Chapter 06-215

2006 -- H 7172 SUBSTITUTE A

Enacted 07/03/06

A N A C T

RELATING TO BUSINESSES AND PROFESSIONS -- PROFESSIONAL EMPLOYER

ORGANIZATIONS ACT OF 2004

Introduced By: Representatives Diaz, Slater, and Almeida

Date Introduced: February 08, 2006

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 5-75-4 and 5-75-9 of the General Laws in Chapter 5-75 entitled

"Professional Employer Organizations Act of 2004" are hereby amended to read as follows:

5-75-4. Registration requirements. -- (a) Registration required. - Except as otherwise

provided in this chapter, no person shall provide, advertise, or otherwise hold itself out as

providing professional employer services in this state, unless such person is registered under this

chapter and in conformance with the requirements of section 44-30-71.4.

      (b) Registration information. - Each applicant for registration under this chapter, shall

provide the division of taxation with the following information:

      (1) The name or names under which the PEO conducts business;

      (2) The address of the principal place of business of the PEO and the address of each

office it maintains in this state;

      (3) The PEO's taxpayer or employer identification number;

      (4) A list by jurisdiction of each name under which the PEO has operated in the

preceding five (5) years, including any alternative names, names of predecessors and, if known,

successor business entities;

      (5) A statement of ownership, which shall include the name and evidence of the business

experience of any person that, individually or acting in concert with one or more other persons,

owns or controls, directly or indirectly, twenty-five percent (25%) or more of the equity interests

of the PEO;

      (6) A statement of management, which shall include the name and evidence of the

business experience of any person who serves as president, chief executive officer, or otherwise

has the authority to act as senior executive officer of the PEO; and

      (7) A list of clients including client name, physical address, telephone number and

federal identification number.

      (c) Initial Registration.

      (1) Each PEO operating within this state as of the effective date of this chapter shall

complete its initial registration not later than one hundred eighty (180) days after the effective

date of this chapter. Such initial registration shall be valid through the subsequent July 31 of the

registration year.

      (2) Each PEO not operating within this state as of the effective date of this chapter shall

complete its initial registration prior to commencement of operations within this state.

      (d) Renewal. - On August 1st of each subsequent year such registrant shall renew its

registration by notifying the division of taxation of any changes in the information provided in

such registrant's most recent registration or renewal which shall be effective for an annual term

from August 1 through July 31 of the subsequent year.

      (e) Group registration. - Any two or more PEO's held under common control of any

other person or persons acting in concert may be registered as a PEO group. A PEO group may

satisfy any reporting and financial requirements of this registration law on a consolidated basis.

      (f) Alternative Registration. - The division of taxation may by rule and regulation

provide for the acceptance of an affidavit or certification of a bonded, independent and qualified

assurance organization that has been approved by the department certifying qualifications of a

professional employer organization in lieu of the requirements of section 5-75-6.

      (g) List. - The state tax administrator shall maintain a list of professional employer

organizations registered under this chapter.

      (h) Forms. - The state tax administrator may prescribe forms necessary to promote the

efficient administration of this section.

      (i) Record confidentiality. - All records, reports and other information obtained from a

PEO under this chapter, except to the extent necessary for the proper administration of this

chapter by the state tax administrator, shall be confidential and shall not be published or open to

public inspection other than to public employees in the performance of their public duties.

(j) Limited registration.

(1) A PEO is eligible for a limited registration under this chapter if such PEO;

(a) submits a properly executed request for limited registration on a form provided by the

department;

(b) is domiciled outside this state and is licensed or registered as a PEO in another state;

(c) does not maintain an office in this state or directly solicit clients located or domiciled

within this state; and

(d) does not have more than fifty (50) covered employees employed or domiciled in this

state on any given day.

(2) A limited registration is valid for one year, and may be renewed.

(3) A PEO seeking limited registration under this section shall provide the department

with information and documentation necessary to show that the PEO qualifies for a limited

registration.

(4) Section 5-75-6 of this chapter shall not apply to applicants for limited registrations.

5-75-9. Workers' compensation. -- (a) The responsibility to obtain workers'

compensation coverage for covered employees, from a carrier licensed to do business in this state

and otherwise in compliance with all applicable requirements, shall be specifically allocated in

the professional employer agreement to either the client or the PEO. If such responsibility is

allocated to the PEO under any such agreement, such agreement shall require that the PEO

maintain and provide to client, at the termination of the agreement if requested by the client,

records regarding the loss experience related to workers' compensation insurance provided to

covered employees pursuant to such agreement. A certificate of insurance as proof of workers'

compensation coverage shall be issued to the client if the PEO is to provide coverage or to the

PEO if the client is to provide coverage with notification of cancellation to be issued immediately

to either entity. In the case of cancellation, the other entity must immediately obtain coverage.

      (b) Workers' compensation. - Both client and the PEO shall be considered the employer

for the purpose of coverage under the workers' compensation act and both the PEO and its client

shall be entitled to protection of the exclusive remedy provision of the workers' compensation act

irrespective of which co-employer obtains such workers' compensation coverage.

     SECTION 2. This act shall take effect upon passage.

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LC00902/SUB A

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