First Regular Session

Sixty-first General Assembly

LLS NO. 97­0399.01 BWM SENATE BILL 97­020

STATE OF COLORADO

BY SENATOR Blickensderfer

BUSINESS AFFAIRS & LABOR

A BILL FOR AN ACT

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.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)

For purposes of unemployment compensation, defines "employee leasing company" as a person, business, or other entity that provides services to a work site employer pursuant to an employee leasing company contract. Defines "work site employer" and "employee leasing company contract". Defines the functions of an employee leasing company.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  8­70­114 (2), (3), and (4), Colorado Revised Statutes, 1986 Repl. Vol., as amended, are amended 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 WORK SITE 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 LABOR LEASING CONTRACT, STAFF LEASING CONTRACT, EXTENDED EMPLOYEE STAFFING OR SUPPLY CONTRACT, OR OTHER CONTRACT UNDER WHICH AN EMPLOYEE LEASING COMPANY ACQUIRES FROM A WORK SITE EMPLOYER SPECIFIED EMPLOYER RESPONSIBILITIES FOR SPECIFIED EMPLOYEES, DESIGNATING ITSELF AS EMPLOYER OF SUCH EMPLOYEES, AND EXERCISING A COMPLETE RIGHT OF DIRECTION AND CONTROL OF SUCH EMPLOYEES WITH REGARD TO THOSE EMPLOYER RESPONSIBILITIES, INCLUDING THE RIGHT TO SET THE EMPLOYEES' RATE OF PAY; PAYING THE EMPLOYEES FROM ITS OWN ACCOUNT OR ACCOUNTS; RETAINING THE AUTHORITY, UNDER AN EMPLOYEE LEASING COMPANY CONTRACT, TO HIRE, DISMISS, AND REASSIGN EMPLOYEES; RESPONSIBILITY FOR THE WITHHOLDING, REPORTING, AND PAYMENT OF ALL APPLICABLE PAYROLL TAXES; RESPONSIBILITY FOR UNEMPLOYMENT COMPENSATION INSURANCE TO INCLUDE THE PAYMENT AND REPORTING OF UNEMPLOYMENT INSURANCE AS REQUIRED OF AN EMPLOYER PURSUANT TO THE "COLORADO EMPLOYMENT SECURITY ACT", ARTICLES 70 TO 82 OF THIS TITLE; RESPONSIBILITY FOR PROVIDING WORKERS' COMPENSATION AND OTHER WORKER INJURY OR ILLNESS INSURANCE COVERAGE AS REQUIRED OF AN EMPLOYER PURSUANT TO THE "WORKER'S COMPENSATION ACT OF COLORADO", ARTICLES 40 TO 47 OF THIS TITLE; AND SPONSORING AND ADMINISTERING EMPLOYEE BENEFIT PLANS, INCLUDING EMPLOYER WELFARE BENEFIT PLANS AND EMPLOYER PENSION BENEFIT PLANS, AND PROVISION OF BENEFITS PURSUANT TO SUCH PLANS. 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)  "WORK SITE EMPLOYER" MEANS ANY PERSON, BUSINESS, OR OTHER ENTITY THAT ACQUIRES THE SERVICES OF AN EMPLOYEE LEASING COMPANY UNDER AN EMPLOYEE LEASING COMPANY CONTRACT AND OTHERWISE RETAINS DIRECTION AND CONTROL OF THE EMPLOYEES COVERED UNDER THE CONTRACT REGARDING RESPONSIBILITIES NOT SPECIFIED IN THE CONTRACT PERTAINING TO THE BUSINESS OF THE WORK SITE EMPLOYER TO INCLUDE ITS WORKPLACE PRODUCTS AND SERVICES.

(b)  Notwithstanding the provisions of subsection (1) of this section, an employee leasing company shall be considered an employing unit AND THE EMPLOYER OF RECORD of a client company's workers WORK SITE EMPLOYER'S EMPLOYEES if, it retains the right to perform PURSUANT TO A CONTRACT WITH THE WORK SITE EMPLOYER, IT PERFORMS the following functions:

(I)  RETAINS THE RIGHT TO set the workers' EMPLOYEE'S rate of pay;

(II)  Pay PAYS the workers EMPLOYEES from its own account or accounts; and

(III)  Hire and terminate the workers after consultation with the client company. RETAINS THE AUTHORITY, UNDER AN EMPLOYEE LEASING COMPANY CONTRACT, TO HIRE, DISMISS, AND REASSIGN EMPLOYEES;

(IV)  RESPONSIBILITY FOR THE WITHHOLDING, REPORTING, AND PAYMENT OF ALL APPLICABLE PAYROLL TAXES;

(V)  RESPONSIBILITY FOR UNEMPLOYMENT COMPENSATION INSURANCE TO INCLUDE THE PAYMENT AND REPORTING OF UNEMPLOYMENT INSURANCE AS REQUIRED OF AN EMPLOYER PURSUANT TO THE "COLORADO EMPLOYMENT SECURITY ACT", ARTICLES 70 TO 82 OF THIS TITLE;

(VI)  RESPONSIBILITY FOR PROVIDING WORKERS' COMPENSATION AND OTHER WORKER INJURY OR ILLNESS INSURANCE COVERAGE AS REQUIRED OF AN EMPLOYER PURSUANT TO THE "WORKERS' COMPENSATION ACT OF COLORADO", ARTICLES 40 TO 47 OF THIS TITLE; AND

(VII)  SPONSORING AND ADMINISTERING EMPLOYEE BENEFIT PLANS, INCLUDING EMPLOYER WELFARE BENEFIT PLANS AND EMPLOYER PENSION BENEFIT PLANS, AND PROVISION OF BENEFITS PURSUANT TO SUCH PLANS.

(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 WORK SITE 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 WORK SITE 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 of a client company's WORK SITE EMPLOYER'S workers 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 WORK SITE 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 WORK SITE 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 WORK SITE 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 WORK SITE EMPLOYER that would not otherwise be subject to articles 70 to 82 of this title.

SECTION 2.  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 WORK SITE 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 WORK SITE EMPLOYER and an employee leasing company is terminated.

SECTION 3.  Effective date ­ applicability. This act shall take effect November 1, 1997, and shall apply to contracts entered into on or after said date.

SECTION 4.  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.