AB1056: Bill Text

AB1056,17,2 (3) Financial capability. Except as provided in sub. (2) (e) 5. or (g), a professional employer organization shall maintain one of the following:

AB1056,17,6 (a) A net worth of not less than $100,000, as shown in the financial statement submitted to the department under sub. (2) (b) 7., (d), or (f), except that the value of any instrument specified in par. (b) may not be included in calculating the net worth required under this paragraph.

AB1056,17,21 (b) A bond, certificate of deposit, escrow account, or irrevocable letter of credit in an amount that is not less than $100,000. The commitment described in this paragraph shall be in a form approved by the department, shall be held in a depository designated by the department, and shall secure the payment by the professional employer organization of any wages, salaries, employee benefits, worker's compensation insurance premiums, payroll taxes, unemployment insurance contributions, or other amounts that are payable to or with respect to a covered employee if the professional employer organization does not make those payments when due. The commitment shall be established in favor of or be made payable to the department, for the benefit of the state and any covered employee to whom or with respect to whom the professional employer organization does not make a payment described in this paragraph when due. The professional employer organization shall file with the department any agreement, instrument, or other document that is necessary to enforce the commitment against the professional employer organization or any relevant 3rd party or both.

AB1056,18,2 (4) Professional employer agreements; requirements. (a) Allocation of rights, duties, and obligations. Except as specifically provided in this section, a coemployment relationship shall be governed by a professional employer agreement. A professional employer agreement shall allocate the rights, duties, and obligations of an employer that arise out of an employment relationship as follows:

AB1056,18,6 1. The professional employer organization shall be permitted to exercise and enforce only those rights, and shall be required to perform only those duties and obligations, that are specifically allocated to the professional employer organization under the professional employer agreement or this section.

AB1056,18,15 2. The client shall be permitted to exercise and enforce all those rights, and shall be required to perform all those duties and obligations, that are specifically allocated to the client under the professional employer agreement or this section or that are not specifically allocated under the professional employer agreement or this section and, unless otherwise agreed to in the professional employer agreement, to retain the exclusive right to direct, supervise, and control the activities of the covered employees as necessary to conduct the client's business, to discharge the client's fiduciary duties, or to comply with any federal, state, or local licensing, registration, or certification requirements that are applicable to the client or a covered employee.

AB1056,18,18 (b) Contents of agreement. In addition to allocating the rights, duties, and obligations specified in par. (a), a professional employer agreement shall specify all of the following:

AB1056,19,5 1. That the professional employer organization is responsible for paying wages or salary to a covered employee; for withholding, collecting, reporting, and remitting payroll taxes and unemployment insurance contributions on behalf of a covered employee; and, to the extent agreed to in the professional employer agreement, for making payments for employee benefits for a covered employee; except that the professional employer organization is not responsible for the payment of any remuneration payable by a client to a covered employee beyond the covered employee's regular rate of pay or overtime pay, such as bonuses, commissions, profit sharing, deferred compensation, severance or dismissal pay, or sick pay, holiday pay, vacation pay, or other paid time off, unless the professional employer organization specifically agrees in the professional employer agreement to assume responsibility for those payments.

AB1056,19,9 2. Whether the professional employer organization or the client assumes liability for worker's compensation under s. 102.03 and agrees to obtain a policy of worker's compensation insurance issued by an insurer authorized to do business in this state under s. 102.28 (2) (a) or self-insure in accordance with s. 102.28 (2) (b).

AB1056,19,13 3. That the client may hire, discipline, or discharge a covered employee, but that the professional employer organization may also hire, discipline, or discharge a covered employee as necessary to fulfill the professional employer organization's duties and obligations under the professional employer agreement and this section.

AB1056,19,18 (c) Notice to covered employees. A professional employer organization that enters into a professional employer agreement shall provide written notice to each covered employee who is affected by the professional employer agreement concerning the general nature of the coemployment relationship created by the professional employer agreement.

