1997 Regular Session
By: Representative Reeves
House Bill 347
AN ACT TO CREATE THE "EMPLOYEE LEASING COMPANY REGULATORY ACT"; TO PRESCRIBE DEFINITIONS FOR CERTAIN TERMS USED IN THIS ACT; TO CREATE AN ADVISORY BOARD AND A DIRECTOR AND TO PRESCRIBE THEIR POWERS AND DUTIES WITH REGARD TO THE ADMINISTRATION OF THIS ACT; TO PROVIDE THAT THE STATE TREASURER SHALL BE THE DIRECTOR OF THE ADVISORY BOARD; TO REQUIRE THE LICENSING OF PERSONS AND COMPANIES ENGAGED IN THE BUSINESS OF PROVIDING EMPLOYEE LEASING ARRANGEMENTS; TO REQUIRE A NONREFUNDABLE APPLICATION FEE AND AN ANNUAL LICENSE FEE FOR EMPLOYEE LEASING COMPANIES; TO PRESCRIBE THE DUTIES AND RESPONSIBILITIES OF EMPLOYEE LEASING COMPANIES; TO AUTHORIZE DISCIPLINARY ACTIONS AGAINST LICENSEES BY THE DIRECTOR AND ADVISORY BOARD; TO AUTHORIZE THE DIRECTOR AND ADVISORY BOARD TO RECOMMEND INVESTIGATIONS, AUDITS OR REVIEWS AS NECESSARY TO CARRY OUT THE PROVISIONS OF THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. This act shall be known and may be cited as the "Employee Leasing Company Regulatory Act."
SECTION 2. The Legislature recognizes that there is a public need for regulation of employee leasing companies and, therefore, deems it necessary and in the interest of public health, safety and welfare to establish standards for the operation, regulation and licensing of employee leasing companies in this state.
SECTION 3. As used in this act, unless the context otherwise requires:
(a) "Advisory Board" means the Advisory Board created by this act. If the Advisory Board wishes to implement a per diem for services, these payments shall be provided through the fees generated by licensure requirements of employee leasing companies.
(b) "Applicant" means a person applying for licensing in accordance with this act.
(c) "Client" means a person other than an ELCO who is a party to an ELCO arrangement.
(d) "Director" means the State Treasurer acting as Director of the Advisory Board. The director shall hire someone or designate someone within the State Treasurer's Office to administer this act whose salary shall be determined by the Advisory Board subject to approval by the State Personnel Board. This person's hours shall be set according to the workload dictated by the activities of this act.
(e) "Controlling person" means:
(i) Any natural person who possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of any ELCO, through ownership of a five percent (5%) or greater interest, or voting securities of a five percent (5%) or greater interest, by contract or otherwise; or
(ii) Any natural person employed, appointed or authorized by an ELCO to enter into a contractual relationship with a client on behalf of the ELCO.
(f) "Good moral character" means a personal history of honesty, trustworthiness, fairness, good reputation for fair dealings and respect for the rights of others and for the laws of this state and nation.
(g) "Licensee" means a person licensed as an ELCO or ELCO group under this act.
(h) "Employee leasing company" or "ELCO" means any person engaged in providing services to a client in accordance with one (1) or more ELCO arrangements.
(i) "Person" means an individual, an association, a company, a firm, a partnership or a corporation.
(j) "Employee leasing company arrangement" or "ELCO arrangement" means a plan, policy or procedure under contract, or otherwise, whereby:
(i) An ELCO agrees to perform, purports to perform or actually performs services for a client as a coemployer for a majority of the existing workforce at a client worksite;
(ii) The arrangement sets no restriction or limitation on the duration of employment; and
(iii) Employer responsibilities are in fact allocated between or shared by the ELCO and the client.
The term "ELCO arrangement" is to be liberally constructed so as to include any and all arrangements meeting the criteria set forth by this act, by whatever term known. The employer responsibilities are deemed allocated between or shared by the ELCO and client whenever the arrangement, agreement or contract between the client and the ELCO expressly provides for such or whenever a substantive analysis of the client's manufacturing, service or business process reveals that, in fact, the client, or someone acting on his behalf and in his interest, exercises some degree of control over the employees as to the method and manner of the work performed.
