=====
LC080
=====

It is enacted by the General Assembly as follows

SECTION 1. Title 5 of the General Laws entitled "Businesses and Professions" is hereby amended by adding thereto the following chapter:

{ADD 5-7.1-1. Short title. -- This act shall be known and may be cited as the Rhode Island Employee Leasing Act. ADD}

{ADD 5-7.1-2. Purpose. -- The legislature recognizes that there is a public need for employee leasing and, therefore deems it necessary in the interest of public health, safety and welfare to establish standards for the operation, regulation and licensing of employee leasing companies in the state. ADD}

{ADD 5-7.1-3. Definitions. -- The following words and phrases, when used in this chapter, shall be construed as follows: ADD}

{ADD (A) "Applicant" means a business seeking to be licensed under this chapter or seeking the renewal of a license under this chapter. ADD}

{ADD (B) "Department" means the Department of Labor. ADD}

{ADD (C) "Director" means the director of the Department of Labor for the state of Rhode Island. ADD}

{ADD (D) "Client company" means a person who enters into an employee leasing arrangement and is assigned employees by the employee leasing company. ADD}

{ADD (E) "Employee leasing company" means any person engaged in providing the services of employees pursuant to one or more employee leasing arrangements or any person that represents itself to the public as providing services pursuant to an employee leasing arrangement and who satisfies the standards set forth in section 28-47-11. ADD}

{ADD (F) "Employee leasing group" means two (2) or more, but not more than five (5), corporate employee leasing companies each of which are majority owned by the same ultimate parent, entity or person. ADD}

{ADD (G) "Employee leasing arrangement" means an arrangement, under written contract or otherwise, where by: ADD}

{ADD (1) An employee leasing company assigns an individual to perform services for the client company; ADD}

{ADD (2) The arrangement is intended to be, or is ongoing rather than temporary in nature; ADD}

{ADD (3) Employer responsibilities are carried out by an employee leasing company which meets the standards set forth in section 28-47-11, or are shared by the employee leasing company and the client company. ADD}

{ADD (H) "Person" means any individual, partnership, firm, corporation, limited liability company, association, trust or estate, state or political subdivision or instrumentability of a state. ADD}

{ADD 5-7.1-4. Director -- Powers and duties. -- The director is hereby authorized to prescribe such rules and regulations for the conduct of the business and licensing of employee leasing companies as may be deemed necessary to carry out the provisions of this chapter. These rules shall have the force and effect of law and shall be enforced by the director. The adoption of rules and regulations pursuant to this chapter shall be carried out in accordance with the provisions of chapter 35 of title 42. ADD}

{ADD 5-7.1-5 Exemptions. -- This chapter shall not apply to labor organizations, to any political subdivision of this state, the United States and any programs or agencies thereof. This act shall also not apply to "Temporary Help Services Companies" which shall mean a service or organization which hires its own employees, and assigns them to clients 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. ADD}

{ADD 5-7.1-6. License application and fees. -- (A) Every applicant for an initial employee leasing company license shall file with the director a completed application on a form prescribed by the director together with a non-refundable application fee of one hundred dollars ($100). In the application, the director may require information relating to the business, the nature of the business, the name and residence of the applicant; whether the applicant is a partnership, and if so, the name and residence of each partner; whether the applicant is a corporation, and if so, the name and residences of its principal officers and directors; and any other pertinent information. Every application shall be verified upon oath or affirmation of the applicant, if an individual, or by one of the partners if the applicant is a partnership, or by an officer of the corporation if the applicant is a corporation, and shall be accompanied by the required fee. Every applicant for license renewal shall file with the director a completed application within sixty (60) days of license expiration. The director shall act upon such renewal application within said sixty (60) day period. A licensee shall pay an annual fee for a license of five hundred dollars ($500) per year or a fee in the same amount required by the foreign jurisdiction where the employee leasing company is domiciled, whichever is greater. As a condition of licensure under this chapter, any applicant who is not a resident of, or is domiciled outside of, the state of Rhode Island shall first be licensed as an employee leasing company in the state in which it is a resident or is domiciled if licensing is required by such state. ADD}

{ADD (B) The director may issue a restricted license to an employee leasing company domiciled in another state for limited operation within the state only if the foreign state permits the issuance of such restricted licenses and under the following conditions: ADD}

{ADD (1) The applicant does not maintain an office in the state, maintain a sales force or have a sales representative in the state, nor in any way solicit clients resident or domiciled in the state. ADD}

{ADD (2) The applicant shall have not more than one hundred (100) leased employees per year. ADD}

{ADD (3) A restricted licensee shall pay an annual fee of one hundred ($100) dollars or a fee in the same amount required by the foreign jurisdiction, whichever is greater. ADD}

