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House Engrossed
professional employer organization; repeal |
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State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024
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HOUSE BILL 2252 |
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An Act
amending section 23-561, Arizona Revised Statutes; repealing sections 23-563, 23-564, 23-565, 23-566, 23-567 and 23-568, Arizona Revised Statutes; amending sections 23-569 and 23-572, Arizona Revised Statutes; repealing sections 23-575 and 23-576, Arizona Revised Statutes; relating to professional employer organizations.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 23-561, Arizona Revised Statutes, is amended to read:
23-561. Definitions
In this article, unless the context otherwise requires:
1. "Administrative fee":
(a) Means the fee that is charged to a client by a professional employer organization for professional employer services. Administrative fee
(b) Does not include any amount of the fee that is applied to wages, salaries, benefits, workers’ compensation, payroll taxes, withholding or other assessments that the professional employer organization pays to or on behalf of covered employees under a professional employer agreement.
2. "Client":
(a) Means a person who contracts with a professional employer organization under a professional employer agreement. A client
(b) Does not include a professional employer organization.
3. "Co-employer" means a professional employer organization or a client.
4. "Co-employment relationship" means all of the following:
(a) A relationship between co-employers if the rights, duties and obligations of an employer that arise out of an employment relationship are allocated between co-employers subject to a professional employer agreement and this article, and the relationship is intended to be an ongoing relationship and not a temporary or project specific project-specific relationship.
(b) A relationship between a professional employer organization and a covered employee that is subject to a professional employer agreement and this article, that allows the professional employer organization to enforce those rights and that requires the professional employer organization to perform those duties and obligations that are allocated to the professional employer organization by the professional employer agreement or this article.
(c) A relationship between a client and a covered employee that is subject to a professional employer agreement and this article, that allows the client to enforce those rights and that requires the client to perform those employer obligations that are allocated to the client by the professional employer agreement or this article or that are not otherwise allocated by the professional employer agreement or this article.
5. "Covered employee":
(a) Means an individual who has a co-employment relationship with a professional employer organization and a client, if the individual:
(i) Has executed a written notice of the co-employment relationship with a professional employer organization.
(ii) Is a party to a co-employment relationship with a professional employer organization and a client.
(iii) Is subject to a professional employer agreement under this article.
(b) Includes an individual who is an officer, director, shareholder, partner or manager of a client if the professional employer agreement includes the individual as a covered employee and the individual acts as a manager or performs services for the client.
6. "Person" means any individual, partnership, corporation, limited liability company or other legally recognized entity.
7. "Professional employer agreement" means a written contract between a professional employer organization and a client that provides for:
(a) The co-employment of covered employees.
(b) The allocation and sharing between the client and the professional employer organization of employer responsibilities with respect to a covered employee, including hiring, firing and disciplinary responsibilities.
(c) Any other responsibility required by this article.
8. "Professional employer organization":
(a) Means any person who is engaged in the business of providing professional employer services whether or not the person uses the term professional employer organization, staff leasing company, registered staff leasing company, employee leasing company or any other name.
(b) Does not include:
(i) Any person whose principal business activity is not entering into professional employer agreements and who does not hold itself out as a professional employer organization.
(ii) A person who shares employees with a commonly owned company as defined by sections 414(b) and 414(c) of the internal revenue code.
(iii) Arrangements by a person who assumes responsibility for the product that is produced or service that is performed by the person and who retains and exercises the primary discretion and control over the work performed by the person whose services are supplied under the arrangement.
(iv) A person who hires temporary help for the purpose of supporting or supplementing a client's employees.
9. "Professional employer services" means the service of entering into a co-employment relationship under this article in which all or a majority of the employees who provide services to a client or to a division or work unit of the client are covered employees.
10. "Registrant" means a professional employer organization that is registered under this article.
11. "Temporary help services" means services by a person consisting of:
(a) Recruiting and hiring the person's own employees.
(b) Finding other organizations that need the services of employees who are recruited and hired by the person.
(c) Assigning employees to perform work for other organizations to support that organization's workforces, including covering employee absences, skill shortages or seasonal workloads or performing special assignments or projects.
(d) Customarily attempting to reassign the employees to other organizations when the employees complete each assignment.
Sec. 2. Repeal
Sections 23-563, 23-564, 23-565, 23-566, 23-567 and 23-568, Arizona Revised Statutes, are repealed.
Sec. 3. Section 23-569, Arizona Revised Statutes, is amended to read:
23-569. Financial capability; bonding
A. Every professional employer organization that is located in this state shall maintain either of the following:
1. A minimum net worth of at least one hundred thousand dollars $100,000.
2. A bond, an irrevocable letter of credit or securities that have a minimum market value of one hundred thousand dollars $100,000. The bond shall be held by a an insured depository designated by the secretary of state institution in order to secure the payment of all taxes, wages, benefits or other entitlements, including amounts expended by the industrial commission's special fund under section 23-907 that are due to be paid by the professional employer organization with respect to covered employees if the professional employer organization fails to make the required payments. Any bond, irrevocable letter of credit or securities that are deposited under this subsection section shall not be included for the purposes of calculating the minimum net worth of the professional employer organization under this subsection section.
B. This section does not apply to professional employer organizations that file a limited registration under section 23-567.
Sec. 4. Section 23-572, Arizona Revised Statutes, is amended to read:
23-572. Services not insurance
A registrant professional employer organization under this article is not engaged in the sale of insurance by offering, marketing, selling, administering or providing professional employer organization services or employee benefit plans for covered employees.
Sec. 5. Repeal
Sections 23-575 and 23-576, Arizona Revised Statutes, are repealed.