HOUSE BILL 971172
BY REPRESENTATIVES Schauer, Kaufman, Reeser, Schwarz, Anderson, Taylor, T. Williams, and Young;
also SENATORS Wattenberg and Blickensderfer.
CONCERNING THE TREATMENT OF EMPLOYEE LEASING COMPANIES
UNDER THE "COLORADO EMPLOYMENT SECURITY ACT", AND, IN
CONNECTION THEREWITH, DESCRIBING CERTAIN REPORTING REQUIREMENTS
FOR EMPLOYEE LEASING COMPANIES.
Be it enacted by the General Assembly of the State
of Colorado:
SECTION 1. Legislative
declaration. (1) The general assembly hereby finds,
determines, and declares that:
(a) The employee leasing industry provides
a valuable service to Colorado businesses.
(b) The industry has matured since its
inception and therefore existing law must be amended to conform
with industry practices.
(c) The rights and responsibilities of
employee leasing companies must be clearly defined.
(d) Employee leasing companies help businesses
by assisting them in compliance with the increased number of laws
and regulations applicable to Colorado employers.
(e) Common law recognizes that two entities
may both legitimately be the employer in either a coemployer
or employing unit relationship. The recognition of this relationship
should be based on the nature of the relationship as supported
by a written contract between an employee leasing company and
a worksite employer.
(f) Employee leasing companies shall be
the coemployer or the employing unit for all employees covered
under an employee leasing company contract, and employee leasing
companies may aggregate all employees under the individual contracts
if allowed under Colorado law.
(2) The general assembly therefore finds,
determines, and declares that the purpose of this act is to recognize
the valuable service of employee leasing companies and the services
they provide to the citizens of Colorado by:
(a) Recognizing employee leasing companies
as the coemployer or employing unit for purposes of Colorado
law effective on the date an employee leasing company establishes
itself in Colorado;
(b) Ensuring high quality human resource
services; and
(c) Recognizing employee leasing companies
as the legal coemployer or employing unit for all employees
covered under an employee leasing company contract.
SECTION 2. 870114
(2), (3), and (4), Colorado Revised Statutes, 1986 Repl. Vol.,
as amended, are amended, and the said 870114 is further
amended BY THE ADDITION OF A NEW SUBSECTION, to read:
870114. Employing unit
definition. (2) (a) For
purposes of this section: "employee
leasing company" means an employee leasing company or a business
management company.
(I) "EMPLOYEE LEASING COMPANY"
MEANS ANY PERSON, BUSINESS, OR OTHER ENTITY THAT PROVIDES SERVICES
TO A WORKSITE EMPLOYER, AS DEFINED IN SUBPARAGRAPH (III)
OF THIS PARAGRAPH (a), PURSUANT TO AN EMPLOYEE LEASING COMPANY
CONTRACT, AS DEFINED IN SUBPARAGRAPH (II) OF THIS PARAGRAPH (a).
(II) "EMPLOYEE LEASING COMPANY CONTRACT"
MEANS ANY WRITTEN STAFF LEASING CONTRACT, EXTENDED EMPLOYEE STAFFING
OR SUPPLY CONTRACT, OR OTHER CONTRACT UNDER WHICH AN EMPLOYEE
LEASING COMPANY PROCURES OR RECEIVES FROM A WORKSITE EMPLOYER
SPECIFIED COEMPLOYER RESPONSIBILITIES FOR SPECIFIED EMPLOYEES,
DESIGNATING ITSELF AS EMPLOYER OF SUCH EMPLOYEES, AND RETAINING
THE RIGHT OF DIRECTION AND CONTROL OF SUCH EMPLOYEES WITH REGARD
TO THOSE EMPLOYER RESPONSIBILITIES, INCLUDING THE RIGHTS AND RESPONSIBILITIES
SET FORTH IN PARAGRAPH (b) OF THIS SUBSECTION (2). AN EMPLOYEE
LEASING COMPANY MAY HAVE OTHER RESPONSIBILITIES PURSUANT TO AN
EMPLOYEE LEASING COMPANY CONTRACT, INCLUDING PROVISION OF PROFESSIONAL
GUIDANCE WITH REGARD TO EMPLOYMENT MATTERS.
