H 3689 Session 110 (1993-1994)
H 3689 General Bill, By Wilkes, H.H. Clyborne, Davenport, R.C. Fulmer, Harrison,
M.F. Jaskwhich, Littlejohn, Riser, Sharpe, R. Smith, C.H. Stone, Vaughn, Walker,
C.C. Wells, Witherspoon and D.A. Wright
Similar(S 482)
A Bill to amend Title 40, Code of Laws of South Carolina, 1976, relating to
professions and occupations by adding Chapter 68 so as to regulate businesses
that offer staff leasing services; and to provide for licensing and
disciplinary action.
03/11/93 House Introduced and read first time HJ-9
03/11/93 House Referred to Committee on Labor, Commerce and
Industry HJ-9
04/28/93 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-12
05/06/93 House Debate adjourned until Tuesday, May 11, 1993 HJ-72
05/12/93 House Debate adjourned until Thursday, May 13, 1993 HJ-65
05/13/93 House Debate adjourned until Thursday, May 20, 1993 HJ-27
05/20/93 House Debate adjourned until Thursday, May 27, 1993 HJ-20
05/27/93 House Tabled HJ-128
COMMITTEE REPORT
April 28, 1993
H. 3689
Introduced by REPS. Wilkes, Wright, Sharpe, Harrison, Vaughn, Wells,
R. Smith, Witherspoon, Littlejohn, Walker, Davenport, Fulmer, Riser,
Jaskwhich, Clyborne and Stone
S. Printed 4/28/93--H.
Read the first time March 11, 1993.
THE COMMITTEE ON
LABOR, COMMERCE AND INDUSTRY
To whom was referred a Bill (H. 3689), to amend Title 40, Code of
Laws of South Carolina, 1976, relating to professions and occupations,
etc., respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking Section 40-68-10,
SECTION 1, and inserting:
/Section 40-68-10. As used in this chapter:
(1) `Applicant' means a business seeking to be licensed under this
chapter or seeking the renewal of a license under this chapter.
(2) `Client company' means a person that contracts with a licensee
and is assigned employees by the licensee under that contract.
(3) `Administrator' means the administrator of the Department of
Consumer Affairs.
(4) `Controlling person' means:
(a) an officer or director of a corporation seeking to offer staff
leasing services, a shareholder holding ten percent or more of the voting
stock of a corporation seeking to offer staff leasing services, or a partner
of a partnership seeking to offer staff leasing services;
(b) an individual who possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of a
company seeking to offer staff leasing services through the ownership
of voting securities, by contract or otherwise, and who is actively
involved in the day-to-day management of the company; or
(c) an individual employed, appointed, or authorized by a
business seeking to offer staff leasing services to enter into a contractual
relationship with a client company on behalf of the business.
(5) `Department' means the South Carolina Department of Consumer
Affairs.
(6) `Licensee' means a person licensed under this chapter to provide
staff leasing services. The term includes a staff leasing services group
licensed under Section 40-68-80.
(7) `Person' means an individual, association, corporation,
partnership, or other private legal entity.
(8) `Staff leasing services' means an arrangement by which
employees of a licensee are assigned to work at a client company and in
which employment responsibilities are shared by the licensee and the
client company. The employee's assignment is intended to be of a
long-term or continuing nature, rather than temporary or seasonal in
nature, and a majority of the work force at a client company worksite or
a specialized group within that work force consists of assigned
employees of the licensee. This does not include family-related
businesses or similar groups that do not meet the requirements of item
(8).
(9) `Staff leasing services company' means an individual business
entity that offers staff leasing services.
(10) `Staff leasing services group' means a combination of staff
leasing services companies that operates under a group license issued
under Section 40-68-80.
(11) `Assigned employee' means a person performing services for a
client company as affected by a contract between a licensee and client
company in which employment responsibilities are shared.
(12) `Entire work force' means all persons engaged by a client
company and are employees as defined in Title 42 including persons
considered employees under Sections 42-1-400, 42-1-410, and
42-1-420./
Amend further by striking Section 40-68-30(C), SECTION 1, and
inserting:
/(C) An application for a staff leasing services group license under
Section 40-68-80 must provide the information required by this chapter
for each member of the group. An applicant or licensee is ineligible for
a license for one year after the date of final departmental action on the
denial or revocation of a license applied for or issued under this chapter.
This restriction does not apply to a denial or revocation of a license if
the basis of the action was:
(1) an inadvertent error or omission in the application if that error
or omission is promptly corrected;
(2) the experience documented to the department was insufficient
at the time of the previous application;
(3) the department was unable to complete the criminal
background investigation required under Section 40-68-40 because of
insufficient information received from a local, state, or federal law
enforcement agency; or
(4) that one or more of the controlling persons affiliated with the
applicant or licensee was determined by the department to be unsuitable,
if that unsuitable controlling person has in fact ceased to be a controlling
person of the applicant or license./
Amend further by striking items (B) and (E) of Section 40-68-40,
SECTION 1, and inserting:
/(B) The department shall conduct a background investigation of each
individual applicant and of each controlling person of each applicant to
determine whether the applicant or controlling person is qualified under
this chapter. The department may deny an application for the issuance
or renewal of a license if it finds that a controlling person is not qualified
under this chapter. The investigation may include:
(1) the submission of fingerprints for processing through
appropriate local, state, and federal law enforcement agencies; and
(2) examination by the department of police or other law
enforcement records maintained by local, state, or federal law
enforcement agencies.
