State Codes and Statutes

LABOR CODE

TITLE 2. PROTECTION OF LABORERS

SUBTITLE E. REGULATION OF CERTAIN OCCUPATIONS

CHAPTER 91. STAFF LEASING SERVICES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 91.001. DEFINITIONS. In this chapter:

(1) "Applicant" means a business entity applying for a license

or the renewal of a license under this chapter.

(2) "Assigned employee" means an employee under a staff leasing

services arrangement whose work is performed in this state. The

term does not include an employee hired to support or supplement

a client company's work force in a special work situation,

including:

(A) an employee absence;

(B) a temporary skill shortage;

(C) a seasonal workload; or

(D) a special assignment or project.

(2-a) "Assurance organization" means an independent entity

approved by the commission that:

(A) provides a national program of accreditation and financial

assurance for staff leasing services companies;

(B) has documented qualifications, standards, and procedures

acceptable to the department; and

(C) agrees to provide information, compliance monitoring

services, and financial assurance useful to the department in

accomplishing the provisions of this chapter.

(3) "Client company" means a person that contracts with a

license holder and is assigned employees by the license holder

under that contract.

(4) "Commission" means the Texas Commission of Licensing and

Regulation.

(5) Repealed by Acts 2003, 78th Leg., ch. 816, Sec. 14.010(1).

(6) "Common ownership" means a direct or indirect ownership

interest in excess of 33-1/3 percent. The term includes ownership

through subsidiaries or affiliates.

(7) "Controlling person" means an individual who:

(A) possesses direct or indirect control of 25 percent or more

of the voting securities of a corporation that offers or proposes

to offer staff leasing services;

(B) possesses the authority to set policy and direct management

of a company that offers or proposes to offer staff leasing

services;

(C) is employed, appointed, or authorized by a company that

offers or proposes to offer staff leasing services to enter into

a contract with a client company on behalf of the company; or

(D) a person who is an officer or director of a corporation or a

general partner of a partnership that offers or proposes to offer

staff leasing services.

(8) "Department" means the Texas Department of Licensing and

Regulation.

(8-a) "Executive director" means the executive director of the

department.

(9) "Governmental entity" means this state, or an agency,

county, or municipality of this state.

(10) "Independent contractor" means a person who contracts to

perform work or provide a service for the benefit of another and

who:

(A) is paid by the job, not by the hour or some other

time-measured basis;

(B) is free to hire as many helpers as the person desires and to

determine what each helper will be paid; and

(C) is free to work for other contractors, or to send helpers to

work for other contractors, while under contract to the hiring

employer.

(11) "License holder" means a person licensed under this chapter

to provide staff leasing services.

(12) Repealed by Acts 2009, 81st Leg., R.S., Ch. 188, Sec. 6,

eff. September 1, 2009.

(13) "Offer" means a proposal for acceptance or rejection that

is made in such a form that the promises or performance to be

rendered by each party are reasonably certain.

(14) "Staff leasing services" means an arrangement by which

employees of a license holder are assigned to work at a client

company and in which employment responsibilities are in fact

shared by the license holder 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 license holder. The term includes professional

employer organization services. The term does not include:

(A) temporary help;

(B) an independent contractor;

(C) the provision of services that otherwise meet the definition

of "staff leasing services" by one person solely to other persons

who are related to the service provider by common ownership; or

(D) a temporary common worker employer as defined by Chapter 92.

(15) "Staff leasing services company" means a business entity

that offers staff leasing services. The term includes a

professional employer organization.

(16) "Temporary help " means an arrangement by which an

organization hires its own employees and assigns them to a client

to support or supplement the client's work force in a special

work situation, including:

(A) an employee absence;

(B) a temporary skill shortage;

(C) a seasonal workload; or

(D) a special assignment or project.

(17) "Wages" means:

(A) compensation for labor or services rendered by an assigned

employee, whether computed on a time, task, piece, or other

basis; and

(B) vacation pay, holiday pay, sick leave pay, parental leave

pay, severance pay, bonuses, commissions, stock option grants, or

deferred compensation owed to an assigned employee under a

written agreement.