{ADD (C) Every license issued pursuant to this chapter shall be good for a term of one (1) year from the date of its issuance unless revoked for cause, pursuant to the provisions of section 5-7.1-8 of this chapter. ADD}

{ADD (D) As a condition of licensing as an employee leasing group, each employee leasing company within the group shall guarantee payment of all financial obligations with respect to leased employees and taxes of all other members of the group. An employee leasing group may satisfy the reporting and financial assurance requirements of this chapter on a consolidated basis. ADD}

{ADD 5-7.1-7. Employee leasing company license -- Financial assurances required. -- (A) Every application for issuance or renewal of a license as an employee leasing company shall be accompanied by a financial statement prepared by an independent certified public accountance in accordance with generally accepted accounting principles within six (6) months prior to the date of application or renewal, and such statement shall show a minimum net worth of fifty thousand ($50,000) dollars.

(B) In addition to the requirements set forth in subsection (A) of this section, the director may require an employee leasing company to deposit in a depository designated by the director, securities with a market value equal to the amount of the minimum net worth required for the issuance or renewal of a license. The securities so deposited shall include authorization to the director to sell any such securities in an amount sufficient to pay any wages, benefits or other entitlement due a leased employee, if the employee leasing company does not make such payment when due. The director may require such deposit only if he or she finds that the leasing company has had its license suspended or limited in any other jurisdiction; or that there have been instances where the leasing company has not paid employees wages or benefits when due, or, failed to make timely payment of any federal or state payroll taxes or unemployment compensation contributions when due. Any securities deposited under this paragraph shall not be included for the purpose of the calculation of net worth required by section (A). ADD}

{ADD (C) An employee leasing company shall submit to the director within sixty (60) days after the end of each calendar quarter, a certification by an independent certified public accountant that for such quarter all applicable federal and state payroll taxes have been paid on a timely basis. ADD}

{ADD 5-7.1-8. Licensed employee leasing companies -- Deemed employer. -- A licensed employee leasing company shall be deemed an employer of its leased employees and shall perform the following employer responsibilities in conformity with all applicable federal and state laws and regulations, and shall further; ADD}

{ADD (A) Pay wages and other benefits and collect, report, and pay employment taxes from its own accounts; ADD}

{ADD (B) Pay and report unemployment taxes as the employer; ADD}

{ADD (C) Ensure that all of its employees are covered by workers' compensation insurance provided in accordance with the laws of this state. ADD}

{ADD (D) Be entitled and entitle the client, together as joint employers, to the exclusivity of the remedy set forth by state law, under both the workers' compensation and employer's liability provisions of a workers' compensation policy or plan that either party has secured within the meaning of the laws of this state. ADD}

{ADD (E) The employee leasing company notifies the director of employment security of all new and terminated client companies within ten (10) days of engagement or termination. ADD}

{ADD (F) The employee leasing company provides the director of the department of employment and typing with quarterly reports showing total payroll by federal SIC code and client companies. ADD}

{ADD (G) The employee leasing company has each employee executed a "leased employee acknowledgement." ADD}

{ADD (H) The employee leasing company provides to each employee an employee manual outlining the terms and conditions of employment with the leasing company. ADD}

{ADD (I) The employee leasing company provides each client company with written disclosure that it is the rated employer for unemployment compensation purposes at the time that client company enters into an employee leasing arrangement with the lease company. Such notice shall disclose that payments made by the leasing company to the department of employment security are made on the leasing company's account. Its rate and the new wage base at the time of engagement, and that upon termination of the employee leasing arrangement, the client company will return to its previous rate and account balance if applicable, and that the client company shall assume a new wage base. ADD}

{ADD (J) The employee leasing company is legally responsible for the payment of wages and other benefits due an employee, and state unemployment contributions, without regard to whether the client company pays the employee leasing company for such wages, benefits and contributions. ADD}

{ADD (K) The employee leasing company provides an employee grievance system for employees employed by the leasing company. ADD}

{ADD (L) The employee leasing company's contract with the client company provides: ADD}

{ADD (1) That the employee leasing company has the ultimate right to hire, terminate and reassign employees; and

(2) That the employee leasing company has the right to inspect the client company's work site and to demand work site safety modifications; and ADD}

{ADD (3) Such other provisions as are required by this section. ADD}

{ADD Notwithstanding the provisions of this section, employees leased to a client company by an employee leasing company shall remain the employees of the client company for the purposes of general liability insurance, automobile insurance, fidelity bonds, surety bonds and employer's liability insurance carried by the client company. Employees leased to a client company by an employee leasing company shall not be deemed employees of the employee leasing company for purposes of general liability insurance, automobile insurance, fidelity bonds, surety bonds or employer's liability insurance carried by the leasing company unless the employees are included by specific reference in the applicable insurance contract or bond. ADD}