AB1056,19,22 (d) Responsibilities of professional employer organization and client. Except as specifically provided in a professional employer agreement, all of the following apply to a coemployment relationship that is created by the professional employer agreement:

AB1056,19,24 1. The client is solely responsible for the quality, adequacy, and safety of the goods or services produced, provided, or sold in the course of the client's business.

AB1056,20,4 2. The client is solely responsible for directing, supervising, and controlling the activities of the covered employees with respect to the client's business, for training the covered employees involved in that business, and for the acts, errors, or omissions of the covered employees in the performance of those activities.

AB1056,20,8 3. The client is not liable for the acts, errors, or omissions of the professional employer organization or of a covered employee when the covered employee is acting under the express direction, supervision, and control of the professional employer organization.

AB1056,20,11 4. The professional employer organization is not liable for the acts, errors, or omissions of a client or of a covered employee when the covered employee is acting under the express direction, supervision, and control of the client.

AB1056,20,20 5. For purposes of coverage under any policy of general liability insurance or employer's liability insurance, other than worker's compensation insurance, carried by the professional employer organization or under a fidelity or surety bond posted by the professional employer organization, a covered employee is not, solely by reason of being a covered employee, considered to be an employee of the professional employer organization, unless the covered employee is specified as an employee of the professional employer organization for those purposes in the professional employer agreement and in any applicable prearranged employment contract, insurance policy, or bond.

AB1056,20,24 (e) Professional employer services not insurance. A professional employer organization that offers, markets, sells, administers, or provides professional employer services is not engaged in the business of insurance or in the business of an employee benefit plan administrator under ch. 633.

AB1056,21,7 (5) Rights, duties, and obligations unaffected. (a) Labor relations. Nothing in this section or in any professional employer agreement may be construed to affect or impair any collective bargaining agreement or any right, duty, or obligation of any covered employee, representative of a covered employee, client, or professional employer organization under subch. I, III, IV, or V of ch. 111, the federal National Labor Relations Act, 29 USC 151 to 169, or the federal National Railway Labor Act, 45 USC 151 to 180.

AB1056,21,9 (b) Employment arrangements. Nothing in this section or in any professional employer agreement may be construed to do any of the following:

AB1056,21,12 1. Diminish, affect, or impair any rights of a covered employee as to a client or any duties or obligations of a client as to a covered employee that existed prior to the effective date of the professional employer agreement.

AB1056,21,19 2. Affect or impair any contractual relationship or restrictive covenant between a covered employee and a client, whether existing prior to the effective date of the professional employer agreement or entered into after that date. A professional employer organization shall have no liability or responsibility in connection with or arising out of any contractual relationship or restrictive covenant between a covered employee and a client unless the professional employer organization specifically agrees otherwise in writing.

AB1056,22,2 (c) Licensing. Nothing in this section or in a professional employer agreement may be construed to affect or impair any federal, state, or local licensing, registration, or certification requirement that is applicable to a client or covered employee. All of the following apply to a covered employee who is required to be licensed, registered, or certified under any federal, state, or local law, rule, or regulation and to the client and professional employer organization that are the coemployers of the covered employee:

AB1056,22,5 1. The covered employee is considered to be an employee solely of the client for purposes of engaging in any trade, occupation, profession, or other activity that is subject to the licensing, registration, or certification requirement.

AB1056,22,10 2. The professional employer organization is not considered to be engaging in any trade, occupation, profession, or other activity that is subject to the licensing, registration, or certification requirement solely because the professional employer organization has entered into and maintains a coemployment relationship with the covered employee.

AB1056,22,13 3. The client has the sole right to direct, supervise, and control the activities of the covered employee, and the business of the client, that are subject to the licensing, registration, or certification requirement.

