Bill Text: NC S475 | 2013-2014 | Regular Session | Amended

North Carolina Senate Bill 475 (Prior Session Legislation)

Bill Title: PEO Act Amendments

Spectrum: Partisan Bill (Republican 1-0)

Status: (Engrossed - Dead) 2013-05-20 - Ref To Com On Insurance [S475 Detail]

Download: North_Carolina-2013-S475-Amended.html

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2013

S 3

SENATE BILL 475

Insurance Committee Substitute Adopted 5/15/13
Third Edition Engrossed 5/15/13

Short Title: PEO Act Amendments.		(Public)
Sponsors:
Referred to:

March 28, 2013

A BILL TO BE ENTITLED

AN ACT to make various technical, clarifying, and other changes to the Professional Employer organization Statutes.

The General Assembly of North Carolina enacts:

SECTION 1. G.S. 58‑89A‑5(8) is repealed.

SECTION 2. G.S. 58‑89A‑50 reads as rewritten:

"§ 58‑89A‑50. Surety bond; letter of credit; other deposits.

(a) An applicant for licensure shall file with the Commissioner a surety ~~bond for the benefit of the Commissioner as follows:~~

~~(1)~~ If the applicant was initially licensed prior to October 1, 2008, the bond, or other items as provided for in subsection (f) of this section, shall be in the amount of one hundred thousand dollars ($100,000).

~~(2)~~ If the applicant was not initially licensed prior to October 1, 2008, the bond, or other items as provided for in subsection (f) of this section, shall be in an amount equal to five percent (5%) of the applicant's prior year's total North Carolina wages, benefits, workers compensation premiums, and unemployment compensation contributions, but not greater than five hundred thousand dollars ($500,000), or such greater amount as the Commissioner may require.

bond, or other items as set forth in subsection (f) of this section, in the amount of one hundred thousand dollars ($100,000) for the benefit of the Commissioner. An applicant whose current assets do not exceed current liabilities pursuant to G.S. 58‑89A‑60(b) shall file an additional surety bond or other items set forth in subsection (f) of this section equal to or in excess of current liabilities less current assets.

(b) The surety bond required by this section shall be in a form acceptable to the Commissioner, issued by an insurer authorized by the Commissioner to write surety business in this State, and maintained in force while the license remains in effect or any obligations or liabilities of the applicant, licensee or PEO previously licensed by this State remain outstanding.

(c) The surety bond required by this section may be exchanged or replaced with another surety bond if (i) the surety bond applies to obligations and liabilities that arose during the period of the original surety bond, (ii) the surety bond meets the requirements of this section, and (iii) 90 days' advance written notice is provided to the Commissioner.

~~(d)~~ ~~A licensee shall not require a client company to contribute in any manner to the payment of the surety bond required by this section.~~

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SECTION 3. G.S. 58‑89A‑60(b) reads as rewritten:

"(b) Every applicant shall file with the Commissioner ~~evidence of financial responsibility. Evidence of financial responsibility includes~~ an audited GAAP financial statement, prepared as of a date not more than 90 days before the date of application that demonstrates that the applicant or ~~licensee is not in a hazardous financial condition~~ licensee's current assets exceed current liabilities and attached to which is a separate document signed by the chief executive and the chief financial officer certifying that (i) each has reviewed the financial statement; (ii) based on each signatory's knowledge, the financial statement does not contain any untrue or misleading statement of material fact or omit a fact with respect to the period covered by the financial statement; and (iii) based on each signatory's knowledge, the financial statement fairly presents in all material respects the financial condition of the licensee as of, and for, the period presented in the financial statement.

Notwithstanding the requirements of this subsection, the Commissioner may, in the Commissioner's discretion, accept an audited GAAP financial statement that has been prepared more than 90 days before submission to the Commissioner if the Commissioner deems such acceptance appropriate. The Commissioner may, in the Commissioner's discretion, impose conditions upon such acceptance of financial statements prepared more than 90 days prior to submission.

The audited GAAP financial statement shall be prepared in accordance with generally accepted accounting principles and audited by an independent certified public accountant licensed to practice in the jurisdiction in which such accountant is located and shall be without qualification as to the going concern status of the PEO. A PEO group may submit combined or consolidated audited financial statements to meet the requirements of this section; except that a PEO that has not had sufficient operating history to have audited financial statements based upon at least 12 months of operating history must meet the financial capacity requirements of this subsection and present financial statements reviewed by a certified public accountant."