(III) "WORKSITE EMPLOYER"
MEANS ANY PERSON, BUSINESS, OR OTHER ENTITY THAT PROCURES THE
SERVICES OF AN EMPLOYEE LEASING COMPANY UNDER AN EMPLOYEE LEASING
COMPANY CONTRACT AND OTHERWISE RETAINS DIRECTION AND CONTROL OF
THE EMPLOYEES SPECIFIED IN THE CONTRACT REGARDING RESPONSIBILITIES
NOT SPECIFIED IN THE CONTRACT PERTAINING TO THE BUSINESS OF THE
WORKSITE EMPLOYER.
(b) Notwithstanding the provisions of
subsection (1) of this section, an employee leasing company shall
be considered an employing unit OR THE COEMPLOYER of a client
company's workers WORKSITE
EMPLOYER'S EMPLOYEES if, it retains
the right to perform PURSUANT TO
AN EMPLOYEE LEASING COMPANY CONTRACT WITH THE WORKSITE EMPLOYER,
IT HAS the following functions
RIGHTS AND RESPONSIBILITIES:
(I) Set the
workers' rate of pay THE EMPLOYEE
LEASING COMPANY, AS THE EMPLOYING UNIT OR THE COEMPLOYER,
ASSIGNS EMPLOYEES TO THE WORKSITE EMPLOYER'S LOCATIONS;
(II) Pay the
workers from its own account or accounts; and
THE EMPLOYEE LEASING COMPANY, AS THE EMPLOYING UNIT OR COEMPLOYER,
RETAINS THE RIGHT TO SET THE EMPLOYEES' RATE OF PAY;
(III) Hire
and terminate the workers after consultation with the client company.
THE EMPLOYEE LEASING COMPANY, AS THE EMPLOYING UNIT OR COEMPLOYER,
RETAINS THE RIGHT TO PAY THE EMPLOYEE FROM ITS OWN ACCOUNT OR
ACCOUNTS;
(IV) THE EMPLOYEE LEASING COMPANY, AS
THE EMPLOYING UNIT OR COEMPLOYER, RETAINS THE RIGHT TO DIRECT
AND CONTROL THE EMPLOYEES AND SUCH RIGHTS AND RESPONSIBILITIES
MAY BE SHARED AS SPECIFIED IN THE EMPLOYEE LEASING COMPANY CONTRACT;
(V) THE EMPLOYEE LEASING COMPANY, AS THE
EMPLOYING UNIT OR COEMPLOYER, HAS THE RIGHT TO DISCHARGE,
REASSIGN, OR HIRE EMPLOYEES TO PERFORM SERVICES FOR THE WORKSITE
EMPLOYER AND THE EMPLOYEE LEASING COMPANY;
(VI) THE EMPLOYEE LEASING COMPANY, AS
THE EMPLOYING UNIT OR COEMPLOYER, HAS THE RESPONSIBILITY
FOR PAYMENT OF WAGES TO THE WORKERS PURSUANT TO THE EMPLOYEE LEASING
COMPANY CONTRACT. THE EMPLOYEE LEASING COMPANY, AS THE EMPLOYING
UNIT OR COEMPLOYER, HAS RESPONSIBILITY FOR REPORTING, WITHHOLDING,
AND PAYING ANY APPLICABLE TAXES WITH RESPECT TO THE EMPLOYEE'S
WAGES OR PAYMENT OF SPONSORED EMPLOYEE BENEFIT PLANS PURSUANT
TO THE EMPLOYEE LEASING COMPANY CONTRACT;
(VII) THE RESPONSIBILITY FOR UNEMPLOYMENT
COMPENSATION INSURANCE AS REQUIRED OF AN EMPLOYER PURSUANT TO
THE "COLORADO EMPLOYMENT SECURITY ACT", ARTICLES 70
TO 82 OF THIS TITLE;
(VIII) AN EMPLOYEE LEASING COMPANY AS
