SECTION 1.
AUTHOIUTY
This Rule and Regulation is promulgated and adopted by the
Insurance Commissioner for the State of Arkansas ("Commissioner") pursuant to
the authority vested in the Commissioner by Section 3 of Act 1143 of 1991,
codified as Arkansas Code Annotated §§ 23-92-301, et seq., by Acts
652 and 1155 of 1993, by Section 47 of Act 901 of 1993, amending Arkansas Code
Annotated §§ 23-63-309, and by Arkansas Code Annotated §§
23-61-108 and
25-15-201, et
seq.
SECTION 2. PURPOSE
The purpose of this Rule and Regulation is to establish
procedures for licensing of employee leasing firms and employee leasing firm
groups and to establish minimum standards which employee leasing firms and
employee leasing firm groups must meet in conducting business in this
State.
SECTION 3. EFFECTIVE
DATE: DECEMBER 31, 1998
Pursuant to the Commissioner's authority under Ark. Code Ann.
§
23-61-108,
§§
25-15-201, et
seq., as amended by Act 1106 of 1993, Act 652 of 1993, Act 901 of 1993, and
otlier applicable laws and rules, the effective date of this Rule and
Regulation is December 31, 1998, upon filing with the Arkansas Secretary of
State and the Arkansas State Library.
SECTION 4. DEFINITIONS
A. "Commissioner" shall mean the Insurance
Commissioner for the State of Arkansas.
B. "Person" shall mean an individual, an
association, a company, a firm, a partnership or a corporation.
C. "Client" shall mean a person who obtains
all or part of its work force or human labor or services from another person
through an employee leasing arrangement.
D. "Employee Leasing Firm" shall mean any
person engaged in providing services of employees pursuant to one or more
employee leasing arrangements.
E.
"Employee Leasing Firm Group" shall mean at least two (2), but no more than
five (5) corporate employee leasing firms each of which are majority owned by
the same controlling person, or ultimate parent.
F. "Controlling Person" shall mean:
1) An officer or director of a corporation
seeking to offer employee leasing services, a shareholder holding ten (10)
percent or more of the voting stock of a corporation seeking to offer employee
leasing services, or a partner of a partnership seeking to offer employee
leasing services; or
2) 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
employee leasing services through the ownership of voting securities, by
contract or otherwise.
G. "Employee Leasing Arrangement" shall mean
an arrangement or agreement, under written contract or otherwise, whereby:
1) an employee leasing firm assigns or
purports to assign human beings, or the labor or services of human beings, to
clients, for whom the human beings either do perform or are expected to perform
such labor or services;
2) the
arrangement is intended to be, or is, on-going rather than temporary in nature;
and
3) common law employment rights
and responsibilities relative to the "assigned" human being, including the
employer's right of direction and control of the "employee" as to the method
and manner of doing the work, are shared by the employee leasing firm and the
client.
Although it is not always necessarily true, it is generally true
that in an "employee leasing arrangement" the initial source of the workforce
that is to be leased or assigned to the "client" is the existing workforce of
the client.
The term "employee leasing arrangement" is to be liberally
construed so as to include any and all of such arrangements meeting the
criteria herein above set forth, by whatever term known, by which the right to
utilize the labor or services of human beings in a productive capacity is
assigned or transferred from one person or entity to another. The employer's
right of direction and control of the "employee" is deemed to be "shared" by
the employee leasing firm and the client whenever:
(i) the arrangement, agreement or contract
between the client and the employee leasing firm expressly so states; or
(ii) a substantive analysis of the
client's manufacturing, service or business process reveals that, in fact, the
client, or someone acting on his behalf and in his interest, exercises some
degree of control over the "employees" as to the method and manner of the work
performed.
H.