(E) An applicant for an original or renewal license must demonstrate
a net worth of at least fifty thousand dollars. The applicant shall
demonstrate the net worth to the department by providing the department
with the applicant's audited financial statement. The net worth
requirement also may be satisfied through guarantees, letters of credit,
or other security acceptable to the department in a combined total
amount of at least fifty thousand dollars. A guaranty is not acceptable to
satisfy this subsection unless the applicant submits sufficient evidence
to satisfy the department that the guarantor has adequate resources to
satisfy the obligations of the guaranty. For applicants operating a staff
leasing services company or staff leasing services group on or before
January 1, 1991, the net worth requirement will be satisfied by the
documentation of a positive net worth./
Amend further by striking Section 40-68-50(A)(2), SECTION 1, and
inserting:
/(2) in the second year of the biennium:
(a) one thousand dollars for each resident staff leasing services
company;
(b) three thousand, five hundred dollars for each resident staff
leasing services group;
(c) one thousand dollars for a nonresident staff leasing services
company. However, if the state of residency of the nonresident leasing
company imposes a greater fee for licensing nonresident applicants, then
the greater fee is assessed. The maximum fee to be charged is two
thousand, five hundred dollars for a nonresident staff leasing services
company;
(d) three thousand, five hundred dollars for each nonresident
staff leasing services group. However, if the state of residency of the
nonresident staff leasing services group imposes a greater fee for
licensing nonresident applicants, then the greater fee is assessed. The
maximum fee to be charged is five thousand dollars for each nonresident
staff leasing services group;/
Amend further by striking Section 40-68-50(B) and inserting:
/(B) In addition to the license fee, the department may levy a biannual
assessment for each staff leasing services company and each staff
leasing services group sufficient to cover all costs for regulation of the
profession pursuant to this chapter and other applicable provisions of
law. The biannual assessment fee is:
(1) due and payable upon initial licensure and subsequent
renewals and one year before the expiration of any licensure period; and
(2) based on the gross South Carolina payroll, excluding tips and
gratuities, of a staff leasing services company's or staff leasing services
group's clients during the period beginning nine quarters before and
ending one quarter before each assessment;
(3) calculated in accordance with the following table:
Amount of Gross Assessment Fee
South Carolina Payroll Due
less than $500,000 $500
$500,001 - $1,000,000 $750
$1,000,001 - $2,500,000 $1,000
$2,500,001 - $5,000,000 $1,250
$5,000,001 - 10,000,000 $1,750
$10,000,001 - $15,000,000 $2,250
$15,000,001 - $25,000,000 $3,000
$25,000,001 - $50,000,000 $3,750
over $50,000,000 $4,000/
Amend further by striking Section 40-68-60 and inserting:
/Section 40-68-60. (A) A licensee shall establish the terms of a staff
leasing services agreement by a written contract between the licensee
and the client company. The licensee shall give written notice of the
agreement as it affects assigned employees to each employee assigned
to a client company in the manner provided in this section.
(B) A written explanation of the agreement must be provided to each
assigned employee by delivering it to the employee personally. The
explanation shall state, substantially, the terms of the agreement between
the licensee and client company and include the same notice which is
required to be posted in the client company's place of business.
(C) The client company shall post in each of its places of business
in a conspicuous place that is in clear and unobstructed view of the
assigned employees a notice stating, substantially, the following:
`We are operating under and subject to the Workers' Compensation
Act of South Carolina. In case of accidental injury or death to an
employee, the injured employee, or someone acting on his or her
behalf, shall notify immediately (insert name of staff leasing
company, address, and telephone number) or (name of client
company, address, and telephone number). Failure to give immediate
notice may be the cause of serious delay in the payment of
compensation to you or your beneficiaries and may result in failure to
receive any compensation benefits.'
(D) As between the client company, the staff leasing company, and
the employee, the notice to or acknowledgment of the occurrence of an
injury on the part of the client company or the staff leasing company is
notice to or knowledge on the part of the staff leasing company and its
workers' compensation insurer or the client company and its workers'
compensation insurer, or both./
Amend further by striking Section 40-68-70 and inserting:
/Section 40-68-70. (A) A contract between a licensee and a client
company must provide that the licensee:
(1) reserves the right of direction and control over employees
assigned to a client company.