THE EMPLOYING UNIT OR COEMPLOYER MAY AGGREGATE ALL EMPLOYEES
FOR THE PURPOSE OF SPONSORING AND ADMINISTERING WORKERS' COMPENSATION
PLANS PURSUANT TO ARTICLE 44 OF TITLE 8, EMPLOYEE PENSION BENEFIT
PLANS, AND PROVISION OF BENEFITS PURSUANT TO SUCH PLANS. NOTWITHSTANDING
ANY PROVISION OF THIS SECTION TO THE CONTRARY, ANY WORKERS' COMPENSATION
INSURANCE CARRIER MAY ISSUE AN INSURANCE POLICY THAT INSURES EITHER
THE EMPLOYEE LEASING COMPANY OR THE WORKSITE EMPLOYER AS
THE EMPLOYER PURSUANT TO THE "WORKERS' COMPENSATION ACT OF
COLORADO", ARTICLES 40 TO 47 OF THIS TITLE;
(IX) THE EMPLOYEE LEASING COMPANY RETAINS
THE RIGHT TO PROVIDE FOR THE WELFARE AND BENEFIT OF THE EMPLOYEES
THROUGH SUCH PROGRAMS AS PROFESSIONAL GUIDANCE INCLUDING, BUT
NOT LIMITED TO, EMPLOYMENT TRAINING, SAFETY, AND COMPLIANCE MATTERS;
(X) THE EMPLOYEE LEASING COMPANY, AS THE
EMPLOYING UNIT OR COEMPLOYER, HAS THE RESPONSIBILITY FOR
ADDRESSING EMPLOYEE COMPLAINTS, CLAIMS, OR REQUESTS RELATED TO
EMPLOYMENT, EXCEPT AS OTHERWISE PROVIDED PURSUANT TO AN EXISTING
COLLECTIVE BARGAINING AGREEMENT; EXCEPT THAT SOME OR ALL OF THE
RIGHTS AND RESPONSIBILITIES DESCRIBED IN THIS SUBPARAGRAPH (X)
MAY BE SHARED WITH THE WORKSITE EMPLOYER;
(XI) THE EMPLOYEE LEASING COMPANY, AS
THE EMPLOYING UNIT OR COEMPLOYER, INTENDS TO RETAIN THE
RIGHT TO MAINTAIN THE EMPLOYMENT RELATIONSHIP BETWEEN THE EMPLOYEE
LEASING COMPANY AND ITS EMPLOYEES ON A LONG TERM, AND NOT TEMPORARY,
BASIS;
(XII) THE EMPLOYEES OF THE EMPLOYEE LEASING
COMPANY KNOW OF AND CONSENT TO COEMPLOYMENT BY THE EMPLOYEE
LEASING COMPANY;
(XIII) THE EMPLOYEE LEASING COMPANY MAINTAINS
EMPLOYEE RECORDS RELATING TO EMPLOYEES OF THE EMPLOYEE LEASING
COMPANY; AND
(XIV) EXCEPT AS OTHERWISE PROVIDED IN
THE EMPLOYEE LEASING COMPANY CONTRACT, THE WORKSITE EMPLOYER
HAS THE RESPONSIBILITY FOR THOSE POLICIES AND PROCEDURES RELATED
TO THE ACTUAL CONDUCT OF THE WORK THAT LEADS TO THE WORKSITE
EMPLOYER'S CONDUCT OF ITS BUSINESS AND THE PRODUCTION OF ITS GOODS
OR SERVICES.
(c) For the
purposes of this section, an employee leasing company shall be
defined as any employing unit which, for a fee, places a client
company's workers onto its payroll and assigns them to the client
company for at least six consecutive months.
(d) If an employee leasing company does
not meet the requirements of this subsection (2), the client
company WORKSITE EMPLOYER shall
be considered the employing unit.