"Temporary Employee" shall mean a person employed either through another person
or directly by an employer to support or supplement the existing work force in
special situations such as employee absences, and temporary skill shortages,
seasonal workloads, and special assignments and projects with the expectation
that the person's position will be terminated upon the completion of the task
or function. Again, although it is not always true, it is generally true that
the initial source of the workforce leased or assigned to a client to fill a
"temporary" position is the temporary leasing agency or company and not the
client. A particular relationship between a leasing entity, the worker
providing the services, and the client employer will be deemed to be
"temporary" when the position or job (not necessarily the worker or series of
workers) is genuinely anticipated to exist only so long as the special
situation or project continues. The relationship between these entities or
persons shall not be considered "temporary" when the position or job is a
regular, ongoing part of the employer's regular manufacturing or service
process - regardless of how many different workers may be supplied by a third
party over time to fill that job or position. Contracting for services to be
performed by temporary employees shall not be considered the making of employee
leasing arrangements. In administering this Rule and Regulation there shall be
a rebuttable presumption that when:
(i) the
putative temporary employment has continued beyond the "special situation"
which served as its genesis or reason for being; or
(ii) the majority of the workers or employees
providing services to a particular client during the course of any calendar
year at any particular work site or job site are, in fact, provided to the
employer by a third party or parties and are not considered or treated as
regular full time "employees" by the client, such are not "temporary"
employment relationships, but, rather, are "employee leasing
arrangements."
I.
"Independent Contractor" shall mean a person who, exercising an independent
employment or engaging in an independent business enterprise, contracts with
another person to do a piece of work according to the person's own methods, and
without being subject to the other person's control, except as to the result of
the work. Contracting for services to be performed by independent contractors
shall not be considered the making of employee leasing arrangements.
SECTION 5. EXEMPTIONS
This Rule and Regulation shall not apply to a labor organization
or to any political subdivision of this State or the United States or to any
programs or agencies thereof Further, this Rule and Regulation shall not apply
to "temporary" employment relationships as herein defined, nor to contracts
between employers and "independent contractors" as herein above defined.
SECTION 6. LICENSE REQUIRED
Any person who shall engage in the business of or act as an
employee leasing firm or employee leasing firm group without first procuring a
license, or who otherwise violates the provisions of Section 3 of Act 1143 of
1991 or of this Rule and Regulation may be penalized as provided in Section 16
of this Rule and Regulation.
SECTION
7. APPLICATION FOR INITIAL LICENSE
Every applicant for an initial employee leasing firm or employee
leasing firm group license shall file with the Commissioner a completed
application on a form prescribed and furnished by the Commissioner
A. RESIDENT EMPLOYEE LEASING FIRMS.
Applicants for license as a resident employee leasing firm shall meet the
following minimum standards:
1) If an
individual, the applicant shall be a resident of this State and shall have real
ahed the age of majority.
2) If a
partnership, the applicant shall state the names and home addresses of all
partners and indicate whether each partner is a general or a limited partner.
The applicant shall include a copy of the Partnership Agreement, or an
affidavit signed by all partners to the effect that no written partnership
agreement exists. If a limited partnership, the partnership must also produce
and file a certified copy of its "Certificate of Limited Partnership" obtained
through the procedure at Ark. Code § 4-43-201, et seq.
3) If a corporation, the applicant shall
state the names and home addresses of ail officers, directors, and of the legal
or equitable owners often percent (10%) or more of any class of the stock of
the corporation. The applicant shall include a certified copy of its Articles
of Incorporation filed with the Secretary of State of Arkansas and proof that
its most recent annual corporate franchise tax has been paid to the Secretary
of State of Arkansas.
4) The
applicant shall state the address of its principal place of business in this
State and the address(es) of any other office(s) within this State through
which the applicant intends to conduct business as an employee leasing
firm.
5) The applicant shall
include a current list of Arkansas clients with whom the applicant has, if any,
employee leasing arrangements.
6)
The applicant shall provide such other information which the Commissioner deems
necessary to show that the applicant or the controlling persons thereof is/are
of good moral character, business integrity and financial
responsibility.
B.
NON-RESIDENT EMPLOYEE LEASING FIRMS. The Commissioner may license as a
nonresident employee leasing firm an individual, partnership or corporation
which is domiciled in another state but which, nonetheless, maintains or plans
to maintain a "substantial presence" within this State. All of such
non-resident applicants must otherwise be qualified under Section 3 of Act 1143
of 1991 and this Rule and Regulation. An employee leasing firm shall be deemed
to have a "substantial presence" within this State so as to require licensure
if:
(i) it maintains any office or business
location within this State;
(ii)
it undertakes any marketing efforts in this State, or
(iii) it has one hundred (100) or more
"employees" who are domiciled within this State.
