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PAG LIN
1 1 Section 1. NEW SECTION. 95.1 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. 95.2 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 a professional employer organization
1 13 and a client who have entered into a professional employer
1 14 agreement. The client's officers, directors, shareholders,
1 15 and partners are considered coemployees of the professional
1 16 employer organization if they are earning wages and are acting
1 17 as operational managers or are performing services for the
1 18 client.
1 19 3. "Person" means a person as defined in section 4.1,
1 20 subsection 20.
1 21 4. "Professional employer agreement" means a written
1 22 services contract in which:
1 23 a. A professional employer organization and a client agree
1 24 to coemploy a majority of the employees providing service at a
1 25 client work site.
1 26 b. The contract between the professional employer
1 27 organization and the client is intended to be ongoing rather
1 28 than temporary in nature.
1 29 c. Employer responsibilities for coemployees, including
1 30 hiring, firing, and discipline, are allocated between the
1 31 professional employer organization and the client.
1 32 5. "Professional employer organization" means a person who
1 33 enters into a professional employer agreement with a client to
1 34 coemploy all or a majority of that client's existing workforce
1 35 at a client work site. In determining whether the
2 1 professional employer organization employs a majority of the
2 2 employees at a client work site, any employee who is employed
2 3 pursuant to the professional employer agreement after the
2 4 initial placement of client employees on the payroll of the
2 5 professional employer organization shall be considered a
2 6 coemployee.
2 7 Sec. 3. NEW SECTION. 95.3 CONTINUING OBLIGATIONS.
2 8 1. COLLECTIVE BARGAINING AGREEMENTS EXEMPTED. A
2 9 professional employer agreement shall have no effect on
2 10 existing collective bargaining agreements. Notwithstanding
2 11 any statements to the contrary, nothing in this chapter shall
2 12 alter the rights or obligations of any client, professional
2 13 employer organization, or coemployee under the federal
2 14 National Labor Relations Act.
2 15 2. STATE LICENSING PROVISIONS NOT EXEMPTED. This chapter
2 16 does not exempt a client or a coemployee from any state,
2 17 local, or federal licensing, registration, or certification
2 18 requirement.
2 19 a. A person who must be licensed, registered, or certified
2 20 according to law and who is a coemployee is deemed an employee
2 21 of the client for purposes of any license, registration, or
2 22 certification requirement.
2 23 b. A professional employer organization does not engage in
2 24 an occupation, trade, or profession that is licensed,
2 25 registered, certified, or otherwise regulated by a
2 26 governmental entity solely by entering into a professional
2 27 employer agreement with a client or a coemployee.
2 28 Sec. 4. NEW SECTION. 95.4 REQUIREMENTS.
2 29 1. A professional employer organization must meet the
2 30 following requirements:
2 31 a. Have executed a written professional employer agreement
2 32 between the client and the professional employer organization
2 33 that sets forth the responsibilities and duties of each party
2 34 to the agreement. The professional employer agreement shall:
2 35 (1) Contain a description of the type of services to be
3 1 rendered by the professional employer organization to the
3 2 client and of the respective rights and obligations of the
3 3 professional employer organization and the client.
3 4 (2) Provide that the professional employer organization
3 5 does all of the following:
3 6 (a) Reserves the right of direction and control over the
3 7 coemployees working at the client work site. However, the
3 8 right shall be subject to the client's need to maintain the
3 9 degree of direction and control over the coemployees necessary
3 10 to conduct the client's business, discharge the client's
3 11 fiduciary responsibilities, or comply with licensure,
3 12 registration, or certification requirements applicable to the
3 13 client.
3 14 (b) Assumes responsibility for withholding and remittance
3 15 of payroll-related taxes and employee benefits for coemployees
3 16 from the professional employer organization's accounts, as
3 17 long as the contract between the client and the professional
3 18 employer organization remains in force.
3 19 (c) Retains authority to hire, terminate, and discipline
3 20 coemployees.
3 21 b. Provide written notice of the general nature of the
3 22 relationship between the professional employer organization
3 23 and the client to the coemployees of the client and to the
3 24 client.
3 25 2. A professional employer organization shall be
3 26 considered an employer of its coemployees for purposes of Iowa
3 27 law.
3 28 Sec. 5. NEW SECTION. 95.5 WORKERS' COMPENSATION.
3 29 1. Both the client and the professional employer
3 30 organization shall be considered the employer for purposes of
3 31 coverage under chapters 85, 85A, and 85B, and both the
3 32 professional employer organization and the client shall be
3 33 entitled to the protection of section 85.20, the exclusive
3 34 remedy provision of the workers' compensation law,
3 35 irrespective of which coemployer obtains workers' compensation
4 1 coverage.
4 2 2. The professional employer agreement shall allocate the
4 3 responsibility to obtain workers' compensation coverage to
4 4 either the client or the professional employer organization.
4 5 If the agreement allocates responsibility to the professional
4 6 employer organization, at the termination of the agreement the
4 7 professional employer organization shall maintain and provide
4 8 to the client records regarding the loss experience related to
4 9 workers' compensation insurance provided to covered employees
4 10 upon request by the client.
4 11 Sec. 6. NEW SECTION. 95.6 EMPLOYEE BENEFITS.
4 12 1. A professional employer organization is considered an
4 13 employer under Iowa law for the purpose of sponsoring welfare
4 14 benefit plans for coemployees.
4 15 2. This section does not, however, preclude a client from
4 16 including its coemployees in any welfare benefit plan
4 17 sponsored by the client or any affiliated company of the
4 18 client.
4 19 Sec. 7. NEW SECTION. 95.7 PROFESSIONAL EMPLOYER
4 20 ORGANIZATION – SALE OF SERVICES.
4 21 The provision of services under and negotiation of
4 22 professional employer agreements by a professional employer
4 23 organization in conformance with the provisions of this
4 24 chapter does not constitute the sale of insurance within the
4 25 meaning of Title XIII, subtitle 1.
4 26 Sec. 8. NEW SECTION. 95.8 UNEMPLOYMENT COMPENSATION
4 27 INSURANCE.
4 28 The professional employer organization shall be responsible
4 29 for the payment of all contributions, penalties, and interest
4 30 on wages paid by the professional employer organization to its
4 31 covered employees during the term of the applicable
4 32 professional employer agreement. For purposes of the Iowa
4 33 employment security law in chapter 96, covered employees of a
4 34 registered professional employer organization shall also be
4 35 considered employees of the client.
5 1 EXPLANATION
5 2 This bill creates new Code chapter 95 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, that means individual,
5 9 corporation, limited liability company, government or
5 10 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, but the responsibility to obtain workers'
5 19 compensation insurance shall be allocated in the professional
5 20 employer agreement. The professional employer organization is
5 21 considered an employer for purposes of sponsoring welfare
5 22 benefit plans and reporting and making contributions to the
5 23 unemployment compensation fund.
5 24 LSB 6659SC 80
5 25 kk/pj/5
Text: SSB03137 Text: SSB03139 Text: SSB03100 - SSB03199 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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