(e) Each employee leasing company shall
maintain and have open for inspection by the department of labor
and employment a listing of its client
companies WORKSITE EMPLOYERS
and their respective workers
COLLECTIVE EMPLOYEES and shall maintain the records and reports
as required by the "Colorado Employment Security Act",
as described in articles 70 to 82 of this title.
(3) (a) The status of an employee
leasing company as the employing unit OR A COEMPLOYER of
a client company's workers
WORKSITE EMPLOYER'S EMPLOYEES shall be revoked by the division
if such employee leasing company fails to file the required reports
or pay the taxes due under the provisions of articles 70 to 82
of this title. The effective date of any such revocation shall
be the first day of the quarter for which the reports and taxes
are due. In the event of such a revocation, the client
company WORKSITE EMPLOYER shall
become liable for the reports and taxes due.
(b) The provisions of paragraph (a) of
this subsection (3) shall apply if any portion of an employing
unit's business activity can be characterized as an employee leasing
company, as defined in subsection (2) of this section.
(c) The provisions of paragraph (a) of
this subsection (3) shall not apply if an employee leasing company
acts as an agent for a client company
WORKSITE EMPLOYER pursuant to the provisions of subsection
(1) of this section, files the required reports, and pays the
taxes due under an account established for the client
company WORKSITE EMPLOYER.
(d) The provisions of paragraph (a) of
this subsection (3) shall not apply to any temporary help contracting
firm, as defined in section 873105.5. However, if
any portion of such firm's business activity can be characterized
as an employee leasing company, as defined in subsection (2) of
this section, that portion of the firm's business shall be subject
to the provisions of this subsection (3).
(4) An employee leasing company shall
not report wages for any client company
WORKSITE EMPLOYER that would not otherwise be subject to
articles 70 to 82 of this title.
(6) NOTHING IN THIS SECTION SHALL EXEMPT
A WORKSITE EMPLOYER OR ANY EMPLOYEE FROM ANY OTHER LICENSING
REQUIREMENTS IMPOSED BY LOCAL, STATE, OR FEDERAL LAW. AN EMPLOYEE
WHO IS LICENSED, REGISTERED, OR CERTIFIED BY A UNIT OF LOCAL,
STATE, OR FEDERAL GOVERNMENT SHALL, FOR THE PURPOSES OF SUCH LICENSE,
REGISTRATION, OR CERTIFICATION, BE CONSIDERED AN EMPLOYEE OF THE
WORKSITE EMPLOYER.
SECTION 3. 876104
(6), Colorado Revised Statutes, 1986 Repl. Vol., as amended, is
amended to read:
876104. Successor employer.
(6) No experience rate transfer provided by this section
shall occur when a client company's
WORKSITE EMPLOYER'S account is made inactive as a result
of its entering into an
agreement
A CONTRACT with an employee leasing company, as defined in section
870114 (2), or when an
agreement A CONTRACT between a client
company WORKSITE EMPLOYER and
an employee leasing company is terminated.
SECTION 4. 1016105
(8) (a) (I) and (8) (a) (VII), Colorado Revised Statutes, 1994
Repl. Vol., are amended, and the said 1016105 (8)
(a) is further amended BY THE ADDITION OF THE FOLLOWING NEW SUBPARAGRAPHS,
to read:
1016105. Small group sickness
and accident insurance guaranteed issue mandated
provisions for basic and standard health benefit plans.