Each non-resident employee leasing firm applying for licensure
shall file an appointment, on a form provided, of the Commissioner and his
successors in office as its attorney to receive service of legal process issued
against it in this State.
If any non-resident employee leasing firm has a substantial
presence within this State but has not complied with the requirements of
Section 3 of Act 1143 of 1991 and this Rule and Regulation, the penalty
provisions of Section 16 hereof shall apply and may be enforced by the
Commissioner.
C.
"RESTRICTED" LICENSURE AND LICENSES BY RECIPROCITY.
1) Restricted License. Any non-resident
employee leasing firm or employee leasing firm group which has any presence
within this State not rising to the level of "substantial presence" as herein
above set forth shall, nonetheless, apply for a "Restricted License"; provided,
however, that if such nonresident employee leasing firm or employee leasing
group is licensed as a resident or domestic leasing firm or group under the
laws of another state, if such laws of such other state are, in the reasonable
opinion of the Commissioner, deemed substantially similar to the laws of this
State with respect to costs and, also, the determination of "substantial
presence," such applicant shall be subject to each of the requirements of
Section 3 of Act 1143 of 1991 and this Rule and Regulation except for the
financial assurances required by:
(i) Section
8 of this Rule and Regulation, and
(ii) Ark. Code Ann. § 23-92-307 as
enacted by Section 3 of Act 1143 of 1991.
2) Reciprocal Licenses. Any employee leasing
firm licensed as a resident employee leasing firm or employee leasing firm
group under the laws of another State shall, if such laws be deemed by the
Commissioner to be substantially similar to those of this State and if under
the laws of the State of the firm's state of resident licensure a similar
privilege is granted to such firms whose resident licensure is within this
State, be entitled to the issuance of a "Non-Resident Reciprocal License" upon
completing application and appointment of the Commissioner as agent for service
of process issued within this State.
Such firms shall be subject to all of the provisions of Section 3
of Act 1143 of 1991 and this Rule and Regulation.
D. EMPLOYEE LEASING FIRM GROUPS. The
Commissioner may, in his reasonable discretion,
issue a single resident or non-resident license to any employee
leasing firm group comprised of at least two but not more than five employee
leasing firms that are corporations if each of same is owned and controlled by
the same ultimate controlling person. An employee leasing group may, on behalf
of each of its members, satisfy the reporting and financial assurance
requirements of Section 3 of Act 1143 of 1991 on a consolidated basis. The
ultimate controlling person shall complete the application and shall include a
copy of the Articles of Incorporation for each employee leasing firm within the
group. Further, the information required in Subdivision (A)(2) and (A)(3) of
this Section shall be included as to the controlling person if such is a
partnership or corporation. The applicant shall also include a guarantee, on a
form approved by the Commissioner, executed by each employee leasing firm
within the group guaranteeing payment of all financial obligations with respect
to wages, employment taxes and employee benefits of each other member within
the group.
each employee leasing firm group shall be subject to a single
license fee as required by Arkansas Code Annotated § 23-93-309 and by
Section 12 hereof Multiple or "duplicate" copies of the license may be made
available to the individual corporate employee leasing firms for a reasonable
administrative charge to be set by the Commissioner.
D. Notice of Licensure. Upon the issuance or
renewal of any employee leasing firm or employee leasing group license, the
Commissioner shall immediately notify:
1) The
licensee;
2) The Employment
Security Department of the State of Arkansas;
3) The Arkansas Workers Compensation
Commission;
4) The Plan
Administrator or Plan Administrators of the Workers Compensation Insurance
Plan; and
5) The Secretary of State
for the State of Arkansas.
SECTION 8. FINANCIAL ASSURANCES
A. In addition to the requirements of Section
7 of this Rule and Regulation, every applicant for licensure as a resident or
non-resident employee leasing firm or employee leasing firm group (other than
for "restricted" licensure as set out above) shall, as a condition of
eligibility for such license, provide financial assurances under one or more of
the methods set out herein.
