[§373K-2] Professional employment organization; employee rights; payroll cost exemption. (a)  Where any client company uses the services of assigned employees andco-employs assigned employees with a professional employment organization, theclient company and the professional employment organization, with respect to theassigned employees, shall not be exempt from the requirements of any federal,state, or county law, including labor or employment laws, collective bargainingrights, anti-discrimination provisions, or other laws with respect to theprotection and rights of employees, including chapters 377 and 378, that wouldapply to the assigned employees if the assigned employees were employees of theclient company alone, and were not co-employees of the professional employmentorganization.

These employeerights shall not be abrogated by any contract or agreement between the clientcompany and the professional employment organization, or the professionalemployment organization and the assigned employee, which contains terms orconditions that could not be lawfully contained in a contract or agreementdirectly between the client company and the assigned employee in which noprofessional employment organization is involved.  Notwithstanding any statute,local ordinance, executive order, rule, or regulation to the contrary, wherethe laws, rights, and protections referred to in this section define or requirea determination of the "employer", the employer shall be deemed to bethe client company and not the professional employment organization.  Thedepartment of labor and industrial relations shall notify the department oftaxation in writing of any violation of this subsection.

(b)  The clientcompany shall be deemed to have satisfied its obligations with respect to anyassigned employee under any applicable law, including, without limitation,workers' compensation laws including chapter 386, employee insurance coveragelaws including chapters 383, 385, 392, and 393, and tax withholding andreporting laws, if and to the extent that those obligations are satisfied bythe professional employment organization acting in its capacity as co-employerof such assigned employee.

(c)  Amountsreceived by a professional employment organization from a client company inamounts equal to and that are disbursed by the professional employmentorganization for employee wages, salaries, payroll taxes, insurance premiums,and benefits, including retirement, vacation, sick leave, health benefits, andsimilar employment benefits with respect to assigned employees at a clientcompany shall not be subject to the general excise tax as provided by section237-24.75.

(d)  The generalexcise tax exemption under section 237‑24.75 shall not apply to theprofessional employment organization if:

(1)  By or through anycontract between the client company and any professional employmentorganization, or otherwise, employees are excluded from any employee rights oremployee benefits required by law to be provided to employees of the clientcompany by the client company; or

(2)  The professionalemployment organization fails to pay any tax withholding for assigned employeesor any federal or state taxes for which the professional employmentorganization is responsible. [L 2007, c 225, pt of §2]