(2) assumes responsibility for the payment of wages to the
assigned employees without regard to payments by the client to the
licensee;
(3) assumes responsibility for the payment of payroll taxes and
collection of taxes from payroll on assigned employees;
(4) retains the right to hire, fire, discipline, and reassign the
assigned employees;
(5) retains the right of direction and control over the adoption of
employment and safety policies and the management of workers'
compensation claims, claim filings, and related procedures on joint
agreement by the client company and the licensee; and
(6) agrees that:
(a) notice to or acknowledgment of the occurrence of an injury
on the part of the client company is notice to or knowledge on the part
of the licensee and its workers' compensation insurer;
(b) for the purposes of Title 42, the jurisdiction of the client
company is the jurisdiction of the licensee and its workers' compensation
insurer;
(c) the licensee and its workers' compensation insurer is bound
by and subject to the awards, judgments, or decrees rendered against
them under the provisions of Title 42; and
(d) insolvency, bankruptcy, or discharge in bankruptcy of the
licensee or client company does not relieve the licensee, client company,
their respective workers' compensation insurers from payment of
compensation for disability or death sustained by an employee during
the life of a workers' compensation insurance policy; and
(7) with a client company, in the contract, shall specify whether
the licensee, the client company, or both, are securing workers'
compensation liability.
(B) A licensee, who secures workers' compensation insurance for a
client company before the execution of the contract and on an annual
basis, shall conduct a good faith investigation of the client company's
business. The investigation must determine if the client company
engages any nonassigned employees, including those considered
employees under Title 42 in any part of the client company's trade,
business, or occupation. Upon a determination that a client company's
entire work force includes nonassigned employees, the contract must
require the client company to secure and maintain workers'
compensation insurance.
(C) Upon the failure or neglect of a client company to secure and
maintain workers' compensation insurance, the licensee and its workers'
compensation carrier agree and are liable to pay to a worker employed
in the work of the client company compensation under Title 42 which
the licensee would have been liable to pay if the worker had been
employed by the licensee as provided in Section 40-68-120.
(D) A licensee's workers' compensation insurer providing coverage
to a client company's assigned employees must be provided the
information derived from the licensee's investigation of the client
company's business.
(E) The licensee is the employer of the employees assigned to a
client company. The rights and remedies granted by Title 42 to an
employee when he and the licensee have accepted the provisions of Title
42 to pay and accept compensation exclude all other rights as provided
in Section 42-1-540. This chapter does not affect the rights, duties, or
liabilities of licensees, client companies, or employees under federal
law./
Amend further, SECTION 1, by adding after Section 40-68-70:
/Section 40-68-75. (A) An employer subject to the provisions of
Title 42 who contracts with a staff leasing services company or group
continues to be subject to the provisions of Title 42 and shall comply
with Title 42 with regard to procuring and maintaining workers'
compensation insurance for nonassigned employees. For purposes of
construction, the term `employees' in Section 42-1-360 includes both
assigned and nonassigned employees.
(B) A client company who refuses or neglects to provide workers'
compensation insurance coverage to its nonassigned employees must be
fined one thousand dollars a day for each nonassigned employee for
each day the client company refuses or neglects to provide workers'
compensation insurance. In this event, the client company is liable
during the continuance of the refusal or neglect to an employee either for
compensation under Title 42 or in an action at law instituted by the
employee or his personal representative against the client company to
recover damages for personal injury or death by accident. In the action
at law, the client company may not be permitted to defend upon any of
the grounds mentioned in Section 42-1-510 nor shall Section 42-1-540
apply. The fine provided in this section must be assessed by the
Workers' Compensation Commission in an open hearing with the right
of review and appeal as in other cases./
Amend further by striking Section 40-68-120 and inserting:
/Section 40-68-120. (A) A licensee may elect to obtain workers'
compensation insurance coverage in the same manner as any other
employer as provided below:
(1) An insurer issuing the policy must be licensed in this State to
write such policies.
(2) An insurer issuing a policy of workers' compensation
insurance to a licensee may not plead as a defense:
(a) that the client company is not subject to Title 42. The
insurer is estopped to deny coverage;
(b) lack of an employment relationship between a person
engaged in an employment as defined in Title 42 and the client
company;
(c) breach of contract by the licensee or client company. The
insurer is not entitled to plead as a defense to an employee's claim for
benefits any defects in the performance of a contract between the
licensee and client company.
(3) No policy of insurance against liability arising under Title 42
may be issued to a licensee unless it contains the agreement of the
insurer that it will promptly pay to the persons entitled to them all
benefits conferred by Title 42 and all installments of the compensation
that may be awarded or agreed upon and that the obligation is not
affected by default of the licensee or client company or by default in
giving notice required by the policy or otherwise.
(4) A policy of insurance issued to a licensee is, and must be
construed as, a direct promise by the insurer to the person entitled to
compensation enforceable in his name.
(5) The insurer agrees that:
(a) notice to or acknowledgment of the occurrence of an injury
on the part of the client company is notice to or knowledge on the part
of the licensee and its workers' compensation insurer;
(b) for purposes of Title 42, the jurisdiction of the client
company is the jurisdiction of the licensee and its workers' compensation
insurer;
(c) the licensee and its workers' compensation insurer, in all
things, are bound by and subject to the awards, judgments, or decrees
rendered against them under the provisions of Title 42; and
(d) insolvency, bankruptcy, or discharge bankruptcy of the
licensee or client company does not relieve the workers' compensation
insurer from the payment of compensation for disability or death
sustained by an employee during the life of a workers' compensation
insurance policy issued to the licensee.