AB1056,22,19 (d) Taxation, tax credits, and other economic development incentives. 1. Any covered employee whose services are taxable service under s. 77.52 or 77.53 is considered to be an employee of the client for purposes of liability for payment of sales or use taxes on those services. Nothing contained in this section shall release a client from any liability for payment of the full amount of sales or use taxes due on those services.

AB1056,22,22 2. The liability of a professional employer organization for any tax on professional employer services that is based on gross receipts is limited to a tax on the administrative fee charge by the professional employer organization.

AB1056,23,2 3. For purposes of any tax that is based on the payroll of an employer, a client is liable for the amount of that tax that is based on the compensation of a covered employee and a professional employer organization is liable for the amount of that tax that is based on the compensation of an employee who is not a covered employee.

AB1056,23,18 4. For purposes of determining tax credits, other economic development incentives provided by the state that are based on providing employment, or any other benefits that arises out of the employment of a covered employee, a covered employee is considered to be an employee solely of the client, and the client is entitled to the benefit of the tax credit, economic development incentive, or other benefit. If the amount of a tax credit, incentive, or benefit described in this paragraph is based on the number of employees employed by a client, only those covered employees who are coemployed by the client and the professional employer organization shall be treated as employees employed by the client, and covered employees who are coemployed by the professional employer organization and another client of the professional employer organization shall not be treated as employees employed by the client. On request of a client that is seeking a tax credit, incentive, or other benefit described in this paragraph or of an agency of this state that is responsible for administering such a tax credit, incentive, or benefit, a professional employer organization shall provide any employment information reasonably required by the agency that is necessary to support a claim, application, or other action by the client.

AB1056,23,24 (e) Contracts, grants, and loans. For purposes of contracting with, or obtaining a grant or loan from, the state or a local governmental unit, a client's status or certification as a minority business, minority financial adviser, minority investment firm, women's business, small business, native American or Indian business, veteran-owned business, or disadvantaged business is not affected because the client has entered into a professional employer agreement.

AB1056,24,6 (6) Violations; penalties. (a) Disciplinary action. The department may deny, suspend, revoke, restrict, refuse to renew, or otherwise withhold a registration; impose a period of probation under specified conditions; order a registrant to cease and desist from violating this section or a rule promulgated under sub. (8); or impose a forfeiture of not more than $1,000; if the department finds that an applicant, registrant, or controlling person has done any of the following:

AB1056,24,8 1. Conducted any of the activities specified in sub. (2) (a) without first registering with the department as provided in sub. (2).

AB1056,24,11 2. Knowingly made a material misrepresentation or false statement in an application for registration or for renewal of a registration under sub. (2) or in a report under s. 108.067.

AB1056,24,15 3. Been convicted of any crime in connection with the operation of a professional employer organization, any crime that involves fraud or deceit, or any crime that otherwise affects the ability of the applicant, registrant, or controlling person to operate a professional employer organization.

AB1056,24,17 4. Willfully committed a violation of this section or of a rule promulgated under sub. (8).

AB1056,24,21 (b) Investigations; orders. The department may investigate violations specified in par. (a) and issue orders to enforce this section. The investigations and orders shall be made as provided in s. 103.005. Orders issued under this section are subject to review as provided in ch. 227.

AB1056,25,3 (7) Child support; delinquent taxes. (a) Social security number or federal identification number required. 1. Except as provided in subd. 3., the department shall require each applicant for registration who is an individual to provide the department with the applicant's social security number, and shall require each applicant for registration who is not an individual to provide the department with the applicant's federal employer identification number, when applying for initial or renewal registration.

AB1056,25,10 2. If an applicant who is an individual fails to provide the applicant's social security number to the department or if an applicant who is not an individual fails to provide the applicant's federal employer identification number to the department, the department may not issue or renew a registration to or for the applicant unless the applicant is an individual who does not have a social security number and the applicant submits a statement made or subscribed under oath or affirmation as required under subd. 3.