(8) (a) (I) The premium rate charged during
a rating period to small employers shall be based on a single,
same index rate, applicable to all small employers, adjusted for
case characteristics and coverage; except that the index rate
may be multiplied by a rate adjustment factor for each small employer
group pursuant to subparagraphs (III) to (VII) of this paragraph
(a) to calculate a different premium. The rate adjustment factor
shall only be based on actual claims experience on the small employer
carrier's plan, industry, and class of business; except that,
for health benefit plans issued prior to July 1, 1994, the rate
adjustment factor may also be based on duration of coverage since
the original issue date and gender mix. FOR THE PURPOSES OF THIS
SUBSECTION (8), SMALL EMPLOYER CARRIERS MAY PUT ALL THOSE SMALL
EMPLOYERS THAT HAVE CONTRACTS WITH AN EMPLOYEE LEASING COMPANY,
AS DEFINED IN SECTION 870114 (2) (a) (I), INTO A SINGLE
INDUSTRY CATEGORY CALLED "SMALL EMPLOYERS THAT HAVE EMPLOYEE
LEASING COMPANY CONTRACTS". Small employer carriers shall
apply the rate adjustment factors uniformly with respect to all
small employers.
(VII) For health benefit plans newly issued
and all health benefit plans renewed on and after January 1, 1998,
no rate adjustment factor shall be used, EXCEPT AS PROVIDED IN
SUBPARAGRAPH (X) OF THIS PARAGRAPH (a).
(X) ON AND AFTER JANUARY 1, 1998, A SMALL EMPLOYER CARRIER MAY GIVE ALL THOSE SMALL EMPLOYERS WHO HAVE CONTRACTS WITH AN EMPLOYEE LEASING COMPANY A CLASS OF BUSINESS DISCOUNT IF:
(A) THE EMPLOYEE LEASING COMPANY IS SOLELY
RESPONSIBLE FOR COLLECTING AND REMITTING PREMIUMS WITH RESPECT
TO THE SMALL EMPLOYERS WITH WHOM IT HAS EMPLOYEE LEASING COMPANY
CONTRACTS AND WHO OBTAIN COVERAGE THROUGH THE EMPLOYEE LEASING
COMPANY;
(B) THE SMALL EMPLOYER CARRIER PROVIDING
COVERAGE THROUGH THE EMPLOYEE LEASING COMPANY GUARANTEES THE ISSUANCE
OF SUCH COVERAGE TO EVERY WORKSITE EMPLOYER WITH WHOM THE
LEASING COMPANY HAS A CONTRACT AND TO THEIR ELIGIBLE EMPLOYEES.
THE WORKSITE EMPLOYER AND ITS ELIGIBLE EMPLOYEES SHALL HAVE
THE RIGHT TO SUCH COVERAGE WITHIN THE FIRST SIXTY DAYS AFTER THE
EFFECTIVE DATE OF THE EMPLOYEE LEASING COMPANY CONTRACT. AFTER
THE EXPIRATION OF THAT SIXTYDAY PERIOD, A WORKSITE
EMPLOYER WHO DECLINES COVERAGE WITHIN THE FIRST SIXTY DAYS OF
THE EFFECTIVE DATE OF ENTERING INTO AN EMPLOYEE LEASING COMPANY
CONTRACT BECAUSE SUCH WORKSITE EMPLOYER HAS OBTAINED OR
INTENDS TO OBTAIN COVERAGE FROM ANOTHER SOURCE SHALL NOT SUBSEQUENTLY
BE ISSUED COVERAGE THROUGH THE EMPLOYEE LEASING COMPANY FOR A
MINIMUM OF FIVE YEARS. AFTER THE EXPIRATION OF THAT SIXTYDAY
PERIOD A WORKSITE EMPLOYER WHO DECLINES COVERAGE WITHIN
THE FIRST SIXTY DAYS OF THE EFFECTIVE DATE OF ENTERING INTO AN
EMPLOYEE LEASING COMPANY CONTRACT BECAUSE SUCH WORKSITE
EMPLOYER HAS NOT OFFERED AND OPTS TO CONTINUE NOT TO OFFER AND
CONTRIBUTE TO COVERAGE FOR THE WORKSITE EMPLOYER'S EMPLOYEES
SHALL SUBSEQUENTLY BE ISSUED COVERAGE THROUGH THE EMPLOYEE LEASING
COMPANY ONLY IF THE WORKSITE EMPLOYER HAS NOT OFFERED COVERAGE
TO THE WORKSITE EMPLOYER'S EMPLOYEES FROM ANOTHER SOURCE
FOR THE LESSER OF EITHER THE LAST TWO YEARS OR SINCE THE INCEPTION
OF THE WORKSITE EMPLOYER'S BUSINESS. A WORKSITE EMPLOYER
WHO OPTS FOR COVERAGE UNDER THE PLAN OFFERED BY THE EMPLOYEE LEASING
COMPANY AND LATER DROPS THAT COVERAGE SHALL NOT BE ISSUED COVERAGE
THROUGH THE EMPLOYEE LEASING COMPANY FOR AT LEAST FIVE YEARS.