(6) No agreement by an employee to pay a portion of a premium
paid by the licensee or client company to an insurer or to contribute to
a benefit fund or department maintained by a licensee or client company
for the purpose of providing insurance under Title 42 is valid, and any
licensee or client company who makes a deduction for the purpose from
the pay of an employee entitled to benefits under Title 42 is guilty of a
misdemeanor and, upon conviction, must be fined not more than one
thousand dollars plus reimbursement to the employee of the deductions.
(7) When a person referred to as a licensee undertakes to provide
assigned employees to a client company, the licensee is liable to pay a
worker employed by the client company compensation under Title 42
which the licensee would have been liable to pay if the worker had been
immediately employed by the licensee. When the licensee is liable to
pay compensation under this section, it is entitled to indemnity from a
client company who would have been liable to pay compensation to the
worker independently of this section and have a cause of action therefor.
This section must be construed to require that licensee's workers'
compensation carrier is liable to pay compensation to the client
company's entire work force with the licensee and carrier's right to
indemnity from the client company.
(B) If workers' compensation coverage is obtained, that insurance
must comply with the applicable provisions of the insurance laws of this
State.
(C) A licensee is entitled to the same rights to obtain all types of
insurance coverage, including endorsements obtained by other business
entities doing business in this State.
(D) For companies who have obtained workers' compensation
insurance coverage in the residual (assigned risk) market, the first three
years that a client company has a contract with a licensee, the licensee
shall pay workers' compensation insurance premiums based on the
experience modification rate of the client company. The South Carolina
Department of Insurance shall adopt regulations to implement this
subsection. This subsection applies only to the residual (assigned risk)
market.
(E) The licensee must categorize leased employees according to their
classification within a client company.
(F) A licensee may sponsor and maintain employee benefit plans for
the benefits of assigned employees. The employee benefit plans must
comply with the applicable provisions of the insurance laws of this
State. A client company may include assigned employees in a benefit
plan sponsored by the client company. However, no licensee may
sponsor and maintain a plan of self-insurance for health benefits or
workers' compensation benefits after January 1, 1994.
(G) A staff leasing services company or staff leasing services group
is responsible for the payment of unemployment taxes pursuant to law.
(H) Licensees, within thirty days, shall notify the South Carolina
Employment Security Commission of the start and termination of the
licensee's relationship with a client company./
Amend further by striking Section 40-68-160(A)(9) and inserting:
/(9) failing to notify the department, in writing, of the felony
conviction of a controlling person not later than the thirtieth day after the
date on which that conviction is entered;/
Renumber sections to conform.
Amend title to conform.
THOMAS C. ALEXANDER, for Committee.
STATEMENT OF ESTIMATED FISCAL
IMPACT
1. Estimated Cost to State-First Year$-0-
2. Estimated Cost to State-Annually Thereafter$-0-
If enacted, House Bill 3689 would amend Title 40 of the South
Carolina Code of Laws, 1976, by adding Chapter 68, relating to
professions and occupations. This legislation would require regulation
of businesses that offer staff leasing services, setting definitions, fees,
licensing procedures, and disciplinary actions.
The Department of Consumer Affairs would be the administrator of
the legislation. The Department has estimated the costs associated to
implement the staff leasing services to be $31,018.
Personal Services:
Consumer Investigator II $21,791
Employer Contributions 5,627
TOTAL PERSONAL SERVICES $27,418
Other Operating Expenses 3,600
TOTAL ESTIMATED COSTS $31,018
The fees, as set forth in Section 40-68-170, would be collected by the
Department of Consumer Affairs and must be used to implement the
provisions in Chapter 68.
Section 40-68-120 specifies that the licensees are to promptly notify
the South Carolina Workers' Compensation Commission, the South
Carolina Employment Security Commission, and the South Carolina
Department of Insurance of the start and the termination of the licensee's
relationship with a client company. There is no impact on the State
General Fund.
Since the legislation specifically states that the fees are to be used for
implementation, there would be no impact to the General Fund. Any
appropriations would be offset by revenue generated from the fees.
NOTE:
1)Employment Security Commission:
It appears that there would be no additional cost to the
Employment Security Commission to comply with the provisions
of Section 40-68-110 D), which merely requires licenses to notify
the Commission of the start/termination dates with each client.
Should the Commission be required to process the information,
there would be costs associated with developing appropriate
computer software, personnel postage, etc. However, it is not
possible to estimate these costs, since no action by the Commission
is specified on the bill.
2)The Workers' Compensation Commission:
The bill would affect the Workers' Compensation System, not the
Workers' Compensation Commission, in terms of the budget. A
letter by the Commission was addressed to the Labor, Commence,
and Industry Committee identifying concerned areas.
3)The South Carolina Department of Insurance:
At this time, there would be no fiscal impact for the agency.
Prepared By: Approved By:
Frances H. Barr George N. Dorn, Jr.
State Budget Analyst State Budget Division
A BILL
TO AMEND TITLE 40, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO PROFESSIONS AND OCCUPATIONS BY
ADDING CHAPTER 68 SO AS TO REGULATE BUSINESSES THAT
OFFER STAFF LEASING SERVICES; AND TO PROVIDE FOR
LICENSING AND DISCIPLINARY ACTION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 40 of the 1976 Code is amended by adding:
"CHAPTER 68
Regulation of Staff Leasing Services
Section 40-68-10. As used in this chapter:
(1) `Applicant' means a business seeking to be licensed under this
chapter or seeking the renewal of a license under this chapter.
