MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Insurance

By: Representative Stevens

House Bill 1103

(COMMITTEE SUBSTITUTE)

AN ACT TO CREATE THE MISSISSIPPI PROFESSIONAL EMPLOYER ORGANIZATION REGISTRATION ACT; TO PROVIDE DEFINITIONS; TO AUTHORIZE THE COMMISSIONER OF INSURANCE TO PROMULGATE RULES AND REGULATIONS FOR THE REGISTRATION OF PROFESSIONAL EMPLOYER ORGANIZATIONS (PEOS); TO PROVIDE RESPONSIBILITIES OF PEOS; 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 "Mississippi Professional Employer Organization Registration Act."

SECTION 2. The Legislature recognizes that there is a public need for Professional Employer Organizations ("PEOs") and, therefore, deems it necessary in the interest of public health, safety and welfare to establish rules and regulations for the registration of PEOs in this state.

SECTION 3. As used in this act, unless the context otherwise requires:

(a) "Registrant" means a person registering in accordance with this act.

(b) "Client" means a person other than a PEO who contracts with a PEO to render all types of services that are relevant to persons providing services for the client.

(c) "Commissioner" means the Commissioner of Insurance.

(d) "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 PEO; or

(ii) Any natural person employed, appointed or authorized by a PEO to enter into a contractual relationship with a client on behalf of the PEO.

(e) "Professional Employer Organization" ("PEO") means any person engaged in providing services to a client in accordance with one (1) or more PEO arrangements.

(f) "Person" means an individual, an association, a company, a firm, a partnership or a corporation.

(g) "Professional Employer Organization ("PEO") arrangement" means an arrangement under contract, or otherwise, in which a firm contractually agrees to perform, purports to perform or actually performs services for a client for a part of the existing work force at a client worksite. The term, PEO arrangement, is to be liberally construed so as to include any and all such arrangements meeting the criteria set forth by this act, by whatever term known.

For the purposes of this act, a PEO arrangement shall not include arrangements for which a person assumes total responsibility for the product or service performed by such person or his agents and retains and exercises, both legally and in fact, primary direction and control over the individuals whose services are supplied under such contractual arrangements. The term PEO arrangement shall not include temporary help arrangements in which an organization hires its own employees and assigns them to a client to support or supplement the client's work force in special work situations such as employee absences, temporary skill shortages, seasonal workloads and special assignments and projects.

(h) "Worksite employee" means a person who performs services for a PEO and one or more clients of the PEO in accordance with a PEO arrangement.

(i) "Worksite employer" means a person who, as a client of a PEO, assumes responsibility for worksite operations as necessary to conduct the client's business.

SECTION 4. The commissioner may promulgate rules and regulations in accordance with the Administrative Procedures Act for the registration of PEOs as may be deemed necessary to carry out the provisions of this act. These rules shall have the force and effect of law and shall be enforced by the commissioner.

SECTION 5. The commissioner shall have the authority to set the PEO registration fee in an amount not to exceed Twenty-five Dollars ($25.00).

SECTION 6. (1) A registered PEO or PEO group shall perform the following general responsibilities as a registrant:

(a) The PEO arrangement shall have a written contract between the client and the PEO recognizing the PEO as a co-employer and setting forth the responsibilities and duties of each party. The contract shall disclose to the client the services to be rendered by the PEO, including charges and fees, the respective rights and obligations of the parties, and provide that the PEO:

(i) Reserves a right of direction and control over worksite employees and exercises that right in the context of the need to do so. However, the client as the worksite employer may retain such sufficient direction and control over worksite employees as is necessary to conduct the client's business and without which the client would be unable to conduct its business, discharge any fiduciary responsibility which it may have or comply with any applicable licensure, regulatory or statutory requirement of the client;

(ii) Assumes responsibility for the payment of wages of its worksite employees and related payroll taxes from its own accounts without regard to payments by the client to the PEO;

(iii) Maintains ultimate authority to hire, terminate, discipline and reassign worksite employees, subject to the terms of any collective bargaining agreements which may exist. However, the client shall have the right to accept or cancel the services of any worksite employee independent of the right of the PEO to hire or terminate any of its worksite employees;

(iv) Maintains ultimate authority to resolve and decide worksite employee grievances and disputes, subject to the terms of any collective bargaining agreements which may exist; and

(v) Maintains a right over the management of worksite safety and the right to inspect the premises to ensure that worksite employees are working in safe environments.

(b) The PEO shall give written notice of the general nature of the relationship between the PEO and the client to each worksite employee.

(c) The PEO shall post the registration under this act in a conspicuous place in the client's principal place of business and display in clear public view in each office of the PEO in this state a notice stating that the PEO is registered with the commissioner.

(2) A registered PEO 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 provided in accordance with the laws of this state through a policy maintained or established by the PEO or client.

(3) A registered PEO shall disclose 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. Such information shall include for each plan:

(a) The type of benefits;

(b) The identity of each insurer or benefit provider 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 or benefit plan; and

(e) Whether such coverage is fully insured, partially insured, fully self-funded or other method under which the benefit plan operates.

Disclosure as required by this section may be made by any written means reasonably calculated to inform adequately the worksite employees of the above matters. Such written means may include, without limitation, a summary plan description which meets the requirements of the Employee Retirement Income Security Act of 1974, as amended.

(4) Subject to any contrary provisions of the contract between the client and the PEO, the PEO arrangement that exists between a PEO and its clients shall be interpreted for purposes of insurance, bonding and employer's liability as follows:

(a) The PEO 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) A PEO 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 a PEO or of any employee of a PEO acting under the direction and control of the PEO. Nothing herein shall limit any contractual liability between the PEO and the client, nor shall this subsection in any way limit the liabilities of a PEO or client as defined elsewhere in this act.

(c) Worksite employees of a client and a PEO shall be considered as the employees of the client for the purposes of general liability insurance, automobile insurance, fidelity bonds, surety bonds, employer's liability and liquor liability insurance carried by the client. Worksite employees of a client and a PEO are not deemed employees of the PEO for purposes of general liability insurance, automobile insurance, fidelity bonds, surety bonds, employer's liability or liquor liability insurance carried by the PEO unless the employees are included by specific reference in the applicable insurance contract or bond.

(d) The sale of PEO arrangements in conformance with the provisions of the act shall not constitute the sale of insurance within the meaning of applicable state law.

SECTION 7. Nothing in this act exempts a client of a PEO nor any worksite employee of a client and a PEO 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.

SECTION 8. This act shall take effect and be in force from and after January 1, 1999.