(18) "Working capital" of an applicant means the applicant's

current assets minus the applicant's current liabilities as

determined by generally accepted accounting principles.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 1, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 1, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.001, 14.010(1),

eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 833, Sec. 1, eff.

Sept. 1, 2003.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 1, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 6, eff. September 1, 2009.

Sec. 91.002. RULES. (a) The commission shall adopt rules as

necessary to administer this chapter.

(b) Each person who offers staff leasing services is subject to

this chapter and the rules adopted by the commission.

(c) Notwithstanding any other provision of this chapter, nothing

in this chapter preempts the existing statutory or rulemaking

authority of any other state agency or entity to regulate staff

leasing services in a manner consistent with the statutory

authority of that state agency or entity.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 2, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 2, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.002, eff. Sept.

1, 2003.

Sec. 91.003. INTERAGENCY COOPERATION. (a) Each state agency

that in performing duties under other law affects the regulation

of staff leasing services shall cooperate with the department and

other state agencies as necessary to implement and enforce this

chapter.

(b) In particular, the Texas Workforce Commission, the division

of workers' compensation of the Texas Department of Insurance,

the Department of Assistive and Rehabilitative Services, and the

attorney general's office shall assist in the implementation of

this chapter and shall provide information to the department on

request.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 3, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 26.016, eff.

Sept. 1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.001, eff. September 1, 2005.

Sec. 91.004. EFFECT OF OTHER LAW ON CLIENTS AND EMPLOYEES. (a)

This chapter does not exempt a client of a license holder, or any

assigned employee, from any other license requirements imposed

under local, state, or federal law.

(b) 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.

(c) A license holder is not engaged in the unauthorized practice

of an occupation, trade, or profession that is licensed,

certified, or otherwise regulated by a governmental entity solely

by entering into a staff leasing agreement with a client company

and assigned employees.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 4, eff.

Sept. 1, 1997.

Sec. 91.005. APPLICATION OF CERTAIN PROCUREMENT LAWS. With

respect to a bid, contract, purchase order, or agreement entered

into with the state or a political subdivision of the state, a

client company's status or certification as a small,

minority-owned, disadvantaged, or woman-owned business enterprise

or as a historically underutilized business is not affected

because the client company has entered into an agreement with a

license holder or uses the services of a license holder.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.006. WORKERS' COMPENSATION COVERAGE. (a) A certificate

of insurance coverage showing that a license holder maintains a

policy of workers' compensation insurance constitutes proof of

workers' compensation insurance coverage for the license holder

and the client company with respect to all employees of the

license holder assigned to the client company. The state and a

political subdivision of the state shall accept a certificate of

insurance coverage described by this section as proof of workers'

compensation coverage under Chapter 406.

(b) For a client company that has employees who are not assigned

employees under a staff leasing services agreement, the state or

a political subdivision of the state may require the client

company to furnish separate proof of workers' compensation

insurance coverage for those employees.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.007. APPLICATION OF LABOR RELATIONS LAWS. This chapter

does not relieve a client company of a right, obligation, or duty

under:

(1) Chapter 101;

(2) the federal National Labor Relations Act (29 U.S.C. Section

151 et seq.);

(3) the federal Railway Labor Act (45 U.S.C. Section 151 et

seq.); or

(4) any other law governing labor relations.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.008. APPLICABILITY OF CONTINUING EDUCATION LAW. Section

51.405, Occupations Code, does not apply to this chapter.

Added by Acts 2003, 78th Leg., ch. 816, Sec. 14.003, eff. Sept.

1, 2003.