(2) `Client company' means a person that contracts with a licensee
and is assigned employees by the licensee under that contract.
(3) `Administrator' means the administrator of the Department of
Consumer Affairs.
(4) `Controlling person' means:
(a) an officer or director of a corporation seeking to offer staff
leasing services, a shareholder holding ten percent or more of the voting
stock of a corporation seeking to offer staff leasing services, or a partner
of a partnership seeking to offer staff leasing services;
(b) an individual who possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of a
company seeking to offer staff leasing services through the ownership
of voting securities, by contract or otherwise, and who is actively
involved in the day-to-day management of the company; or
(c) an individual employed, appointed, or authorized by a
business seeking to offer staff leasing services to enter into a contractual
relationship with a client company on behalf of the business.
(5) `Department' means the South Carolina Department of Consumer
Affairs.
(6) `Licensee' means a person licensed under this chapter to provide
staff leasing services. The term includes a staff leasing services group
licensed under Section 40-68-70.
(7) `Person' means an individual, association, corporation,
partnership, or other private legal entity.
(8) `Staff leasing services' means an arrangement by which
employees of a licensee are assigned to work at a client company and in
which employment responsibilities are shared by the licensee and the
client company. The employee's assignment is intended to be of a
long-term or continuing nature, rather than temporary or seasonal in
nature, and a majority of the work force at a client company worksite or
a specialized group within that work force consists of assigned
employees of the licensee.
(9) `Staff leasing services company' means an individual business
entity that offers staff leasing services.
(10) `Staff leasing services group' means a combination of staff
leasing services companies that operates under a group license issued
under Section 40-68-70.
(11) `Temporary employee' means an employee hired for a temporary
help service.
(12) `Temporary help service' means an arrangement by which an
organization hires its own employees and assigns them to clients to
support or supplement the client's work force in special work situations
such as employee absences, temporary skill shortages, seasonal
workloads, or special assignments and projects.
Section 40-68-20. The department shall adopt regulations necessary
to administer this chapter. Regulations must be adopted in compliance
with the Administrative Procedure Act. A licensee is governed and
controlled by this chapter and the regulations adopted by the department.
Section 40-68-30. (A) A person may not engage in or offer staff
leasing services in this State without holding a license issued under this
chapter. A person that desires a staff leasing services company license
shall file with the department a written application accompanied by an
application fee of one hundred dollars for each controlling person. In
addition, the application fee is two hundred dollars for each staff leasing
services company, and three hundred dollars for each staff leasing
services group.
(B) The department may require an applicant for a license to provide
information and certifications to determine whether the applicant meets
the licensing requirements of this chapter and also whether individuals
affiliated with the applicant are qualified to serve as controlling persons.
(C) An application for a staff leasing services group license under
Section 40-68-70 must provide the information required by this chapter
for each member of the group. An applicant or licensee is ineligible for
a license for one year after the date of final department action on the
denial or revocation of a license applied for or issued under this chapter.
This restriction does not apply to a denial or revocation of a license if
the basis of the action was:
(1) an inadvertent error or omission in the application if that error
or omission is promptly corrected;
(2) the experience documented to the department was insufficient
at the time of the previous application;
(3) the department was unable to complete the criminal
background investigation required under Section 40-68-50 because of
insufficient information received from a local, state, or federal law
enforcement agency; or
(4) that one or more of the controlling persons affiliated with the
applicant or licensee was determined by the department to be unsuitable,
if that unsuitable controlling person has in fact ceased to be a controlling
person of the applicant or license.
Section 40-68-40. (A) To be qualified to serve as a controlling
person of a license under this chapter, a person must be at least eighteen
years of age, be of good moral character, and have educational,
managerial, or business experience relevant to:
(1) operation of a business entity offering staff leasing services;
or
(2) services as a controlling person of a staff leasing services
company.
For the purposes of this section, `good moral character' means a
personal history of honesty, trustworthiness, fairness, a good reputation
for fair dealing, and respect for the rights of others and for the laws of
this State and nation.
(B) The department may conduct a background investigation of each
individual applicant and of each controlling person of each applicant to
determine whether the applicant or controlling person is qualified under
this chapter. The department may deny an application for the issuance
or renewal of a license if it finds that a controlling person is not qualified
under this chapter. The investigation may include:
(1) the submission of fingerprints for processing through
appropriate local, state, and federal law enforcement agencies; and
(2) examination by the department of police or other law
enforcement records maintained by local, state, or federal law
enforcement agencies.
(C) Conviction of a crime does not automatically disqualify a
controlling person, require the revocation of a license, or require the
denial of an application for a new or renewed license.
(D) A licensee shall maintain a registered agent for the service of
process in this State.