For the purposes of this act, an ELCO arrangement does not include:
(i) Arrangements wherein a person, whose principal business activity is not entering into an ELCO arrangement, shares employees with a commonly owned company within the meaning of Section 414(b) and (c) of the Internal Revenue Code of 1986, as amended, and who does not hold himself out as an ELCO; or
(ii) Arrangements for which a person assumes full responsibility for the product or service performed by such person or his agents and retains and exercises, both legally and in fact, a complete right of direction and control over the individuals whose services are supplied under contractual arrangements, and the person or his agents perform a specified function for the recipient that is separate and divisible from the primary business or operations of the recipient.
(k) "Employee leasing companies" or "ELCO's" means two (2) or more corporate employee leasing companies, each of which are majority owned by the same ultimate parent, entity or person.
(l) "Worksite employee" means a person who performs services for an ELCO and one or more clients of the ELCO in accordance with an ELCO arrangement.
(m) "Worksite employer" means a person, who as a client of an ELCO, coemploys worksite employees and assumes responsibility for worksite operations as necessary to conduct the client's business.
SECTION 4. (1) The director may prescribe rules and regulations for the conduct of the business and licensing of an ELCO or ELCO's as may be deemed necessary to carry out this act. These rules shall have the force and effect of law and shall be enforced by the director and the Advisory Board in the same manner as the provisions of this act.
(2) (a) An Advisory Board is created to advise the director on matters pertaining to this act and shall consist of seven (7) members to be appointed by and including the director.
(b) The Governor shall appoint a business leader to serve. The Commissioner of Insurance shall appoint an insurance executive with no business with an ELCO. The State Auditor shall appoint a certified public accountant with no leasing clients. The Lieutenant Governor, Secretary of State, Attorney General, and State Treasurer shall each appoint an industry representative with no two (2) individuals from the same company or its affiliate. All members shall serve staggered terms on the Advisory Board as follows: the State Treasurer appointee shall serve for eight (8) years, the Secretary of State appointee shall serve for six (6) years, the Attorney General's appointee shall serve for four (4) years, and the appointees of the Governor, Lieutenant Governor, and Commissioner of Insurance shall serve for two (2) years. Rulings of the Advisory Board may be appealed to the Appellate Committee which includes the State Treasurer, Secretary of State, and the Attorney General.
(c) As terms of the members expire, the director and the designated statewide officials shall appoint successors for terms of four (4) years, and members shall serve until their successors are appointed. The members' service on the Advisory Board shall begin upon appointment and continue until their successors are appointed.
(d) The Advisory Board may recommend rules and regulations to the director for the conduct of the business and licensing of an ELCO as may be deemed necessary to carry out this act.
SECTION 5. Information, statements, transcriptions of proceedings, transcriptions of recordings, electronic recordings, letters, memoranda and other documents and reports obtained from any applicant, client, employing unit or employer in accordance with the administration of this act, except to the extent necessary for the proper administration and enforcement of this act, shall be held confidential and shall not be subject to subpoena in any civil action or proceeding, and shall not be published or open to public inspection other than as may be disseminated by the Director of the Advisory Board to public employees in the performance of their public duties. Such records shall remain confidential in each agency, department or agency of the State of Mississippi to which the Advisory Board approves access for the purpose of effecting state business and duties.
On orders of the Advisory Board, any records or documents received or maintained by the director under this act, or under the rules and regulations promulgated under this act, may be destroyed under safeguards as will protect their confidential nature two (2) years after the date on which the records or documents last serve any useful, legal or administrative purpose in the administration of this act or in the protection of the rights to anyone.
A violation of this section is a felony punishable by imprisonment in the State Penitentiary for one (1) year.
SECTION 6. After July 1, 1998, any person who engages in the business of or acts as an ELCO by entering into any ELCO arrangement with a client relating to business conducted by the client in this state without first procuring a license, or who otherwise violates this act may be penalized as provided in Sections 15 and 16 of this act. Any license issued under this act shall be nontransferable. Any transfer or issuance of stock or other ownership interest in a licensee which results in a change in the ownership interest within a twelve (12) month period shall be deemed a transfer of the license and shall require a new application by the licensee.
SECTION 7. This act shall not apply to labor organizations as defined by the National Labor Relations Act, or to any political subdivision of this state, the United States and any programs or agencies thereof.