SUBCHAPTER B. LICENSE REQUIREMENTS

Sec. 91.011. LICENSE REQUIRED. A person may not engage in or

offer staff leasing services in this state unless the person

holds a license issued under this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.012. GENERAL LICENSE REQUIREMENTS. To be qualified to

serve as a controlling person of a license holder under this

chapter, that person must be at least 18 years of age and have

educational, managerial, or business experience relevant to:

(1) operation of a business entity offering staff leasing

services; or

(2) service as a controlling person of a staff leasing services

company.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 5, eff.

Sept. 1, 1997.

Sec. 91.013. BACKGROUND INVESTIGATIONS. (a) On receipt of an

original application for a license, the department shall conduct

a thorough background investigation of each individual applicant

and of each controlling person of each applicant to determine

whether that applicant or controlling person is qualified under

this chapter. The department may deny an application for the

issuance of a license if the department finds that an applicant

or a controlling person is not qualified under this chapter. The

investigation must 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.

(b) Department background investigations are governed by this

chapter, Section 411.122, Government Code, and Chapter 53,

Occupations Code. 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. The department shall consider criminal

convictions as provided by Section 411.122, Government Code, and

Chapter 53, Occupations Code.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 6, eff.

Sept. 1, 1997; Acts 2001, 77th Leg., ch. 1420, Sec. 14.815, eff.

Sept. 1, 2001.

Text of section effective until December 31, 2011

Sec. 91.014. NET WORTH REQUIREMENTS. (a) An applicant for an

original or renewal license must demonstrate a net worth as

follows:

(1) $50,000 if the applicant employs fewer than 250 assigned

employees;

(2) $75,000 if the applicant employs at least 250 but not more

than 750 assigned employees; and

(3) $100,000 if the applicant employs more than 750 assigned

employees.

(b) The applicant may demonstrate the applicant's net worth to

the department by providing the department with the applicant's

financial statement or a copy of the applicant's most recent

federal tax return. The applicant may also satisfy the net worth

requirement through guarantees, letters of credit, a bond in an

amount that demonstrates compliance with the requirements of

Subsection (a), or other security acceptable to the department. 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.

(c) In computing net worth, an applicant shall include adequate

reserves for all taxes and insurance, including reserves for

claims incurred but not paid and for claims incurred but not

reported under plans of self-insurance for health benefits. The

computation of net worth by an applicant is to be made according

to Section 448, Internal Revenue Code (26 U.S.C. Section 448).

(d) A document submitted to establish net worth must show the

net worth on a date not earlier than nine months before the date

on which the application is submitted. A document submitted to

establish net worth must be prepared or certified by an

independent certified public accountant. Information submitted to

or maintained by the department is subject to Chapter 552,

Government Code, other than information related to:

(1) identification of client companies;

(2) net worth;

(3) financial statements; or

(4) federal tax returns.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 7, eff.

Sept. 1, 1997.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 2, eff. December 31, 2011.

Text of section effective on December 31, 2011

Sec. 91.014. WORKING CAPITAL REQUIREMENTS. (a) An applicant

for an original or renewal license must demonstrate positive

working capital in the following amounts:

(1) $50,000 if the applicant employs fewer than 250 assigned

employees;

(2) $75,000 if the applicant employs at least 250 but not more

than 750 assigned employees; and

(3) $100,000 if the applicant employs more than 750 assigned

employees.

(b) The applicant shall demonstrate the applicant's working

capital to the department by providing the department with the

applicant's financial statement. The financial statement must be

prepared in accordance with generally accepted accounting

principles, be audited by an independent certified public

accountant, and be without qualification as to the going concern

status of the applicant. An applicant that has not had

sufficient operating history to have audited financial statements

based on at least 12 months of operations must meet the financial

capacity requirements required by Subsection (a) and provide the

department with financial statements that have been reviewed by a

certified public accountant.The applicant may satisfy any

deficiencies in the working capital requirement through

guarantees, letters of credit, a bond in an amount that

demonstrates compliance with the amounts required under

Subsection (a), or other security acceptable to the department.

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.

(c) Information submitted to or maintained by the department is

subject to Chapter 552, Government Code, other than information

related to:

(1) identification of client companies;

(2) working capital;

(3) financial statements; or

(4) federal tax returns.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 7, eff.