(E) An applicant for an original or renewal license must demonstrate
a net worth of at least fifty thousand dollars. The applicant shall
demonstrate the net worth to the department by providing the department
with the applicant's financial statement. The net worth requirement also
may be satisfied through guarantees, letters of credit, or other security
acceptable to the department in a combined total amount of at least fifty
thousand dollars. A guaranty is not acceptable to satisfy this subsection
unless the applicant submits sufficient evidence to satisfy the department
that the guarantor has adequate resources to satisfy the obligations of the
guaranty. For applicants operating a staff leasing services company or
staff leasing services group on or before January 1, 1991, the net worth
requirement will be satisfied by the documentation of a positive net
worth.
(F) A document submitted to establish net worth must reflect the net
worth as of a date not earlier than six months before the date on which
the application is submitted, and must be prepared by a certified public
accountant. Information supplied regarding net worth, is proprietary and
confidential and is exempt from disclosure to third parties.
Section 40-68-50. (A) An applicant for an original or renewal
license shall pay to the department on the issuance of the license or
license renewal a fee. License fees are assessed as follows:
(1) in the first year of the biennium:
(a) two thousand dollars for a resident staff leasing services
company;
(b) four thousand dollars for a resident staff leasing services
group;
(c) two thousand dollars for a nonresident staff leasing services
company. However, if the state of residency of the nonresident leasing
company imposes a greater fee for licensing nonresident applicants, then
the greater fee is assessed. The maximum fee to be charged is five
thousand dollars for a nonresident staff leasing services company;
(d) four thousand dollars for each nonresident staff leasing
services group. However, if the state of residency of the nonresident
staff leasing services group imposes a greater fee for licensing
nonresident applicants, then the greater fee is assessed. The maximum
fee to be charged is ten thousand dollars for each nonresident staff
leasing services group;
(2) in the second year of the biennium:
(a) one thousand dollars for each resident staff leasing services
company;
(b) two thousand dollars for each resident staff leasing services
group;
(c) one thousand dollars for a nonresident staff leasing services
company. However, if the state of residency of the nonresident leasing
company imposes a greater fee for licensing nonresident applicants, then
the greater fee is assessed. The maximum fee to be charged is two
thousand, five hundred dollars for a nonresident staff leasing services
company;
(d) two thousand dollars for each nonresident staff leasing
services group. However, if the state of residency of the nonresident
staff leasing services group imposes a greater fee for licensing
nonresident applicants, then the greater fee is assessed. The maximum
fee to be charged is five thousand dollars for each nonresident staff
leasing services group;
(3) for renewal licenses:
(a) fifteen hundred dollars for a staff licensing services
company;
(b) three thousand dollars for a staff licensing services group;
(c) fifteen hundred dollars for a nonresident staff leasing
services company. However, if the state of residency of the nonresident
leasing company imposes a greater fee for licensing nonresident
applicants, then the greater fee is assessed. The maximum fee to be
charged is three thousand, seven hundred fifty dollars for a nonresident
staff leasing services company;
(d) three thousand dollars for each nonresident staff leasing
services group. However, if the state of residency of the nonresident
staff leasing services group imposes a greater fee for licensing
nonresident applicants, then the greater fee is assessed. The maximum
fee to be charged is seven thousand, five hundred dollars for each
nonresident staff leasing services group.
(B) In addition to the license fee, the department may levy a biannual
assessment for each staff leasing services company and each staff
leasing services group sufficient to cover all costs for regulation of the
profession pursuant to this chapter and other applicable provisions of
law. The annual assessment fee is:
(1) due and payable upon initial licensure and subsequent
renewals and one year before the expiration of any licensure period; and
(2) based on the gross South Carolina payroll, excluding tips and
gratuities, of a staff leasing services company's or staff leasing services
group's clients during the period beginning nine quarters before and
ending one quarter before each assessment;
(3) calculated in accordance with the following table:
Amount of Gross Assessment Fee
South Carolina Payroll Due
less than $500,000 $500
$500,001 - $1,000,000 $750
$1,000,001 - $2,500,000 $1,000
$2,500,001 - $5,000,000 $1,250
$5,000,001 - 10,000,000 $1,750
$10,000,001 - $15,000,000 $2,250
$15,000,001 - $25,000,000 $3,000
$25,000,001 - $50,000,000 $3,750
over $50,000,000 $4,000
(C) In order to ensure compliance with the requirements of
subsection (B), each licensee annually shall submit a statement of total
gross South Carolina payroll, excluding tips and gratuities, along with
copies of all South Carolina Unemployment Compensation tax returns
for the preceding calendar year.
(D) The total licensure fee and biannual assessments during a
licensure period must not exceed:
(1) eight thousand, seven hundred fifty dollars for a staff leasing
services company license; or
(2) ten thousand dollars for a staff leasing services group license
issued under Section 40-68-90 of this chapter.
Section 40-68-60. A licensee shall establish the terms of a staff
leasing services agreement by a written contract between the licensee
and the client company. The licensee shall give written notice of the
agreement as it affects assigned employees to each employee assigned
to a client company.
Section 40-68-70. (A) A contract between a licensee and a client
company must provide that the licensee:
(1) reserves the right of direction and control over employees
assigned to a client.