SECTION 4. G.S. 58‑89A‑85 reads as rewritten:

"§ 58‑89A‑85. Supervision; rehabilitation; liquidation.

If at any time the Commissioner determines, after notice and an opportunity for the licensee to be heard, that a licensee (i) has been or will be unable, in such a manner as may endanger the ability of the licensee, to fully perform its obligations pursuant to this Article or (ii) is ~~bankrupt or in a hazardous financial condition,~~ bankrupt, the Commissioner may either (i) commence a supervision proceeding pursuant to Article 30 of this Chapter or (ii) apply to the Superior Court of Wake County or to the federal bankruptcy court that has previously taken jurisdiction over the licensee, if applicable, for an order directing the Commissioner or authorizing the Commissioner to rehabilitate or to liquidate a licensee in accordance with Article 30 of this Chapter."

SECTION 5. G.S. 58‑89A‑95 reads as rewritten:

"§ 58‑89A‑95. ~~Agreement; notice.~~Agreement.

(a) A licensee shall establish the terms of a PEO agreement by a written contract between the licensee and the client company.

(b) The licensee shall give written notice of the agreement, by agreement or otherwise, as it affects assigned employees to each employee assigned to a client company work site. ~~This written notice shall be given to each assigned employee not later than the first payday after the date on which that individual becomes an assigned employee.~~

~~(c)~~ ~~The licensee shall give each employee written notice when the employee ceases to be an employee of the licensee.~~"

SECTION 6. G.S. 58‑89A‑100 reads as rewritten:

"§ 58‑89A‑100. Contract requirements.

A contract between a licensee and a client company shall provide:

(1) ~~That the licensee reserves a right of direction and control over employees assigned to a client company's work sites. However, a~~ Unless otherwise expressly agreed by a professional employer organization and a client company in a PEO agreement, the client company ~~may retain such sufficient~~ retains the exclusive right of direction and control over the assigned employees as is necessary to conduct the client company's business and without which the client company would be unable to conduct its business, to discharge any fiduciary responsibility that it may have, or to comply with any applicable licensure, regulatory, or statutory requirement of the client ~~company.~~ company or an assigned employee. The PEO agreement shall provide that employment responsibilities not allocated to the licensee by the PEO agreement or this section remain with the client company.

(2) That the licensee assumes responsibility for the payment of wages to the assigned employees as agreed to in the PEO agreement.

(3) That the licensee assumes responsibility for the payment of payroll taxes and collection of taxes from payroll on assigned employees.

(4) ~~That the licensee reserves a right to hire, fire, and discipline the assigned employees.~~That the licensee shall have a right to hire, discipline, and terminate an assigned employee as may be necessary to fulfill the licensee's responsibilities under this Chapter and a PEO agreement. The client company shall have a right to hire, discipline, and terminate an assigned employee.

(5) That the licensee retains a right of direction and control over the adoption of employment policies and the management of workers' compensation claims, claim filings, and related procedures in accordance with applicable federal laws and the laws of this State.

(6) That responsibility to obtain workers' compensation coverage for assigned employees, from an entity authorized to do business in this State and otherwise in compliance with all applicable requirements, shall be specifically allocated in the PEO agreement to either the client company or the licensee. If the responsibility is allocated to the licensee under any such agreement, that agreement shall require that the licensee maintain and provide to the client company, at the termination of the agreement if requested by the client company, records regarding the loss experience related to workers' compensation insurance provided to assigned employees pursuant to the agreement."

SECTION 7. G.S. 58‑89A‑145 reads as rewritten:

"§ 58‑89A‑145. Examinations.

(a) The Commissioner may conduct an examination of a licensee as often as the Commissioner considers appropriate.

(b) An examination under this Article shall be conducted in accordance with the Examination Law of this Chapter, G.S. 58‑2‑131 through G.S. 58‑2‑134.

(c) In lieu of an examination of any foreign or alien person licensed under this Article, the Commissioner may, in the Commissioner's discretion, accept an examination report on the licensee prepared by the appropriate regulator for the licensee's state of domicile.

(d) When making an examination under this Article, the Commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the reasonable cost of which ~~shall be borne by the licensee that is the subject of the examination.~~may only be recovered pursuant to G.S. 58‑89A‑65(d)."

SECTION 8. G.S. 58‑89A‑155(a)(4) is repealed.

SECTION 9. This act becomes effective October 1, 2013.