Sept. 1, 1997.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 2, eff. December 31, 2011.

Sec. 91.015. LICENSE APPLICATION. (a) To receive a staff

leasing services company original license, a person shall file

with the department a written application accompanied by the

application fee.

(b) The department shall require an applicant for a license to

provide information necessary to determine that the applicant

meets the licensing requirements of this chapter. The department

shall also require the applicant to provide information necessary

to determine whether individuals affiliated with the applicant

are qualified to serve as controlling persons.

(c) Before denying a license application, the department shall

provide written notice to an applicant specifying the reasons for

the denial. The department shall provide the applicant at least

30 days after the date of the notice to address the reasons for

the denial. For good cause and on a showing of a good faith

effort to remedy the reasons for the denial, the executive

director may grant an additional 30 days to remedy the reasons

for denial.

(d) Removal, demotion, or discharge of a controlling person in

response to notice from the department of the alleged

unsuitability of that controlling person is an affirmative

defense to any claim by that individual based on the removal,

demotion, or discharge.

(e) A controlling person who has been evaluated by the

department under this chapter is not required to be reevaluated

if that person changes the person's affiliation or employment

from one applicant or license holder to another applicant or

license holder.

(f) Following denial or revocation of a license, and prior to

issuing a new license or reinstating a license, the department

shall consider:

(1) the extent to which the applicant or license holder has

adequately corrected any problems; and

(2) whether the applicant or license holder has demonstrated

that the applicant or license holder had exercised due diligence

to avoid the reason or reasons for the denial or revocation.

The applicant or license holder shall bear the burden of proof

with respect to Subdivisions (1) and (2).

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 8, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 4, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 26.017, eff. Sept.

1, 2003.

Sec. 91.016. LICENSE ISSUANCE; TERM. (a) The department shall

issue a license to an applicant who the department determines has

met the requirements of this chapter. The department shall notify

an applicant of any deficiency in the application not later than

the 30th day after the date on which the department receives the

application forms. The department shall issue the license not

later than the 90th day after the date on which the completed

application is filed with the department.

(b) A license issued or renewed by the department under this

chapter is valid for one year from the date of the issuance or

renewal. The department shall renew a license on receipt of a

complete renewal application form and payment of the license

renewal fee.

(c) Each applicant or license holder shall disclose to the

department the addition of a new controlling person not later

than the 45th day after the date on which the person assumes the

duties of a controlling person. That person may serve as a

controlling person while the department is conducting any

necessary investigation. If the department determines not to

approve the new controlling person, the department shall notify

the applicant or license holder and that controlling person at

least 20 days before taking action against the applicant or

license holder.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 9, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.004, eff.

Sept. 1, 2003.

Sec. 91.017. FEES. (a) Each applicant for an original or

renewal staff leasing services company license shall pay to the

department before the issuance of the license or license renewal

a fee set by the commission by rule.

(b) The commission is authorized to charge reasonable fees for

license applications and renewals, investigations, inspections,

and any other administrative or enforcement responsibilities

created under this chapter.

(c) Fees collected by the department under this chapter shall be

used to implement this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 10, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.005, eff.

Sept. 1, 2003.

Sec. 91.018. LICENSE NOT ASSIGNABLE; CHANGE OF NAME OR LOCATION.

(a) A license holder may not conduct business under any name

other than that specified in the license. A license issued under

this chapter is not assignable. A license holder 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 license holder that

the public may be confused or misled by the name's use. A license

holder may not conduct business under more than one name unless

the license holder has obtained a separate license for each name.

(b) A license holder may change the license holder's licensed

name at any time by notifying the department and paying a fee for

each change of name. The commission by rule shall set the fee for

a name change. A license holder may change the license holder's

name on renewal of the license without the payment of the name

change fee.

(c) A license holder must notify the department in writing of:

(1) any change in the location of the license holder's primary

business office;

(2) the addition of more business offices; or

(3) a change in the location of business records maintained by

the license holder.