1) The applicant
may post a surety bond issued by an unaffiliated corporate surety authorized to
do business in this State in an amount not less than One Hundred Thousand
Dollars ($100,000), the terms and conditions of which shall be approved by the
Commissioner. The bond shall:
a) be
conditioned that the licensee, and any person as an agent of the licensee, will
not violate the provisions of Section 3 of Act 1143 of 1991, of this Rule and
Regulation, of any orders lawfully issued by the Commissioner or fail to pay
any wages due under any contract made by the licensee in the conduct of its
business under its license; and b) secure the performance of the licensee's
responsibility to its leased employees for payment of wages.
2) In lieu of posting a surety
bond, the applicant may deposit cash or an irrevocable letter of credit (in a
form approved by the Commissioner) from a National Banking Association not
affiliated with applicant and approved by the Commissioner in the sum of One
Hundred Thousand Dollars ($100,000); further, the applicant may make deposit of
securities with a market value as determined by the Commissioner of not less
than One Hundred Thousand Dollars ($100,000) and make additional deposits of
securities as may be required to maintain such market value. The applicant
shall assign said securities to the Commissioner on a form approved by the
Commissioner and execute such other documents in connection with the deposit as
the Commissioner shall prescribe.
3) In lieu of posting a surety bond or
depositing cash, cash equivalent or securities, the applicant may file with the
Commissioner an audited financial statement prepared in accordance with
generally accepted accounting principles by an independent certified public
accountant.
a) The audited financial
statement shall be prepared as of a date within six (6) months prior to the
date of application.
b) The audited
financial statement shall show a true minimum net worth for the applicant,
subject to concurrence by the Commissioner, of not less than One Hundred
Thousand Dollars ($100,000).
c)
During the term of its license, the licensee shall continue to file with the
Commissioner an interim financial statement on a calendar semi-annual basis,
prepared by a certified public accountant in accordance with generally accepted
accounting principles as of a date within three (3) months prior to the end of
the filing period. These interim financial statements (which need not be
audited) shall show a true minimum net worth as set out above and shall be
received by the Commissioner within fifteen (15) days of the end of the
semi-annual period.
B. In addition to the requirements of Section
7 of this Rule and Regulation, every applicant for a Reciprocal License shall
as a condition of eligibility file or deposit with the Commissioner such
"substantially similar" financial assurances as required by the applicant's
state of domicile. If such financial assurances include the filing of a
financial statement and if the applicant has chosen to comply in that fashion,
such statement shall be an audited financial statement prepared in accordance
with generally accepted accounting principles by an independent certified
public accountant.
1) The financial statement
shall be prepared as of a date within six (6) months prior to the date of the
application.
2) The financial
statement shall show a true minimum net worth for the applicant of not less
than the sum required by the laws of the applicant's state of
domicile.
3) During the term of its
license, the licensee shall continue to file with the Commissioner audited
financial statements on an annual basis and with its annual application for
renewal, prepared as of a date within six (6) months priorto the end of the
filing period.
C. Any
licensee providing any type of financial assurance as set forth in Subsections
(A) or (B) above who fails to maintain the financial assurance in the
prescribed amount and with the degree of fiscal integrity and reliability
reasonably satisfactory to the Commissioner shall not be renewed, or in the
alternative, if the deficiencies become known to the Commissioner during the
term of the license, the licensee shall, within thirty (30) days of receipt of
notice, provide financial assurances as set out in Subsection (A) of this
Section, or be subject to the penalties set out in Sections 9(C) and 16 of this
Rule and Regulation.
SECTION
9 ACTION AGAINST BOND OR SECURITIES
A. If any person shall be aggrieved by the
misconduct of any licensee, that person may maintain an action in his own name
upon the bond of the licensee (if there be one) in any court of competent
jurisdiction or in the Circuit Court of Pulaski County, Arkansas. Such an
action shall not be exclusive of any other remedy available to the aggrieved
person. Alternatively, the Commissioner may maintain such an action in the name
of the State for the benefit of the aggrieved person.
1) The aggrieved person may assign the claim,
and the assignee shall be entitled to any remedies available to the aggrieved
person.
2) An assigned claim may be
enforced in the name of the assignee.
