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PAG LIN
1 1 Section 1. NEW SECTION. 94B.1 SHORT TITLE.
1 2 This chapter shall be known as the "Iowa Professional
1 3 Employer Organization Recognition Act".
1 4 Sec. 2. NEW SECTION. 94B.2 DEFINITIONS.
1 5 As used in this chapter, unless the context otherwise
1 6 requires:
1 7 1. "Client" means a person who contracts with a
1 8 professional employer organization to obtain services from a
1 9 professional employer organization through a professional
1 10 employer agreement.
1 11 2. "Coemployee" means a person having an employment
1 12 relationship with both the professional employer organization
1 13 and the client. The client's officers, directors,
1 14 shareholders, and partners are considered coemployees of the
1 15 professional employer organization if they are earning wages
1 16 and are acting as operational managers or are performing
1 17 services for the client.
1 18 3. "Person" means a person as defined in section 4.1,
1 19 subsection 20.
1 20 4. "Professional employer agreement" means a written
1 21 services contract in which:
1 22 a. A professional employer organization and a client agree
1 23 to coemploy a majority of the employees providing service at a
1 24 client worksite.
1 25 b. The contract between the professional employer
1 26 organization and the client is intended to be ongoing rather
1 27 than temporary in nature.
1 28 c. Employer responsibilities for coemployees, including
1 29 hiring, firing, and discipline are allocated between the
1 30 professional employer organization and the client.
1 31 5. "Professional employer organization" means a person
1 32 that enters into a professional employer agreement with a
1 33 client to coemploy all or a majority of that client's existing
1 34 workforce at a client worksite. In determining whether the
1 35 professional employer organization employs a majority of the
2 1 employees at a client worksite, any employee who is employed
2 2 pursuant to the professional employer agreement after the
2 3 initial placement of client employees on the payroll of the
2 4 professional employer organization shall be considered a
2 5 coemployee.
2 6 Sec. 3. NEW SECTION. 94B.3 CONTINUING OBLIGATIONS.
2 7 1. COLLECTIVE BARGAINING AGREEMENTS EXEMPTED. A
2 8 professional employer agreement shall have no effect on
2 9 existing collective bargaining agreements. Notwithstanding
2 10 any statements to the contrary, nothing in this chapter shall
2 11 alter the rights or obligations of any client, professional
2 12 employer organization, or coemployee under the federal
2 13 National Labor Relations Act.
2 14 2. STATE LICENSING PROVISIONS NOT EXEMPTED. This chapter
2 15 does not exempt a client or a coemployee from any state,
2 16 local, or federal licensing, registration, or certification
2 17 requirement.
2 18 a. A person who must be licensed, registered, or certified
2 19 according to law and who is a coemployee is deemed an employee
2 20 of the client for purposes of any license, registration, or
2 21 certification requirement.
2 22 b. A professional employer organization does not engage in
2 23 an occupation, trade, or profession that is licensed,
2 24 registered, certified, or otherwise regulated by a
2 25 governmental entity solely by entering into a professional
2 26 employer agreement with a client or a coemployee.
2 27 Sec. 4. NEW SECTION. 94B.4 REQUIREMENTS.
2 28 1. A professional employer organization must meet the
2 29 following requirements:
2 30 a. Have executed a written professional employer agreement
2 31 between the client and the professional employer organization
2 32 that sets forth the responsibilities and duties of each party
2 33 to the agreement. The professional employer agreement shall:
2 34 (1) Contain a description of the type of services to be
2 35 rendered by the professional employer organization to the
3 1 client and of the respective rights and obligations of the
3 2 professional employer organization and the client.
3 3 (2) Provide that the professional employer organization
3 4 does all of the following:
3 5 (a) Reserves the right of direction and control over the
3 6 coemployees working at the client worksite. However, the
3 7 right shall be subject to the client's need to maintain the
3 8 degree of direction and control over the coemployees necessary
3 9 to conduct the client's business, discharge the client's
3 10 fiduciary responsibilities, or comply with licensure,
3 11 registration, or certification requirements applicable to the
3 12 client.