(2) assumes responsibility for the payment of wages to the
assigned employees without regard to payments by the client to the
licensee;
(3) assumes responsibility for the payment of payroll taxes and
collection of taxes from payroll on assigned employees;
(4) retains the right to hire, fire, discipline, and reassign the
assigned employees; and
(5) retains the right of direction and control over the adoption of
employment and safety policies and the management of worker's
compensation claims, claim filings, and related procedures.
(B) The licensee is the employer of the employees assigned to a
client company. This chapter does not affect the rights, duties, or
liabilities of licensees, client companies, or employees under federal law.
Section 40-68-80. A group of at least two but not more than five
staff leasing services companies that are majority-owned by the same
entity may be licensed as a staff leasing services group. A staff leasing
services group may satisfy the reporting and financial requirements of
the chapter on a consolidated basis. As a condition of the issuance of a
staff leasing services group license, each person that is a member of the
group must guarantee payment of all financial obligations of other
members of the group.
Section 40-68-90. (A) The department may issue a restricted
license to a nonresident staff leasing services company or staff leasing
services group for limited operation within this State under the following
conditions if the:
(1) applicant's state of residence provides for licensing of staff
leasing services companies, the applicant is licensed and in good
standing in its state of residence, and the applicant's state of residence
grants a similar privilege for restricted licensing to staff leasing services
companies or staff leasing services groups that are residents in South
Carolina;
(2) applicant does not maintain an office, sales force, or
representatives in this State, and it does not solicit clients that are
residents in this State; and
(3) applicant does not have more than forty leased employees
working in this State.
(B) An applicant for a restricted license is exempt from the
requirements of Section 40-68-40(C) and (F).
(C) An applicant for a nonresident or restricted license shall file, on
a form approved by the department an appointment of a recognized and
approved entity as its attorney to receive service of legal process issued
against it in this State.
Section 40-68-100. The department shall issue a license to an
applicant that meets the requirements of this chapter. The license must
be issued not later than the ninetieth day after the date on which the
completed application is filed with the department. A license issued by
the department under this chapter is valid for two years. The department
shall renew a license on receipt of a renewal application approved by the
department and payment of the required renewal fees.
Section 40-68-110. (A) A licensee shall disclose to the department,
each client company, and its assigned employees, information relating
to any insurance or benefit plan provided for the benefit of its assigned
employees. The information must include:
(1) the type of coverage;
(2) the identity of each insurer for each type of coverage;
(3) the amount of benefits provided for each type of coverage and
to whom or on whose behalf benefits are to be paid;
(4) the policy limits on each insurance policy; and
(5) whether the coverage is fully insured, partially insured, or
fully self-funded.
(B) The administrator by regulation may require the filing by
licensees of other reports necessary to the implementation of this
chapter.
Section 40-68-120. (A) A licensee may elect to obtain workers'
compensation insurance coverage in the same manner as any other
employer. If coverage is obtained, that insurance must comply with the
applicable provisions of the insurance laws of this State. A licensee is
entitled to the same rights to obtain all types of insurance coverage,
including endorsements, as may be obtained by other business entities
doing business in this State.
For companies who have obtained workers' compensation insurance
coverage in the residual (assigned risk) market, the first two years that
a client company has a contract with a licensee, the licensee shall pay
workers' compensation insurance premiums based on the experience
modification rate of the client company. The South Carolina Department
of Insurance shall adopt regulations to implement this subsection.
This section does not apply to licensees who have obtained workers'
compensation insurance outside of the residual (assigned risk) market.
(B) A licensee may sponsor and maintain employee benefit plans for
the benefit of assigned employees. The employee benefit plans must
comply with the applicable provisions of the insurance laws of this
State. A client company may include assigned employees in any benefit
plan sponsored by the client company. However, no licensee may
sponsor and maintain a plan of self-insurance for health benefits after
January 1, 1994.
(C) A staff leasing services company or staff leasing services group
is responsible for the payment of unemployment taxes pursuant to law.
(D) Licensees shall promptly notify the South Carolina Workers'
Compensation Commission, the South Carolina Employment Security
Commission, and the South Carolina Department of Insurance of the
start and the termination of the licensee's relationship with a client
company.
Section 40-68-130. (A) The department by regulation shall determine
the form and content of:
(1) the licenses issued under this chapter; and
(2) notices required to be posted under this section.
(B) The license issued under this chapter must be posted in a
conspicuous place in the principal place of business in this State of the
licensee. The licensee shall display, in a place that is in clear and
unobstructed public view, a notice stating that the business operated at
the location is licensed and regulated by the department and that any
questions or complaints should be directed to the department.
Section 40-68-140. (A) A licensee may not conduct business under
a name other than that specified in the license. A license issued under
this chapter is not assignable. A licensee may not conduct business
under any fictitious or assumed name without prior written authorization
from the department. The department may not authorize the use of a
name that is so similar to that of a public office or agency or to that of
another licensee that the public may be confused or misled by its use. A
licensee may not conduct business under more than one name unless it
has obtained a separate license for each name.
(B) A licensee may change its licensed name at any time by
notifying the department and paying a fee for each change of name. The
department by regulation shall set the fee for each name change in an
amount not to exceed fifty dollars. A licensee may change its name on
renewal of the license without the payment of the name change fee.