B. If any person obtains an unsuperseded
judgment in its favor against a licensee maintaining a deposit of securities,
cash, or cash equivalent, and the licensee does not promptly pay the judgment,
the Commissioner shall upon receipt of a certified copy of the final judgment:
1) Notify the licensee by certified mail to
pay the judgment within thirty (30) days of receipt of the notice;
and
2) pay from the cash deposit or
draw upon a letter of credit or sell at public or private sale an amount of
securities sufficient to pay the judgment, if the judgment is not paid by the
licensee within the thirty (30) day period.
C. A licensee shall have thirty (30) days
after receiving notice of cancellation of its bond or notice that the cash,
letter of credit or securities have been drawn upon, to replace or supplement
its bond, cash, letter of credit or sold securities. Failure of the licensee to
so replace shall result in summary suspension of its license, which suspension
shall continue until replacement of the bond or sold securities. A licensee so
suspended shall not carry on the business of an employee leasing firm while
suspended.
D. When any licensee,
regardless of the form of Financial Assurance provided, does not promptly pay
an unsuperseded judgment against it, the Commissioner shall provide to the
licensee, a notice in writing requiring that the licensee, within thirty (30)
days of receipt of notice, shall either pay the judgment in full or post
supersedeas satisfactory to the Court issuing the judgment. Failure of the
licensee to pay or post shall result in summary suspension of its license,
which suspension shall continue until the judgment is reversed, superseded or
paid. A licensee so suspended shall not carry on the business of an employee
leasing firm while suspended.
SECTION
10. REJECTION OF APPLICATION FOR LICENSE
A. The Commissioner, or his authorized
representative, shall reject an application for license:
1) where the application is not fully
completed, properly executed or is otherwise deficient on its face;
2) where documents required to supplement the
application are not included in the application packet;
3) where any fee required by Section 12 is
not submitted or is incorrectly submitted with the application
packet;
4) where the applicant has
had an employee leasing firm or employee leasing firm group license revoked in
this or any other state, unless such revocation has subsequently been rescinded
or otherv/ise suspended and the problems remedied to the reasonable
satisfaction of the Commissioner;
5) where the applicant, or any person named
in the application, has made a material misrepresentation in the application;
or
6) upon finding that any person
named in the application, any controlling person, or any person in a management
or policy-making position with any applicant, is not of good moral character,
business integrity or financial responsibility, or that there is good and
sufficient reason within the meaning and purpose of this Rule and Regulation or
of Section 3 of Act 1143 of 1991 to reject the application.
B. The Commissioner or his
authorized representative shall furnish the applicant with a written statement
of the reason(s) for rejecting or revoking the application. The applicant may
request a hearing before the Commissioner within thirty (30) days of receipt of
the written statement. The hearing and further appeal shall proceed as provided
in Arkansas Code Annotated §§
23-61-301,
et. seq.
SECTION 11.
RENEWAL OF LICENSE
A. Any license issued
hereunder shall remain in force, unless revoked, for one (1) year from the date
of issue of license.
B. At least
thirty (30) days prior to the expiration of its license, the licensee shall
submit an application for renewal of license on a form and with such
supplemental material as may be prescribed by the Commissioner, Late renewal
applications may possibly not be processed prior to the expiration of the
licensee's current license, thereby resulting in a time period of unlicensed
activity. Those engaged in such unlicensed activity shall be subject to the
penalties set out in Section 16 of this Rule and Regulation.
C. An application for renewal of license
shall be rejected by the Commissioner, or his authorized representative, upon
any ground set out in Subsection (A) of Section 10. The rejected applicant
shall have the procedures of Subsection (B) of Section 10 available to review
the rejection.
SECTION
12. FEES AND LICENSES
A. The
nonrefundable fees for initial and renewal licenses of resident, nonresident,
and reciprocal employee leasing firms or employee leasing firm groups shall be
Five Hundred Dollars ($500).
B. The
nonrefundable fee for initial and renewal licenses of restricted non-resident
employee leasing firms or employee leasing groups shall be Fifty Dollars
($50).
C.
Duplicate copies of employee leasing firm or group licenses shall be Ten
Dollars ($10).