3 13 (b) Assumes responsibility for withholding and remittance
3 14 of payroll-related taxes and employee benefits for coemployees
3 15 from the professional employer organization's own accounts, as
3 16 long as the contract between the client and the professional
3 17 employer organization remains in force.
3 18 (c) Retains authority to hire, terminate, and discipline
3 19 coemployees.
3 20 b. Provide written notice of the general nature of the
3 21 relationship between the professional employer organization
3 22 and the client to the coemployees of the client and to the
3 23 client.
3 24 2. A professional employer organization shall be
3 25 considered an employer of its coemployees for purposes of Iowa
3 26 law.
3 27 Sec. 5. NEW SECTION. 94B.5 WORKERS' COMPENSATION.
3 28 1. Both the client and the professional employer
3 29 organization are considered an employer for purposes of
3 30 coverage under the Iowa workers' compensation laws provided in
3 31 chapter 85, 85A, or 85B.
3 32 2. Both the professional employer organization and the
3 33 client are entitled to the protection of section 85.20, the
3 34 exclusive remedy provision of the Iowa workers' compensation
3 35 laws, irrespective of whether the professional employer
4 1 organization or the client secures and provides workers'
4 2 compensation coverage.
4 3 Sec. 6. NEW SECTION. 94B.6 EMPLOYEE BENEFITS.
4 4 1. A professional employer organization is considered an
4 5 employer under Iowa law for the purpose of sponsoring welfare
4 6 benefit plans for coemployees.
4 7 2. This section does not, however, preclude a client from
4 8 including its coemployees in any welfare benefit plan
4 9 sponsored by the client or any affiliated company of the
4 10 client.
4 11 Sec. 7. NEW SECTION. 94B.7 PROFESSIONAL EMPLOYER
4 12 ORGANIZATION – SALE OF SERVICES.
4 13 The provision of services under and negotiation of
4 14 professional employer agreements by a professional employer
4 15 organization in conformance with the provisions of this
4 16 chapter does not constitute the sale of insurance within the
4 17 meaning of Title XIII, subtitle 1.
4 18 Sec. 8. NEW SECTION. 94B.8 UNEMPLOYMENT COMPENSATION
4 19 INSURANCE.
4 20 1. During the term of a professional employer agreement, a
4 21 professional employer organization is liable in accordance
4 22 with the provisions of chapter 96 for the payment of
4 23 contributions, penalties, and interest on wages paid to
4 24 coemployees.
4 25 2. The professional employer organization shall report and
4 26 pay all required contributions to the unemployment
4 27 compensation fund using the state employer account number and
4 28 the contribution rate of the professional employer
4 29 organization.
4 30 3. A professional employer organization that enters into a
4 31 professional employer agreement with a client during the
4 32 course of a taxable year shall receive a credit for amounts
4 33 already paid by the client to the unemployment compensation
4 34 fund for any employee coemployed by the professional employer
4 35 organization.
5 1 EXPLANATION
5 2 This bill creates new Code chapter 94B that recognizes
5 3 professional employer organizations. The bill defines a
5 4 "professional employer organization" as a person that enters
5 5 into a written contract with a client to coemploy all or a
5 6 majority of the client's employees. Both a client and a
5 7 professional employer organization are a "person" as that term
5 8 is defined in Code section 4.1, subsection 20, that means
5 9 individual, corporation, limited liability company, government
5 10 or governmental subdivision or agency, business trust, estate,
5 11 trust, partnership, or association, or any other legal entity.
5 12 A professional employer agreement between a professional
5 13 employer organization and a client allocates employer
5 14 responsibilities for coemployees including hiring, firing, and
5 15 discipline between the parties to the agreement. Both the
5 16 client and the professional employer organization are
5 17 considered employers for purposes of Iowa workers'
5 18 compensation law. The professional employer organization is
5 19 considered an employer for purposes of sponsoring welfare
5 20 benefit plans and reporting and making contributions to the
5 21 unemployment compensation fund.
5 22 LSB 2630SC 79
5 23 av/cls/14
Text: SSB01171 Text: SSB01173 Text: SSB01100 - SSB01199 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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