officer.
§373L-J Judicial review by circuit court. Any professional employer organization aggrieved by a final decision and order of the director in a contested case, as defined in chapter 91, is entitled to judicial review thereof by the circuit court of the circuit in which the professional employer organization's principal place of business is located. The review shall be as provided by chapter 91.
§373L-K Payroll cost exemption. (a) Amounts received by a professional employer organization from a client company equal to amounts that are disbursed by the professional employer organization for employee wages, salaries, payroll taxes, insurance premiums, and benefits, including retirement, vacation, sick leave, health benefits, and similar employment benefits with respect to covered employees at a client company shall not be subject to the general excise tax as provided by section 237-24.75.
(B) The professional employer organization fails to pay any tax withholding for covered employees or any federal or state taxes for which the professional employer organization is responsible.
As used in this paragraph, ["professional employment organization",] "professional employer organization", "client company", and ["assigned employee"] "covered employee" shall have the meanings provided in section [373K-1.] 373L‑1."
""Controlling person" means any individual, firm, association, or corporation that directly or indirectly has the power to direct or cause to be directed, the management, control, or activities of the professional employer organization.
2. By amending the definitions of "client company", "covered employee", "professional employer agreement", "professional employer organization", and "temporary help services" to read:
"Covered employee" means an individual having a [co-employment] relationship with a professional employer organization and a client company who meets all of the following criteria:
(1) The individual has received written notice of [co-employment] the relationship with the professional employer organization; and
(2) The individual's [co-employment] relationship is pursuant to a professional employer agreement subject to this chapter. Individuals who are officers, directors, shareholders, partners, and managers of the client company shall be covered employees to the extent that the professional employer organization and the client company have expressly agreed in the professional employer agreement that the individuals shall be covered employees; provided that the individuals meet the criteria of this definition and act as operational managers or perform day-to-day operational services for the client company.
"Professional employer agreement" means a written contract by and between a client company and a professional employer organization that provides for the following:
(1) The [co-employment] assignment of covered employees[;] to the client company; and
(2) The allocation of employer rights and obligations between the client company and the professional employer organization with respect to the covered employees.
3. By deleting the definition of "co-employment".
[""Co-employment" 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 that arise out of an employment relationship have been allocated between the client company and the professional employer organization pursuant to a professional employer agreement and this chapter."]
(12) A financial statement prepared in accordance with generally accepted accounting principles, audited within three months of registration or renewal by an independent certified public accountant licensed to practice in the State, and without qualification as to the going concern status of the professional employer organization[.]; provided that if the professional employer organization has not had sufficient operating history to have audited financial statements, a financial statement that has been reviewed within three months of registration by an independent certified public accountant licensed to practice in the State who can attest that the professional employer organization has $150,000 in working capital shall be required; and
(d) The director shall [establish fees and requirements for registration, maintenance of registration, renewal, and restoration of registration for professional employer organizations by rule pursuant to chapter 91.] to the extent practicable permit the acceptance of electronic filings in conformance with chapter 489E, including applications, documents, reports, and other filings required under this chapter. The director may provide for the acceptance of electronic filings by a professional employer organization. Nothing in this subsection shall limit or change the director's authority to register or terminate registration of a professional employer organization or to investigate or enforce any provision of this chapter."
(1) Professional employer organizations consisting of fewer than one hundred full-time or part-time employees shall post a minimum of $250,000; provided that the number of employees shall be calculated in the same manner as required under 373L-E; and
(b) Any bond posted pursuant to this section shall name the director as the obligee and may be canceled only if either the professional employer organization or the surety gives sixty days prior written notice to the other and the surety gives at least forty-five days prior written notice to the director of cancellation of the bond. If a professional employer organization has more than one branch location in the State, the bond shall cover all locations. The requirements of this section shall be satisfied by a single bond. The bond required by this section shall be issued by [a] an A-rated surety [or federally insured lending institution] authorized to do business in the State to [indemnify a] fulfill the obligations of the professional employer organization to the State, client [company] companies, and covered employees who may suffer loss as a result of [nonperformance] noncompliance and failure to make payment by a professional employer organization[.], including but not limited to unemployment insurance, workers' compensation, temporary disability insurance, prepaid health care benefits, wages, employee benefits, and employment taxes.
(c) [Upon cancellation or expiration of the bond, the] The surety [or insurer] shall remain [liable] obligated for any claims against the bond [for a period of six months;] after cancellation or expiration of the bond; provided that:
[(1) The debts were incurred while the bond was in effect; and
(2) The director notifies the surety or insurer, as the case may be, of any claims within ninety days of discovery of any claims.]
(1) The surety was provided written notice of such claim during the six month period immediately following the cancellation or expiration of the bond; and
(2) The claim accrued, but only for the amount accrued, before the expiration or cancellation of the bond.
(d) The surety [or insurer] is not required to release any moneys or collateral to the professional employer organization during the six months after cancellation of the bond.
(e) Failure to have in effect a current bond shall result in automatic forfeiture of registration pursuant to this chapter and shall require the professional employer organization to immediately cease doing business in the State. Notwithstanding section 373L-H, if the professional employer organization does not cease doing business, the director may immediately apply to the court for an order to enjoin the professional employer organization. A professional employer organization whose registration is forfeited shall apply as a new applicant for registration in order to resume business in the State.
(f) The director, or any person claiming to have sustained loss resulting from noncompliance and failure to make payments by a professional employer organization as required by this chapter, may bring an action on the bond to recover such damage. The surety may fulfill its obligation under the bond by depositing the penal sum of the bond with the director. Upon receiving any sum from the surety, the director may deduct all money due to the State resulting from the noncompliance and nonpayment by the professional employer organization. Any remaining balance shall be held by the director for the benefit of all other persons who sustained loss by the noncompliance and nonpayment by the professional employer organization, and the director may deposit such balance with a court of competent jurisdiction in order to resolve competing claims. After all claims are finally resolved or settled, any remaining balance from the bond proceeds shall be returned to the surety."
SECTION 9. The director of labor and industrial relations may establish two .5 full-time equivalent (FTE) permanent additional positions, subject to chapters 76 and 89, Hawaii Revised Statutes, to carry out the purposes of chapter 373L, Hawaii Revised Statutes. The positions may include a disability compensation enforcement specialist IV and office assistant IV.
SECTION 10. There is appropriated out of the general revenues of the State of Hawaii the sum of $177,500 or so much thereof as may be necessary for fiscal year 2012-2013 to be deposited to the credit of the professional employer organization special fund established pursuant to section 373L‑A, Hawaii Revised Statutes.
SECTION 11. There is appropriated out of the professional employer organization special fund the sum of $177,500 or so much thereof as may be necessary for fiscal year 2012-2013 for the department of labor and industrial relations to carry out the purposes of this Act, including the hiring of two .5 full-time equivalent (FTE) permanent positions pursuant to section 9 of this Act, necessary equipment, and fees to the department of commerce and consumer affairs.
SECTION 15. This Act shall take effect upon its approval; provided that sections 10 and 11 shall take effect on July 1, 2012.
Adds powers and duties to the Director of Labor and Industrial Relations regarding the registration and regulation of professional employer organizations. Authorizes various penalties for noncompliance; amends definitions and bond level requirements; and establishes the professional employer organization special fund. Repeals chapter 373K, Hawaii Revised Statutes, but moves the general excise tax exemption provisions to chapter 373L, Hawaii Revised Statutes. Appropriates funds to the Department of Labor and Industrial Relations. (CD1)