(C) A licensee must notify the department in writing of:
(1) a change in the location of its primary business office;
(2) the addition of more business offices; or
(3) a change in the location of business records maintained by the
licensee.
Section 40-68-150. (A) A person may not:
(1) engage in staff leasing services without holding a license
under this chapter as a staff leasing services company or a staff leasing
services group;
(2) use the name or title `staff leasing services company',
`licensed staff leasing services company', `licensed staff leasing services
group', or `staff leasing services group', or otherwise represent that it is
licensed under this chapter, unless the entity holds a license issued under
this chapter;
(3) represent as the person's own the license of another person or
represent that a person is licensed if the person does not hold a license;
(4) give false or forged evidence to the department in connection
with obtaining or renewing a license or in connection with disciplinary
proceeding under this chapter: or
(5) use or attempt to use a license which has expired or been
revoked.
(B) A person who wilfully and voluntarily violates the provisions of
this section is guilty of a misdemeanor and, upon conviction, must be
imprisoned not more than one year or fined not more than fifty thousand
dollars, or both.
Section 40-68-160. (A) For the purposes of this section, `conviction'
includes a plea of guilty or nolo contendere or a finding of guilt.
Disciplinary action may be taken against a licensee by the department
on any of the following grounds:
(1) the conviction of a licensee or a controlling person of a
licensee of bribery, fraud, or intentional or material misrepresentation in
obtaining, attempting to obtain, or renewing a license;
(2) the conviction of a licensee or a controlling person of a
licensee of a crime that relates to the operation of a staff leasing service
or the ability of the licensee or a controlling person of a licensee to
operate a staff leasing service;
(3) the conviction of a licensee or a controlling person of a
licensee of a crime that relates to the classification, misclassification, or
under-reporting of employees under the South Carolina Workers'
Compensation Act;
(4) the conviction of a licensee or a controlling person of a
licensee of a crime that relates to the establishment or maintenance of a
self-insurance program, whether health insurance, workers'
compensation insurance, or other insurance;
(5) the conviction of a licensee or a controlling person of a
licensee of a crime that relates to fraud, deceit, or misconduct in the
operation of a staff leasing service;
(6) engaging in staff leasing services without a license;
(7) transferring or attempting to transfer a license issued under
this chapter;
(8) violating this chapter or any order or regulation issued by the
department under this chapter;
(9) failing to notify the department, in writing, of the felony
conviction of a controlling person not later than the thirtieth day after the
date on which that conviction is final;
(10) failing to cooperate with an investigation, examination, or
audit of the licensee's records conducted by the licensee's insurance
company or its designee, as provided by the insurance contract or as
authorized by law by the South Carolina Department of Insurance;
(11) failing to notify the department and the South Carolina
Department of Insurance not later than the thirtieth day after the
effective date of a change in ownership, principal business address, or
the address of accounts and records;
(12) failing to correct a tax filing or payment deficiencies within
a reasonable time as determined by the department;
(13) refusing, after reasonable notice, to meet reasonable health
and safety requirements within the licensee's control and made known
to the licensee by a federal or state agency;
(14) failing to correct a delinquency in the payment of the
licensee's insurance premiums within a reasonable time;
(15) failing to correct a delinquency in the payment of an employee
benefit plan premiums or contributions within a reasonable time; or
(16) knowingly making a material misrepresentation to an
insurance company, to the department, or other governmental agency.
(B) Upon finding that a licensee has violated one or more provisions
of this section, the department may:
(1) deny an application for a license;
(2) revoke, restrict, or refuse to renew a license:
(3) may impose an administrative penalty in an amount not less
than one thousand dollars for each violation, but not more than fifty
thousand dollars;
(4) issue a reprimand; or
(5) place the licensee on probation for the period and subject to
conditions that the department specifies.
(C) On revocation of a license, the licensee immediately shall return
the revoked license to the department.
(D) Disciplinary action, a denial of an application for a new or
renewal license or a revocation of a license, or a determination that a
controlling person is unqualified may occur subject to the
Administrative Procedures Act, with notice to, and an opportunity for a
hearing by, the affected applicant, licensee, or controlling person.
(E) If a license is revoked or renewal is denied, the affected licensee
may request a reinstatement hearing after a minimum of one year. The
department may reinstate or renew the license only if the cause of the
nonrenewal or revocation has been corrected.
Section 40-68-170. All fees collected by the department under this
chapter must be used to implement its provisions.
Section 40-68-180. This chapter does not exempt a client of a
licensee or an assigned employee from any other license requirements
imposed under local, state, or federal law. An employee who is licensed,
registered, or certified under law and who is assigned to a client
company is an employee of the client company for the purpose of that
license, registration, or certification, but otherwise remains the employee
of the licensee as provided in this chapter. Nothing in this chapter
affects the South Carolina Employment Security Law (Sections
41-27-10 through 41-41-50)."
SECTION 2. This act takes effect upon approval by the Governor.
However, a person is not required to hold a license under this act to
provide staff leasing services until September 30, 1993. The first
licensing period under this act runs from September 30, 1993 until
September 30, 1995, and thereafter each biennium shall end on
September 30 of every odd-numbered year.
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