SECTION
13. SUSPENSION OR REVOCATION OF LICENSE
A. In addition to imposition of the penalties
set out in Section 16 of this Rule and Regulation, the Commissioner may suspend
for up to twelve (12) months, or may revoke or refuse to renew any license
issued hereunder, if, after notice to the licensee of the charges against it
and after hearing the Commissioner finds anyone or more of the following causes
exist;
1) Any cause for which issuance of the
license could have been refused had it then existed and been known to the
Commissioner;
2) Violation of or
noncompliance with any applicable provision of Section 3 of Act 1143 of 1991,
such provisions of titles 11 and 23 of the Arkansas Code which may be
applicable, or of this Rule and Regulation or of any order of the
Commissioner;
3) Violation of or
noncompliance with requirements set forth by Arkansas Employment Security
Division, Arkansas Workers' Compensation Commission or Arkansas Secretary of
State's Office and upon request by any such entity for an administrative
hearing by the Arkansas Insurance Department for determination of cause for
revocation;
4) Obtaining or
attempting to obtain any license through misrepresentation or fraud;
5) Conviction of the licensee, a controlling
person, or any person with material management and policy-making authority with
the licensee, of a felony;
6) If in
the conduct of business under the license, the licensee violates the provisions
of Section 14 or Section 15 of this Rule and Regulation; or
7) Failure to provide a complete and truthful
written response to a written inquiry from the Commissioner or his authorized
representative within thirty (30) days after receipt of the inquiry.
B. The license of a partnership or
corporate employee leasing firm or employee leasing firm group may be
suspended, revoked, or not renewed for any of the causes set out in Subsection
(A) of this Section if such cause relates to any individual designated in the
license or who otherwise exercises management or policy-making authority for
the partnership or corporation.
C.
Upon suspension or revocation of license, the Commissioner shall immediately
notify:
1) The licensee, by mail addressed to
the licensee at its address last of record with the Commissioner, who may
appeal the decision of the Commissioner, which appeal shall proceed as provided
in Arkansas Code Annotated §
23-61-307;
2) Each client of the licensee, either by
mail or by publication of notice in a newspaper with state-wide
circulation;
3) The Employment
Security Department of the State of Arkansas;
4) The Office of the Attorney General of the
State of Arkansas;
5) The Arkansas
Workers' Compensation Commission; and
6) The Secretary of State for the State of
Arkansas.
D. The
Commissioner shall not again issue any license provided for in this Rule and
Regulation to any employee leasing firm or employee leasing firm group whose
license has been revoked for a minimum period of one year. The Commissioner may
upon conducting a reinstatement hearing at the request of the former licensee,
reinstate the license only if the cause of the revocation has been corrected to
the reasonable satisfaction of the Commissioner.
SECTION 14. DECEPTIVE PRACTICES; PROHlBITED
ACTS
The following act and omissions are deemed to constitute
deceptive practices and are prohibited acts of employee leasing firms and
employee leasing groups:
A. Making,
issuing, circulating, or causing to be made, issued or circulated, any
estimate, illustration, circular, statement, sales presentation, omission, or
comparison which misrepresents the benefits, advantages, conditions, or terms
of any employee leasing arrangement; or the licensing status of the firm or
group under this Rule and Regulation;
B. Making, publishing, disseminating,
circulating, or placing before the public or causing, directly or indirectly,
to be made, published, disseminated, circulated, or placed before the public in
a newspaper, magazine, or other publication or in the form of a notice,
circular, pamphlet, letter, or poster or over any radio or television station
or in any other way an advertisement, announcement, or statement containing any
assertion, representation, or statement with respect to the business of
employee leasing or with respect to any person in the conduct of its employee
leasing business which is untrue, deceptive, or misleading;
C. Making, publishing, disseminating, or
circulating, directly or indirectly, or aiding, abetting, or encouraging the
making, publishing, disseminating, or circulating of any oral or written
statement or of any pamphlet, circular, article, or literature which is false
or maliciously critical of or derogatory to the financial condition of any
person and which is calculated to injure that person;
D. Entering into any agreement to commit or,
by an concerted action, committing any act of boycott, coercion, or
intimidation resulting in or tending to result in unreasonable restraint of, or
monopoly in, the business of employee leasing;
E. Filing with any supervisory or other
public official or making, publishing, disseminating, circulating, or
delivering to any person, or placing before the public or causing, directly or
indirectly, to be made, published, disseminated, circulated, delivered to any
person, or placed before the public any false statement of financial condition
of a person with intent to deceive;
F. Knowingly making any false entry of a
material fact in any book, report, or statement of any person or knowingly
omitting to make a true entry of any material fact pertaining to the business
of the person in any book, report, or statement of that person;
G. Engaging in any act or omission which
discriminates against any person on the basis of race, color, sex, age,
religion, or national origin;
H.