AB1056,25,15 3. If an applicant who is an individual does not have a social security number, the applicant shall submit a statement made or subscribed under oath or affirmation to the department that the applicant does not have a social security number. The form of the statement shall be prescribed by the department. A registration issued in reliance upon a false statement submitted under this subdivision is invalid.

AB1056,25,21 4. The subunit of the department that obtains a social security number or a federal employer identification number under subd. 1. may not disclose the social security number or the federal employer identification number to any person except to the department of revenue for the sole purpose of requesting certifications under s. 73.0301 or on the request of the subunit of the department that administers the child and spousal support program under s. 49.22 (2m).

AB1056,26,7 (b) Child support payments. The department shall deny, suspend, restrict, refuse to renew, or otherwise withhold a registration for failure of the applicant or registrant to pay court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse or for failure of the applicant or registrant to comply, after appropriate notice, with a subpoena or warrant issued by the department or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings, as provided in a memorandum of understanding entered into under s. 49.857. Notwithstanding s. 103.005 (10), an action taken under this paragraph is subject to review only as provided in the memorandum of understanding entered into under s. 49.857 and not as provided in ch. 227.

AB1056,26,13 (c) Delinquent taxes. The department shall deny an application for the issuance or renewal of a registration, or revoke a registration already issued, if the department of revenue certifies under s. 73.0301 that the applicant or registrant is liable for delinquent taxes. Notwithstanding s. 103.005 (10), an action taken under this paragraph is subject to review only as provided under s. 73.0301 (5) and not as provided in ch. 227.

AB1056,26,15 (8) Rules. The department shall promulgate rules to implement this section. Those rules shall include rules providing for all of the following:

AB1056,26,17 (a) Alternative registration of professional employer organizations under sub. (2) (g).

AB1056,26,19 (b) Fees under sub. (2) (h) 4. and 6. for registration of professional employer groups and for other services provided under this section.

AB1056,26,21 (c) Minimum requirements for issuance or renewal of a registration under sub. (2) (i).

AB1056, s. 13 Section 13. 108.02 (21e) (a) of the statutes is amended to read:

AB1056,26,25 108.02 (21e) (a) Has the right to hire and terminate the employees who perform services for the client and to reassign the employees to other clients as provided in s. 105.117 (4) (b) 3.;

AB1056, s. 14 Section 14. 108.02 (21e) (d) of the statutes is amended to read:

AB1056,27,6 108.02 (21e) (d) Has a general right of direction and control over the employees, including corporate officers, which right may be shared with the client to the degree necessary to allow the client to conduct its business, meet any fiduciary responsibility, or comply with any applicable regulatory or statutory requirements as provided in a professional employer agreement under s. 105.117 (4);

AB1056, s. 15 Section 15. 108.02 (21e) (f) of the statutes is amended to read:

AB1056,27,10 108.02 (21e) (f) Has the obligation to establish, fund, and administer employee benefit plans for the employees, if so agreed to in a professional employer agreement under s. 105.117 (4) (b) 1.; and

AB1056, s. 16 Section 16. 108.02 (21e) (g) of the statutes is amended to read:

AB1056,27,13 108.02 (21e) (g) Provides notice of the employee leasing arrangement to the employees under s. 105.117 (4) (c).

AB1056, s. 17 Section 17 . Nonstatutory provisions.

AB1056,27,21 (1) Rule making. The department of workforce development shall submit in proposed form the rules required under section 105.117 (8) of the statutes, as created by this act, to the legislative council staff under section 227.15 (1) of the statutes no later than the first day of the 6th month beginning after the effective date of this subsection, unless the secretary of administration requires the department to prepare an economic impact report under section 227.137 of the statutes for the proposed rules.

AB1056, s. 18 Section 18. Effective dates. This act takes effect on the first day of the 12th month beginning after publication, except as follows:

AB1056,28,2 (1) Rule making. The treatment of Section 17 (1) of this act takes effect on the day after publication.

AB1056,28,3 (End)