(d) A license holder may amend the name specified in its license

to add a trade name, trademark, service mark, or parent company

name. An amendment made under this subsection must comply with

the requirements imposed under Subsection (a). The department may

charge a fee for processing of such an amendment.

(e) A license holder offering staff leasing services in more

than one state may advertise in this state using the name of its

parent company or under a trade name, trademark, or service mark.

The trade name, trademark, service mark, or parent company name

must be listed on the license in addition to the licensed name

used by the license holder in this state.

(f) Each written proposal provided to a prospective client

company and each contract between a license holder and a client

company or assigned employee shall clearly identify the name of

the license holder. A proposal or contract may also identify the

trade name, trademark, service mark, or parent company name of

the license holder. A license holder may use written materials

including forms, benefit information, letterhead, and business

cards that bear only the trade name, trademark, service mark, or

parent company name of the license holder.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 11, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.006, eff.

Sept. 1, 2003.

Sec. 91.019. LIMITED LICENSE. (a) The commission by rule shall

provide for the issuance of a limited license to a person who

seeks to offer limited staff leasing services in this state.

(b) For purposes of this section, a staff leasing services

company is considered to be offering limited staff leasing

services if the staff leasing services company:

(1) employs fewer than 50 assigned employees in this state at

any one time;

(2) does not provide assigned employees to a client company

based or domiciled in this state; and

(3) does not maintain an office in this state or solicit client

companies located or domiciled in this state.

(c) A staff leasing services company that offers limited staff

leasing services shall complete the application forms and pay the

fees for a limited license as prescribed by the department. A

limited license is valid for one year from the date of issuance

and may be renewed annually on submission of a renewal

application and payment of the required fees.

(d) The department may use information obtained from regulatory

agencies in other states in evaluating an applicant for a limited

license.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 12, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 5, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.007, eff. Sept.

1, 2003.

Sec. 91.020. GROUNDS FOR DISCIPLINARY ACTION. The department

may take disciplinary action against a license holder on any of

the following grounds:

(1) engaging in staff leasing services or offering to engage in

the provision of staff leasing services without a license;

(2) transferring or attempting to transfer a license issued

under this chapter;

(3) violating this chapter or any order or rule issued by the

executive director or commission under this chapter;

(4) failing after the 31st day after the date on which a felony

conviction of a controlling person is final to notify the

department in writing of the conviction;

(5) failing to cooperate with an investigation, examination, or

audit of the license holder's records conducted by the license

holder's insurance company or the insurance company's designee,

as allowed by the insurance contract or as authorized by law by

the Texas Department of Insurance;

(6) failing after the 31st day after the effective date of a

change in ownership, principal business address, or the address

of accounts and records to notify the department and the Texas

Department of Insurance of the change;

(7) failing to correct any tax filings or payment deficiencies

within a reasonable time as determined by the executive director;

(8) refusing, after reasonable notice, to meet reasonable health

and safety requirements within the license holder's control and

made known to the license holder by a federal or state agency;

(9) being delinquent in the payment of the license holder's

insurance premiums other than those subject to a legitimate

dispute;

(10) being delinquent in the payment of any employee benefit

plan premiums or contributions other than those subject to a

legitimate dispute;

(11) knowingly making a material misrepresentation to an

insurance company or to the department or other governmental

agency;

(12) failing to maintain the working capital required under

Section 91.014; or

(13) using staff leasing services to avert or avoid an existing

collective bargaining agreement.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 13, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.008, eff.

Sept. 1, 2003.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 3, eff. September 1, 2009.

Sec. 91.021. ELECTRONIC FILING AND COMPLIANCE. (a) The

commission may adopt rules to permit the acceptance of electronic

filings under this chapter, including the filing of applications,

documents, reports, and other documents required by this chapter.