Permitting to be used or using, permitting to be filed or filing any name,
trade name, fictitious name, or business identity which is the same as, similar
to, or may be confused with the name, trade name, fictitious name, or business
identity of an existing licensee, any governmental agency, or any nonprofit
organization;
I. Using or
permitting to be used in the marketing soliciting, selling, negotiating, or
contracting of employee leasing arrangements the fact that any person has made
financial assurances hereunder;
J.
Engaging in any practice designed to conceal or obstruct or which has the
effect of concealing or obstructing the determination by the Commissioner, by
the Workers Compensation Commission, by any workers compensation insurer or by
any workers compensation plan administrator of:
(i) the identity and business location(s) of
the client;
(ii) the appropriate
risk classification of the client company's business and the workplace exposure
of the "shared" employees;
(iii)
that client's actual experience modifier; or
(iv) the client's actual payroll for the
leased or shared employees.
K. Entering into or maintaining any employee
leasing arrangement by which fewer than all of the employees performing labor
or services for the client are, in fact, leased to the client, as required by
the mandate of Ark. Code §
11-9-408(c),
as amended by Act 796 of 1993, that there be no split coverages. This provision
is not intended to prohibit issuance to clients of employee leasing firms or
employee leasing firm groups of separate "if any" policies of workers
compensation insurance designed to cover the client for the risks posed by
possibly uninsured subcontractors.
L. Any other practice not specifically
defined herein which the Commissioner, after notice and hearing, determines to
be a deceptive practice.
SECTION
15. RESPONSIBILITIES OF LICENSEES
A. A licensed employee leasing firm or
employee leasing firm group shall be deemed an employer of its leased employees
and shall at a minimum perform the following employer responsibilities:
1) Pay wages and collect, report and pay
employment taxes from its own accounts;
2) Pay unemployment taxes as required by
Arkansas and Federal law;
3) Ensure
that all of its leased employees are covered by workers' compensation insurance
through a policy or plan maintained by the employee leasing firm, employee
leasing firm group or the client; that each client be properly and completely
identified to the insurer and noted on the policy of insurance, or be tendered
its own policy of insurance, and that all rules and filings of the insurer or
of the Workers Compensation Insurance Plan be followed so as to insure that the
premium collected and remitted is commensurate with the workplace risk faced by
the leased employees;
4) If
approved as a self-insurer by the Workers Compensation Commission under the
terms of Ark. Code Ann. §
11-9-404,
report all compensable injuries to the Arkansas Workers Compensation Insurance
Plan Administrator in such a manner as to identify the "client" company for
whom the injured employee was performing the labor or services; if written by
either a voluntary writer of workers compensation insurance or another workers
compensation carrier under the Workers Compensation Insurance Plan, all
compensable injuries shall be reported to the insurer and to the Arkansas
Workers Compensation Insurance Plan Administrator in the same manner; such
reporting shall be done on a regular, periodic basis as shall be required by
the procedures of the said Plan Administrator;
5) Be entitled with the client as joint
employer to exclusivity of remedy under workers' compensation and employers'
liability provisions of a policy or plan that either has secured; and
6) Sponsor and maintain employee benefit and
welfare plans for its leased employees.