{ADD 5-7.1-9. Employee benefits. -- An employee leasing company may sponsor and maintain employee benefit and welfare plans for its leased employees. Nothing in this section shall require an employee leasing company to provide comparable benefits to employees located at different work sites. ADD}

{ADD 5-7.1-10. Exclusivity and vicarious liability. -- An employee leasing company and its client company shall both be entitled to the exclusivity of remedy provided in this chapter, and the employee leasing company shall not be vicariously liable for the actions or omissions of the client company, and the client company shall not be vicariously liable nor shall this section be construed to prohibit any direct contractual liability between the employee leasing company and the client company, nor shall the same limit any liability or responsibility imposed by this chapter. ADD}

{ADD 5-7.1-11. Issuance, refusal, suspension or revocation of license. -- (A) The director shall issue a license or license renewal as an employee leasing company to any person who qualifies for the license in accordance with the terms and conditions of this chapter. The director may, in addition, refuse to issue a license to any person or may suspend or revoke the license of an employee leasing company or impose administrative fees as provided by any applicable provision of the general laws when the director finds that the licensee or applicant has willfully violated or failed to comply with any of the provisions of this chapter, the rules and regulations or other orders promulgated by the director, or has engaged in a fraudulent, deceptive, or dishonest practice; or, for good and sufficient cause, finds the licensee or applicant unfit to engage in an employee leasing company within the meaning of this chapter or of any of rules and regulations or orders promulgated by the director. ADD}

{ADD (B) The director shall not refuse to issue, renew, direct, suspend or revoke a license unless he or she furnishes the person or employee leasing company with a written statement of the charges and affords the person or employee leasing company an opportunity be to heard. No license shall be denied, suspended or revoked nor shall any renewal be refused except after hearing thereon in accordance with the provisions of chapter 35 of title 42. ADD}

{ADD (C) The director is hereby empowered in all hearings held pursuant to this chapter to determine the location where the hearing shall be held, to administer oaths, to subpoena witnesses, to take depositions of witnesses residing without the state in the manner provided for in civil actions before courts of this state, and to pay witness fees and the mileage for attendance as provided for witnesses in civil actions in the superior court. ADD}

{ADD 5-7.1-12. Deceptive practices. -- The director may prescribe, by regulations, those acts or omissions which shall be deemed to constitute deceptive practices under this act. ADD}

{ADD 5-7.1-13. Penalties. -- (A)(1) No person shall engage in the business of or act as any class of employee leasing company without first securing a license form the director. ADD}

{ADD (2) No person shall engage in the business of employee leasing nor hold itself out to the public as an employee leasing company without first having secured a license under this chapter. ADD}

{ADD (B)(1) Any person who shall engage in the business of or act as an employee leasing company without first procuring a license or otherwise violate the provisions of this subsection or any rules or regulations promulgated by the commissioner pursuant to this subsection shall be liable for a civil penalty for each such offense of not less than two hundred fifty dollars ($250) nor more than five thousand dollars ($5,000). ADD}

{ADD (2) In addition to the penalties described in subsection (B)(1) of this section, the director is hereby empowered to enjoin or restrain by bringing an action against any person who engages in the business of or acts as an employee leasing company without having first procured a license for so engaging or acting. ADD}

{ADD 5-7.1-14. Investigations of applicant by director. -- ADD} {ADD An application for license shall be rejected by the director if it is found that any person named in the license application is not of good moral character, business integrity, or financial responsibility, or there is good and sufficient reason within the meaning and purpose of this subsection for rejecting this action. ADD}

{ADD 5-7.1-15. Use of collected fees. -- ADD} {ADD All fees collected by the state pursuant to this chapter shall be paid over to the treasurer for deposit in a general fund. ADD}

{ADD 5-7.1-16. Severability. -- ADD} {ADD If any provision of this chapter, or the application thereof to any person or circumstances, is held invalid, such invalidity shall not affect the other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to that end the provisions of this chapter are severable. ADD}

{ADD 5-7.1-17. Prior omissions. -- ADD} {ADD No person who applies for a license on or before one (1) year following the date of passage of the act, and whose application is granted, shall be liable for any act, omission or representation which would be lawful under its license had the license been in effect at the time of such act, omission, or representation. ADD}

SECTION 2. This act shall take effect upon passage.

This act would provide for the licensing and regulation of employee leasing companies by the department of labor.

This act would take effect upon passage.