The rules may provide for the acceptance of electronic filing

and other assurance by an assurance organization, qualified and

approved by the commission, that provides satisfactory assurance

and documentation of compliance acceptable to the department that

meets or exceeds the requirements of this chapter.

(b) A staff leasing services company may authorize an assurance

organization that is qualified and approved by the commission to

act on its behalf in complying with the licensing requirements of

this chapter, including the electronic filing of information and

the payment of application and licensing fees. Use of an

assurance organization is optional and is not mandatory for a

staff leasing services company.

(c) Nothing in this section may be construed to change or affect

the department's authority to issue licenses, revoke licenses,

conduct investigations, or enforce any provision of this chapter.

Added by Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 4, eff. September 1, 2009.

SUBCHAPTER C. STAFF LEASING SERVICES AGREEMENT

Sec. 91.031. AGREEMENT; NOTICE. (a) A license holder shall

establish the terms of a staff leasing services agreement by a

written contract between the license holder and the client

company.

(b) The license holder shall give written notice of the

agreement as it affects assigned employees to each employee

assigned to a client company worksite.

(c) The written notice required by Subsection (b) must be given

to each assigned employee not later than the first payday after

the date on which that individual becomes an assigned employee.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 15, eff.

Sept. 1, 1997.

Sec. 91.032. CONTRACT REQUIREMENTS. (a) A contract between a

license holder and a client company must provide that the license

holder:

(1) shares, as provided by Subsection (b), with the client

company the right of direction and control over employees

assigned to a client's worksites;

(2) assumes responsibility for the payment of wages to the

assigned employees without regard to payments by the client to

the license holder;

(3) assumes responsibility for the payment of payroll taxes and

collection of taxes from payroll on assigned employees;

(4) shares, as provided by Subsection (b), with the client

company the right to hire, fire, discipline, and reassign the

assigned employees; and

(5) shares, as provided by Subsection (b), with the client

company 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.

(b) Notwithstanding any other provision of this chapter, a

client company retains responsibility for:

(1) the direction and control of assigned employees as necessary

to conduct the client company's business, discharge any

applicable fiduciary duty, or comply with any licensure,

regulatory, or statutory requirement;

(2) goods and services produced by the client company; and

(3) the acts, errors, and omissions of assigned employees

committed within the scope of the client company's business.

(c) Notwithstanding Subsection (a)(2), a client company is

solely obligated to pay any wages for which:

(1) obligation to pay is created by an agreement, contract,

plan, or policy between the client company and the assigned

employee; and

(2) the staff leasing services company has not contracted to

pay.

(d) Each staff leasing services company shall disclose the

requirements of Subsection (c) in writing to each assigned

employee.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1999, 76th Leg., ch. 771, Sec. 7, eff.

Sept. 1, 1999; Acts 2003, 78th Leg., ch. 833, Sec. 2, eff. Sept.

1, 2003.

SUBCHAPTER D. POWERS AND DUTIES OF LICENSE HOLDER

Sec. 91.041. EMPLOYEE BENEFIT PLANS; REQUIRED DISCLOSURE; OTHER

REPORTS. (a) A license holder may sponsor and maintain employee

benefit plans for the benefit of assigned employees. A client

company may include assigned employees in any benefit plan

sponsored by the client company.

(b) With respect to any insurance or benefit plan provided by a

license holder for the benefit of its assigned employees, a

license holder shall disclose the following information to the

department, each client company, and its assigned employees:

(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 in 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.

(c) The commission by rule may require a license holder to file

other reports that are reasonably necessary for the

implementation of this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 16, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.009, eff.

Sept. 1, 2003.

Sec. 91.042. WORKERS' COMPENSATION INSURANCE. (a) A license

holder may elect to obtain workers' compensation insurance

coverage for the license holder's assigned employees through an

insurance company as defined under Section 401.011(28) or through

self-insurance as provided under Chapter 407.

(b) If a license holder maintains workers' compensation

insurance, the license holder shall pay workers' compensation

insurance premiums based on the experience rating of the client

company for the first two years the client company has a contract

with the license holder and as further provided by rule by the

Texas Department of Insurance.