B. A licensed employee leasing firm or
employee leasing group shall also perform the following general
responsibilities as a licensee:
1) Inform
every employee in writing of the nature of the "shared" employment relationship
with the licensee;
2) For licensees
with a substantial presence (not applicable to licensees with a "restricted"
license), submit to the Commissioner, within sixty (60) days of the end of each
calendar quarter, a certification by an independent certified public accountant
that for such quarter all applicable payroll taxes have been paid on a timely
basis;
3) Submit to the
Commissioner, within sixty (60) days of the end of each calendar quarter, a
completed form "PC EL-QUARTERLY RPT" (applicable to all licensees);
4) Submit to the Commissioner, with the
annual license renewal applicable, a complete list of the names and addresses
of the licensee's clients;
5)
Maintain and make available for the Commissioner's or his authorized
representative's inspection any and all records concerning the licensee's
conduct of business under its license, which records shall be maintained for a
period of three (3) years after termination of the employment relationship or
employee leasing arrangement;
6)
Notify the Commissioner in writing of a change, addition or termination of a
place of business or business address within ten (10) days of such;
7) Notify the Commissioner In writing within
twenty (20) days of any changes among partners, directors, officers, members,
controlling persons, or any other individuals designated in the license, or a
change or movement often percent (10%) or more in ownership; and
8) Within ten (10) days of the end of each
month provide a list of all additions or terminations of clients during the
previous calendar month, provide In writing to its workers' compensation
insurance carrier, the Commissioner, the Arkansas Workers' Compensation
Commission, and the Arkansas Employment Security Division, the name and address
of such clients.
SECTION
16. PENALTIES
A. Any person
violating any provisions of this Rule and Regulation or any provisions of
Section 3 of Act 1143 of 1991 shall, after notice and hearing, be liable for a
civil penalty of not less than Two Hundred Fifty Dollars (S250) nor more than
Five Thousand Dollars ($5,000) for each violation, with each day of
non-compliance constituting a separate violation.
B. The Commissioner shall have the power to
bring an action in the Chancery Court of Pulaski County to enjoin or restrain
any person from engaging in the business of or action as an employee leasing
firm or employee leasing firm group who has not procured a license or who is
otherwise in violation of Sections of Act 1143 of 1991 or this Rule and
Regulation.
SECTION 17.
POSTING OF LICENSES
Each license issued under this Rule and Regulation must be posted
in a conspicuous place in the principal place of business of the licensee in
this State. Each 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 Commissioner and that any questions
or complaints should be directed to the Commissioner.
SECTION 18. LICENSE NOT ASSIGNABLE
A licensee may not conduct business under any name other than
that specified in the license. A license issued under this Rule and Regulation
is not assignable. A licensee may not conduct business under any fictitious or
assumed name without prior written authorization from the Commissioner. A
licensee may not conduct business under more than one name unless it has
obtained a separate license for each name.
SECTION 19. EFFECT OF OTHER LAW
Act 1143 of 1991 and this Rule and Regulation do not exempt a
client of a licensee, or any assigned employee, from any other license or
regulatory 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 considered to be an employee of the client company for the
purpose of that license, registration, or certification, but otherwise remains
the shared employee of the licensee and client as provided by Act 1143 of 1991
and this Rule and Regulation.
SECTION
20. PROPRIETARY INFORMATION
Under the terms of Section 3 of Act 1143 of 1991 employee leasing
firms and employee leasing firm groups are required to file with the
Commissioner certain documents, including but not necessarily limited to client
lists, the disclosure of which would give advantage to competitors. The
Commissioner shall not consider such "proprietary" material to be subject to
mandatory disclosure under the Freedom of Information Act [Ark. Code Ann.
§§
25-19-101 et
seq., particularly Ark. Code Ann. §
25-19-105(b)(9)(A)
], but if the Commissioner be challenged as to the confidentiality or
disclosure of any such records and if litigation or any other proceedings be
instituted to compel disclosure, the total expense of such proceedings shall be
borne by the employee leasing form or employee leasing firm group whose
"proprietary" material is being sought. The Commissioner shall give notice in
writing to any employee leasing firm or employee leasing firm group whose
client lists or other material which the Commissioner deems to be "proprietary"
are being sought under the terms of Ark. Code Ann. §
25-19-101 et
seq.
SECTION 21.
INTERPRETATION
This Rule and Regulation is en pari materia with
and shall be construed in accordance with Acts 652, 901 and 1155 of 1993, Acts
561 and 1143 of 1991, Rule and Regulation 54, and Rule and Regulations?.
SECTION 22. SEVERABILITY
If any provision of this Rule and Regulation, or the application
thereof to any person or circumstance, is held invalid, such invalidity shall
not affect other provisions or applications of this Rule and Regulation which
can be given effect without the invalid provision or application, and to that
end the provisions of this Rule and Regulation are severable.