SECTION 8. (1) Every applicant for an initial ELCO license shall file with the director a completed application on a form prescribed and furnished by the director together with any forms, materials and information as is necessary to enable the director to ascertain if the application meets the requirements of this act. The application shall be accompanied by a nonrefundable application fee not to exceed Two Hundred Fifty Dollars ($250.00). As a condition of licensure under this act, any applicant that is not a resident of, or is domiciled outside of, the State of Mississippi must first be licensed as an ELCO, employee leasing or staff leasing company in the state in which it is a resident or is domiciled if licensing is required by the state. A temporary license of Two Hundred Fifty Dollars ($250.00) shall be purchased. If a license is approved, then the application fee shall be credited toward the licensee's fee to be established by the Advisory Board. The Advisory Board may rescind the temporary license or approve a license for permanent status.
(2) Applicants for licensing as an ELCO or ELCO group shall meet the following minimum standards:
(a) If an individual, the applicant must be the age of majority.
(b) If a partnership, the applicant shall state the names and home addresses of all partners and indicate whether each partner is a general or a limited partner. The applicant shall include a copy of the partnership agreement or an affidavit signed by all partners to the effect that no written partnership agreement exists.
(c) If a corporation, the applicant shall state the names and home addresses of all officers, directors and shareholders who own or owned a five percent (5%) or greater interest in the corporation or its predecessors during the preceding five (5) years. The applicant shall include a certificate of good standing from the Secretary of State evidencing its qualification to do business in this state.
(d) If a group, the parent entity or other entity authorized to act on behalf of the group shall be the applicant. The applicant shall include for each ELCO within the group the information required in paragraphs (b) and (c) of this subsection. The applicant shall also include a guarantee, on a form approved by the Advisory Board, executed by each ELCO within the group, guaranteeing payment of all financial obligations with respect to wages, employment taxes, insurance premiums and employee benefits of each other member within the group. An ELCO group may satisfy the reporting and financial requirements of this act on a consolidated basis.
(e) The applicant shall provide the trade name or names under which the applicant conducts business, its taxpayer or employer identification number and the address of its principal place of business in this state and the address of any other office within this state through which the applicant intends to conduct business as an ELCO or ELCO group. If the applicant's principal place of business is located in another state, such address shall be provided.
(f) The applicant shall provide a list, by jurisdiction, of each name under which the applicant has operated during the preceding five (5) years, including any alternative names, names of predecessors and names of related business entities with common majority ownership. The applicant also shall provide detailed information on the background of each controlling person to the extent deemed necessary by the Advisory Board.
(g) The applicant shall provide any other information the Advisory Board deems reasonably necessary to show that the applicant and each controlling person is of good moral character, business integrity and financial responsibility. A thorough background investigation of the applicant shall be instituted by the Advisory Board. The Advisory Board may deny an application for licensure or renewal citing lack of good moral character.
(3) The Advisory Board shall license by reciprocity as a nonresident ELCO group, an applicant which is licensed as an ELCO or ELCO group in another state, and which is otherwise qualified thereof under this act except as to residence or domicile, if under the laws of the state of the applicant's residence or domicile, a similar privilege is granted to persons residing or domiciled and licensed in Mississippi under this act. If no licensure regulations exist in the domicile state, the employee leasing company must comply with Mississippi laws. For the purpose of this act, the majority of all home offices, payroll functions and administration duties, wherever performed, shall constitute a resident.
(4) The Advisory Board may issue a restricted license to an ELCO or ELCO group residing or domiciled in another state for limited operation within this state under the following conditions:
(a) If the applicant's state of domicile or residence provides for licensing of an ELCO, employee leasing or staff leasing company, the applicant is licensed and in good standing in its state of domicile or residence, which state grants a similar privilege for restricted licensing to an ELCO, employee leasing or staff leasing company or groups resident or domiciled and licensed in Mississippi under this act.
(b) The applicant does not have more than five (5) clients in this state.
(c) The applicant shall not have more than one hundred (100) worksite employees working in this state.
(d) The applicant has only one (1) client in this state, but that client has numerous worksites and employees.
(5) An applicant to be granted a restricted license shall be exempt from the requirements of subsection (2)(h) of this section if the applicant is licensed and in good standing in its state of domicile.