(C) BOTH THE EMPLOYEE LEASING COMPANY
AND THE CARRIER PROVIDING A HEALTH BENEFIT PLAN THROUGH THE EMPLOYEE
LEASING COMPANY SHALL MAINTAIN A RECORD OF THE REASONS A WORKSITE
EMPLOYER CITES FOR DECLINING COVERAGE AT THE TIME OF THE INITIAL
OFFERING OF SUCH COVERAGE.
(D) PRIOR TO PROVIDING COVERAGE TO THE
SMALL EMPLOYERS WHO HAVE CONTRACTS WITH AN EMPLOYEE LEASING COMPANY,
THE EMPLOYEE LEASING COMPANY SUBMITS AND ANNUALLY RESUBMITS TO
THE COMMISSIONER FOR REVIEW AND APPROVAL SUFFICIENT DOCUMENTATION
TO SHOW THAT THE EMPLOYEE LEASING COMPANY MEETS THE DEFINITION
OF AN EMPLOYEE LEASING COMPANY PURSUANT TO SECTION 870114,
C.R.S.; AND
(E) THE CLASS OF BUSINESS DISCOUNT IS
BASED SOLELY ON SAVINGS RELATED TO MARKETING COSTS AND THE COSTS
OF COLLECTING PREMIUMS.
(XI) NOTHING IN SUBPARAGRAPH (X) OF THIS
PARAGRAPH (a) SHALL BE CONSTRUED TO EXEMPT EMPLOYEE LEASING COMPANIES,
CARRIERS, OR ANY OTHER ENTITY FROM THE REQUIREMENTS OF ARTICLE
18 OF TITLE 6, C.R.S., CONCERNING HEALTH CARE COVERAGE COOPERATIVES.
NOTHING IN SUBPARAGRAPH (X) OF THIS PARAGRAPH (a) SHALL BE CONSTRUED
TO EXEMPT A CARRIER THAT PROVIDES COVERAGE TO THE EMPLOYEES OF
A SMALL EMPLOYER, INCLUDING THOSE SMALL EMPLOYERS THAT MAY HAVE
CONTRACTED FOR SERVICES WITH AN EMPLOYEE LEASING COMPANY, FROM
THE SMALL GROUP PROVISIONS OF TITLE 10, C.R.S.
(XII) ALL HEALTH COVERAGE PLANS SPONSORED
BY OR MARKETED THROUGH AN EMPLOYEE LEASING COMPANY SHALL BE FULLY
INSURED PLANS.
SECTION 5. Effective
date applicability. This act shall take effect
upon passage and shall apply to contracts in effect on and after
that date and acts occurring on or after said date.
SECTION 6. Safety
clause. The general assembly hereby finds, determines, and
declares that this act is necessary for the immediate preservation
of the public peace, health, and safety.
____________________________ ____________________________
Charles E. Berry Tom Norton
SPEAKER OF THE HOUSE PRESIDENT OF
OF REPRESENTATIVES THE SENATE
____________________________ ____________________________
Judith M. Rodrigue Joan M. Albi
CHIEF CLERK OF THE HOUSE SECRETARY OF
OF REPRESENTATIVES THE SENATE
APPROVED________________________________________
_________________________________________
Roy Romer
GOVERNOR OF THE STATE OF COLORADO