Michigan Administrative Code › Department - Labor and Economic Opportunity › Unemployment Insurance Agency › Employment Security › Part 2 - EMPLOYERS › Section R. 421.190 - Common paymaster; employee leasing companies; payrolling; temporary help firms

Current through Vol. 24-12, July 15, 2024
Rule 190.
(1) As
				  used in this rule:
(a) "Captive provider"
				  means an employee leasing company which limits itself to providing services and
				  employees to only 1 client entity and the entity's subsidiaries and affiliates
				  and which does not hold itself out as available to provide leasing services to
				  other client entities that do not share an ownership relationship with the
				  employee leasing company.
(b)
				  "Client entity," also known as a "work-site employer," means the business
				  entity that contracts with an employee leasing company for the purpose of
				  providing employees and related services to the client entity.
(c) "Common paymaster" is the arrangement by
				  which different services performed by 1 individual are divided among 2 or more
				  employers that are related through commonality of ownership, and the individual
				  is compensated by 1 of those employers that acts as the common paymaster. Under
				  such an arrangement, different employers benefit from the services of the same
				  individual, but these services are reflected in the experience rating of, and
				  the payment of unemployment taxes by, only 1 of the employers. If 2 or more
				  related corporations concurrently employ the same individual and compensate
				  that individual through a common paymaster that is 1 of the corporations, the
				  corporations may elect to report wages and pay unemployment taxes of all shared
				  employees of the related corporations through a common paymaster and the
				  related corporations will be considered to be a single employing unit. The
				  common paymaster for purposes of reporting wages and paying Michigan
				  unemployment taxes of all shared employees shall be the corporation that has
				  the highest Michigan unemployment tax rate. Corporations are considered to be
				  related if they satisfy any 1 of the following tests at any time during the
				  calendar quarter:
(i) The corporations are
				  members of a controlled group of corporations as defined in section 1563 of the
				  internal revenue code,
				  26 U.S.C.
				  §1563, or would be members if certain
				  stock ownership percentage requirements between corporations were relaxed and
				  certain exclusions made inapplicable.
(ii) In the case of a corporation that does
				  not issue stock, either 50% or more of the members of 1 corporation's board of
				  directors or other governing body are members of the other corporation's board
				  of directors or other governing body, or the holders of 50% or more of the
				  voting power to select such members are concurrently the holders of 50% or more
				  of that power with respect to the other corporation.
(iii) Fifty percent or more of 1
				  corporation's officers are concurrently officers of the other
				  corporation.
(iv) Thirty percent or
				  more of 1 corporation's employees are concurrently employees of the other
				  corporation. Corporations are considered related for an entire calendar quarter
				  if 1 of the requirements listed in paragraphs (i) to (iv) of this subdivision
				  is satisfied. Concurrent employment means the contemporaneous existence of an
				  employment relationship between an individual and 2 or more
				  corporations.
(d)
				  "Employee leasing company (ELC)," also known as a "professional employer
				  organization," means an independently established business entity that does all
				  of the following:
(i) Provides employees to a
				  client entity.
(ii) Pays the wages
				  of the employees.
(iii) Reports and
				  withholds applicable taxes from the wages of the employees.
(iv) Administers the benefits for the
				  employees.
(v) Provides other
				  payroll, human resources, and other management assistance services that are
				  agreed upon with its client entity. The employees provided to the client entity
				  may have previously been employed directly by the client entity. The
				  relationship between the client entity and ELC is intended to be long-term or
				  continuing, rather than temporary or intermittent, and the employees are,
				  generally, not subject to reassignment. The majority of the workers at a client
				  entity's worksite, or a majority of workers in a specialized group within that
				  workforce, consists of employees assigned by the leasing company.
(e) "Payrolling" is the practice
				  of establishing a related or associated company for the purposes of reassigning
				  the employee payroll functions from 1 business entity to the related business
				  entity, usually to take advantage of the lower unemployment tax rate of the
				  related business entity. Direction and control of the involved employees are
				  not transferred along with the payroll to the related business entity, and the
				  related entity is not an employee leasing company. The related business entity
				  to which the payroll is assigned is not the employer for unemployment insurance
				  tax purposes. The entity for which services are performed and which exercises
				  direction and control over the employee is the employer.
(f) "Temporary help firm" means an employer
				  whose primary business is to provide a client entity with the temporary
				  services of 1 or more individuals under contract with the employer. Employment
				  with a temporary help firm is characterized by a series of limited-term
				  assignments of an individual to a client entity based on a written or oral
				  contract between the temporary help firm and the client entity. The assignment
				  is usually for a specified period. A separate written or oral employment
				  contract exists between the temporary help firm and each individual it hires as
				  an employee. The employee of the temporary help firm is subject to reassignment
				  by the temporary help firm. Completion of an assignment for the client entity
				  by an employee employed by the temporary help firm does not, in itself,
				  terminate the employment contract between the temporary help firm and the
				  individual. A temporary help firm that meets the requirements of section 41 of
				  the act is a liable employer and shall pay unemployment taxes on its
				  employees.