(6) An applicant for nonresident or restricted license shall file, on a form provided, an appointment of a recognized and approved entity as its attorney to receive service of legal process issued against it in this state.
(7) Any license issued shall remain the property of the Advisory Board, and a licensee shall immediately return the license to the Advisory Board upon demand by the Director of the Advisory Board or his authorized representative.
SECTION 9. (1) The Advisory Board may deny application for license:
(a) If the application is not fully complete, not properly executed or is otherwise deficient on its face;
(b) If the documents required to supplement the application are not included in the application packet or are otherwise inadequate;
(c) If the nonrefundable application fees required by Section 8 or 10 of this act or the license fee required by Section 11 of this act are not submitted or are incorrectly submitted with the application packet;
(d) If the applicant, or any person named in the application, has made a material misrepresentation in the application;
(e) Upon a finding that any person named in the application is not of good moral character, business integrity or financial responsibility; or
(f) Upon a finding that the applicant has failed to meet or maintain any other requirement of this act or there is good and sufficient reason within the meaning and purpose of this act to deny the application.
(2) The Advisory Board shall furnish the applicant with a written statement of the reason for denying the application. The applicant may request a hearing before the Advisory Board within thirty (30) days of receipt of the written statement. The hearing and any further appeal shall proceed as provided in the Mississippi Administrative Procedures Act. The applicant may continue to operate during the hearing and appeal process to the extent otherwise permitted by state law. If the application is rejected, the applicant shall have thirty (30) days following receipt of written notification after the finding has become nonappealable to cease all operations within the state.
(3) An applicant or licensee shall be ineligible to reapply for a license for a period of one (1) year following final agency action on the denial or revocation of a license applied for or issued under this act. This time restriction shall not apply to administrative denials or revocations wherein the basis for denial was:
(a) An inadvertent error or omission on the application;
(b) A failure to meet a financial condition;
(c) The Advisory Board was unable to complete the background investigation due to insufficient information from one or more governmental agencies;
(d) Failure to submit required fees;
(e) If an applicant or licensed ELCO has been deemed ineligible for a license because of a lack of good moral character, business integrity or financial responsibility of an individual or individuals when the individual is no longer associated with the ELCO in a manner so as to affect licensure; or
(f) Any basis as the Advisory Board finds good cause to allow reapplication before the expiration of the one-year period.
SECTION 10. (1) A license shall remain in force, unless revoked, for one (1) year from the date of issuance of the license. A licensee shall demonstrate continued compliance with all requirements of the act, including without limiting other requirements set forth in this act for initial application.
(2) At least thirty (30) days before the expiration of its license, the licensee shall submit an application for renewal of license on a form prescribed by the Advisory Board accompanied by a nonrefundable application fee established by the Advisory Board of not less than Two Hundred Fifty Dollars ($250.00).
(3) An application for renewal of license shall be denied by the Advisory Board upon any grounds provided in Section 9(1) of this act. The denied applicant shall have the procedures of Section 9(2) of this act available to review the denial and to continue or cease operations within the state.
SECTION 11. (1) In addition to imposition of the penalties set out in Section 14 of this act, the Advisory Board may suspend for up to twelve (12) months, or may permanently revoke or refuse to renew any license issued hereunder, if, after notice to the licensee of the charges against it and after hearing, the Advisory Board finds that one or more of the following causes exists:
(a) Any cause for which issuance of the license could have been refused had it then existed and been known to the Advisory Board;
(b) Violation of or noncompliance with any applicable provision of this act or of any order of the Advisory Board;
(c) Obtaining or attempting to obtain any license through misrepresentation or fraud;
(d) Conviction of the licensee, or any controlling person designated in the license, of a felony, as described under Section 14 of this act;
(e) If in the conduct of business under the license, the licensee violates Section 12 or Section 14 of this act;
(f) Failure to provide a written response to a written inquiry from the Advisory Board within thirty (30) days after receipt of the inquiry; or
(g) Failure to meet or maintain any other requirement of this act.
(2) The license of a partnership, corporation or group may be suspended, revoked or not renewed for any of the causes set out in subsection (1) of this section as such cause relates to any controlling person designated in the license to exercise powers of the partnership, corporation or group.
(3) Upon suspension or revocation of license, the Advisory Board shall immediately:
(a) Notify the licensee by mail addressed to the licensee at its last address of record with the Advisory Board, who may appeal the decision of the Advisory Board. The appeal shall proceed as provided in the Mississippi Administrative Procedures Act;
(b) Notify the Employment Security Commission;
(c) Notify the Office of the Attorney General;
(d) Notify the Secretary of State; and
(e) At the time the revocation or suspension is nonappealable, require the licensee to notify each client by certified mail, return receipt requested, of the suspension or revocation, using any language as the Advisory Board shall require, and furnish the Advisory Board with evidence of notification.
SECTION 12. (1) A licensed ELCO or ELCO group shall perform the following general responsibilities as a licensee:
(a) The ELCO arrangement shall have a written contract between the client and the ELCO recognizing the ELCO as a coemployer and setting forth the responsibilities and duties of each party. The contract shall disclose to the client the services to be rendered by the ELCO, including charges and fees, and the respective rights and obligations of the parties. For the purposes of this act, an ELCO shall be viewed as a coemployer for payroll administration, federal tax and health care, cafeteria plans, withholding, and all other duties and obligations of an ELCO described in the contract.
(b) The ELCO shall give written notice of the general nature of the relationship between the ELCO and the client to each worksite employee and notice of right to file a complaint to the director by the client or employee as described in Section 19 of this act regarding complaints.
(c) Submit to the Advisory Board, within ninety (90) days of the end of each calendar quarter, a certification by an independent certified public accountant or independent public accountant that for that quarter all applicable payroll taxes have been paid on a timely basis and that workers' compensation premiums and health insurance premiums have been paid or are in escrow. Any exceptions shall be reported. Upon a showing of reasonable cause, one (1) thirty-day extension per quarter shall be granted. If a company submits a fraudulent and/or an inaccurate report, there shall be an automatic forfeiture of license for one (1) year.
(d) Maintain and make available for the director's inspection all records concerning the licensee's conduct of business under its license. The records shall be maintained for a period of three (3) years after termination of the employment relationship or ELCO arrangement.
(e) Notify the director in writing of a change of business address within thirty (30) days of the change.
(f) Notify the director in writing within thirty (30) days of any changes among partners, directors, officers, members and controlling persons designated in the license.
(g) Post the license issued under the act in a conspicuous place in the principal place of business and display in clear public view in each licensee's office in this state a notice stating that the ELCO is licensed and regulated by the state and that any questions or complaints should be directed to the Director of the Advisory Board.
(2) A licensed ELCO shall be deemed an employer of its worksite employees and shall have a right to and shall perform the following responsibilities:
(a) Pay wages and collect, report and pay employment taxes from its own accounts;
(b) Pay unemployment taxes as required by law; and
(c) Ensure that all of its Mississippi employees are covered by workers' compensation in accordance with the laws of this state through a policy maintained or established by the ElCO or client. The policy must be with a company registered in this state. No selffunded workers' compensation plan is allowed unless it is registered and is in compliance with the insurance laws of the state. Any client that receives its workers' compensation through an ELCO, must maintain the experiences modification factor of the ELCO for at least two (2) years. A licensed ELCO promptly shall notify its clients and the Advisory Board of any change of its workers' compensation insurance carrier.
(3) A licensed ELCO shall be deemed an employer for the purposes of sponsoring and maintaining employee benefit and welfare plans for its worksite employees. An ELCO is not required to provide comparable benefits to worksite employees located at different client worksites.
(4) All other duties and obligations shall be determined by contract between the ELCO and its clients.
(5) A licensed ELCO shall disclose to the Advisory Board, to each of its clients and to its worksite employees information on any health or life fringe benefit program provided for the benefit of its worksite employees. Any changes in benefits must be in writing and the ELCO must notify the Advisory Board, clients and employees within thirty (30) days. The information shall include for each plan:
(a) The type of benefits;
(b) The identity of each insurer for each type of coverage;
(c) The amount of benefits for each type of coverage and to whom or on whose behalf benefits will be paid;
(d) The policy limits on each insurance policy; and
(e) Whether or not the coverage is fully insured, partially insured or fully selffunded. If an ELCO provides benefits through either a single employer or a multiple employer benefit trust as defined under the Employee Retirement Income Security Act of 1974 (ERISA), then that company must meet the requirements prescribed in this paragraph (e). Any changes to the plan requires the company to notify all worksite employees and the Advisory Board within thirty (30) days in writing of the changes. The ELCO must meet the following requirements with regard to the benefits and plan:
(i) State if the plan has reinsurance, and the name of the reinsurance company;
(ii) State the amount of reinsurance, and the single and the aggregate amounts;
(iii) File a copy of the benefit plan with the Advisory Board; and
(iv) Maintain a reserve sufficient to meet the plan's obligations as determined by the certified actuary of its choice, for each year.
Disclosure as required by this paragraph may be made by any written means reasonably calculated to adequately inform the worksite employees. Written means may include, without limitation, a summary plan description which meets the requirements of the ERISA, as amended.
(6) Subject to any contrary provisions of the contract between the client and ELCO, the ELCO arrangement that exists between an ELCO and its clients shall be interpreted for the purposes of insurance, bonding and employer's liability as follows:
(a) The ELCO shall be entitled along with the client to the exclusivity of the remedy under both the workers' compensation and employer's liability provisions of a workers' compensation policy or plan that either party has secured.
(b) An ELCO shall not be liable for the acts, errors or omissions of a client or of any worksite employee acting under the direction and control of a client. A client shall not be liable for the acts, errors or omissions of an ELCO or of any employee of an ELCO acting under the direction and control of the ELCO. Nothing herein shall limit any contractual liability between the ELCO and the client, nor shall this subsection in any way limit the liabilities of an ELCO or client as defined elsewhere in this act.
(c) Worksite employees of a client and an ELCO shall be considered as the employees of the client for the purpose of general liability insurance, automobile insurance, fidelity bonds, surety bonds, employer's liability and liquor liability insurance carried by the ELCO unless the employees are included by specific reference in the applicable state insurance law.
(d) The sale of ELCO arrangements in conformance with this act shall not constitute the sale of insurance within the meaning of applicable state law.
SECTION 13. The following acts and omissions are deemed to constitute deceptive practices and are prohibited for an ELCO and ELCO groups:
(a) Making, issuing, circulating or causing to be made, issued or circulated, any estimate, illustration, circular, statement, advertisement, sales promotion, omission or comparison that misrepresents the benefits, advantages, conditions or terms of any ELCO arrangement, or is otherwise untrue, deceptive or misleading;
(b) Entering into any agreement to commit or, by any concerted action, committing any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of providing ELCO services;
(c) Filing with the Advisory Board or other public official, or making, publishing, disseminating, circulating or delivering to any person, or placing before the public or causing, directly or indirectly, to be made, published, disseminated, circulated or delivered to any person, any false statement of financial condition of a person with intent to deceive;
(d) Knowingly making any false entry of a material fact in any book, report or statement of any person or knowingly omitting to make a true entry of any material fact pertaining to the business of the person in any book, report or statement of that person;
(e) Permitting to be used or using, permitting to be filed or filing any name, trade name, fictitious name or business identity of any existing licensee, any governmental agency or any nonprofit organization; or
(f) Any other practice that the Advisory Board determines by regulation, rule or otherwise, after notice and hearing, to be a deceptive practice.
SECTION 14. (1) The following constitute grounds for which disciplinary action against a licensee may be taken by the Advisory Board:
(a) Being convicted of or entering a plea of nolo contendere to bribery, fraud or willful misrepresentation in obtaining, attempting to obtain or renew a license;
(b) Being convicted of or entering a plea of nolo contendere to a crime in any jurisdiction which relates to the operation of an ELCO or the ability to engage in business as an ELCO;
(c) Being convicted of or entering a plea of nolo contendere to fraud, deceit or misconduct in the classification of employees and reporting of employee wages under the Mississippi Workers' Compensation Act;
(d) Being convicted of or entering a plea of nolo contendere to fraud, deceit or misconduct in the establishment of or maintenance of workers' compensation or health coverage, regardless of whether self-insured or otherwise;
(e) Being convicted of or entering a plea of nolo contendere to fraud, deceit or misconduct in the operation of an ELCO;
(f) Conducting business without a valid and active license;
(g) Failing to comply with the regulations governing employee benefit plans;
(h) Failing to maintain evidence of the workers' compensation insurance required in accordance with this act;
(i) Transferring or attempting to transfer a license issued under this act;
(j) Violating any provision of this act or any lawful order or rule issued under the provisions of this act;
(k) Failing to notify the Advisory Board, in writing, of any change of the primary business address or the addresses of any of the licensee's offices in the state;
(l) Determination of liability for civil fraud by any court of competent jurisdiction in any state;
(m) Failure to meet or maintain the requirements for licensure as an ELCO; or
(n) Attempting to obtain, obtaining or renewing a license as an ELCO or ELCO group by bribery, misrepresentation or fraud.
(2) Upon finding that a licensee has violated one or more of the provisions of subsection (1) of this section, the Advisory Board may take one or more of the following actions:
(a) Deny an application for licensure;
(b) Revoke, suspend, restrict or decline to renew a license;
(c) Impose an administrative fine not to exceed Ten Thousand Dollars ($10,000) for every count or separate offense;
(d) Issue a reprimand;
(e) Place the licensee on probation for a period of time and subject to any conditions as the Advisory Board may specify; or
(f) Impose upon the licensee the cost of investigation and prosecution, including reasonable attorney fees.
(3) Upon revocation or suspension of a license, the licensee shall immediately return the license to the Advisory Board.
SECTION 15. (1) Any person who engages in the business of or acts as an ELCO without first procuring a license, or otherwise violates the provisions of this act or any rules and regulations promulgated by the Advisory Board in accordance with this act, shall be liable for a civil penalty for each offense of Ten Thousand Dollars ($10,000.00) for each count or separate offense. Each day of violation shall constitute a separate offense.
(2) In addition to the penalties provided in this act, the Advisory Board may enjoin or restrain by bringing an action in the Chancery Court of Hinds County, Mississippi, against any person who engages in business of or acts as an ELCO without having first procured a license.
SECTION 16. If a majority of the Advisory Board believes that an ELCO has violated any provisions of this act, they shall submit in writing to the State Treasurer, a statement outlining the name of the ELCO, the provision violated, and the action by the ELCO. Upon such written notification, the State Treasurer shall recommend to the Consumer Protection Division of the State Attorney General's Office that the division investigate within ten (10) days.
If the Consumer Protection Division of the State Attorney General's Office determines a violation occurred, the offending ELCO shall pay all costs associated with the investigation, audits, or reviews. Financial information, including without limitation client lists, obtained by the State Treasurer or the Advisory Board in connection with investigations, audits or reviews shall be kept confidential and exempt from public disclosure, unless such action results in a finding of guilt by a court of law.
SECTION 17. The Advisory Board shall use all fees collected under this act to implement and administer this act. The fees shall be deposited in a special account in the State General Fund and the interest and principal of the reserve shall not lapse to the State General Fund.
SECTION 18. Nothing in this act exempts a client of an ELCO or any worksite employee of a client and an ELCO from any other state, local or federal licensure or registration requirement. Any individual who must be licensed, registered or certified according to law and who is a worksite employee is deemed an employee of the client for purposes of the license, registration or certification. Except to the extent provided otherwise in the contract with a client, an ELCO is not liable for the general debts, obligations, loss of profits, business goodwill or other consequential, special or incidental damages of a client with which he has entered into an ELCO arrangement.
SECTION 19. Written complaints shall be filed with the Director of the Advisory Board. Those complaints shall then be sent to the appropriate regulatory agency. If there is no appropriate regulatory agency, then arbitration may occur between the ELCO and the complainant through the Advisory Board or they may proceed with legal action. The ELCO has seven (7) days after receiving the written complaint in which to decide which action to take. If the ELCO submits to the Advisory Board for arbitration, the ELCO has twenty-one (21) days to resolve the problem with the complainant. If the problem is not resolved to the satisfaction of the complainant after the twenty-one-day period, the Advisory Board shall schedule a grievance hearing within ten (10) days. The Advisory Board's decision shall be binding on all parties and failure to comply with the board's decision shall subject the ELCO to disciplinary actions by the Advisory Board as outlined in Section 13 of this act.
SECTION 20. Should any part of this act be held invalid or unconstitutional by a court of competent jurisdiction or by new regulations issued by appropriate regulatory agencies, the balance of this act shall remain in full force and effect.
SECTION 21. This act shall take effect and be in force from and after July 1, 1997.