(c) For workers' compensation insurance purposes, a license

holder and the license holder's client company shall be

coemployers. If a license holder elects to obtain workers'

compensation insurance, the client company and the license holder

are subject to Sections 406.034 and 408.001.

(d) If a license holder does not elect to obtain workers'

compensation insurance, both the license holder and the client

company are subject to Sections 406.004 and 406.033.

(e) After the expiration of the two-year period under Subsection

(b), if the client company obtains a new workers' compensation

insurance policy in the company's own name or adds the company's

former assigned workers to an existing policy, the premium for

the workers' compensation insurance policy of the company shall

be based on the lower of:

(1) the experience modifier of the company before entering into

the staff leasing arrangement; or

(2) the experience modifier of the license holder at the time

the staff leasing arrangement terminated.

(f) On request, the Texas Department of Insurance shall provide

the necessary computations to the prospective workers'

compensation insurer of the client company to comply with

Subsection (e).

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.043. HEALTH BENEFIT PLANS. (a) A license holder may

not sponsor a plan of self-insurance for health benefits except

as permitted by the Employee Retirement Income Security Act of

1974 (29 U.S.C. Section 1001 et seq.).

(b) For purposes of this section, a "plan of self-insurance"

includes any arrangement except an arrangement under which an

insurance carrier authorized to do business in this state has

issued an insurance policy that covers all of the obligations of

the health benefits plan.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.044. UNEMPLOYMENT TAXES; PAYROLL. (a) A license holder

is the employer of an assigned employee for purposes of Subtitle

A, Title 4, and, except for wages subject to Section 91.032(c),

for purposes of Chapter 61. In addition to any other reports

required to be filed by law, a license holder shall report

quarterly to the Texas Workforce Commission on a form prescribed

by the Texas Workforce Commission the name, address, telephone

number, federal income tax identification number, and

classification code as described in the "Standard Industrial

Classification Manual" published by the United States Office of

Management and Budget of each client company.

(b) For purposes of Subtitle A, Title 4, in the event of the

termination of a contract between a license holder and a client

company or the failure by a staff leasing entity to submit

reports or make tax payments as required by that subtitle, the

contracting client company shall be treated as a new employer

without a previous experience record unless that client company

is otherwise eligible for an experience rating.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 17, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 833, Sec. 3, eff. Sept.

1, 2003.

Sec. 91.045. POSTING REQUIREMENTS. (a) Each license holder

shall post in a conspicuous place in the license holder's

principal place of business in this state the license issued

under this chapter.

(b) Each license holder 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.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.046. CONTRACTUAL DUTIES. Each license holder is

responsible for the license holder's contractual duties and

responsibilities to manage, maintain, collect, and make timely

payments for:

(1) insurance premiums;

(2) benefit and welfare plans;

(3) other employee withholding; and

(4) any other expressed responsibility within the scope of the

contract for fulfilling the duties imposed under this section and

Sections 91.032, 91.047, and 91.048.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.047. COMPLIANCE WITH OTHER LAWS. Each license holder

shall comply with all appropriate state and federal laws relating

to reporting, sponsoring, filing, and maintaining benefit and

welfare plans.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.048. REQUIRED INFORMATION. Each license holder shall:

(1) maintain adequate books and records regarding the license

holder's duties and responsibilities;

(2) maintain and make available at all times to the executive

director the following information, which shall be treated as

proprietary and confidential and is exempt from disclosure to

persons other than other governmental agencies having a

reasonable, legitimate purpose for obtaining the information:

(A) the correct name, address, and telephone number of each

client company;

(B) each client company contract; and

(C) a listing by classification code as described in the

"Standard Industrial Classification Manual" published by the

United States Office of Management and Budget, of each client

company;

(3) notify the department of any addition or deletion of a

controlling person as listed on the license application or

renewal form by providing the name of the person not later than

the 45th day after the date on which the person is added or

deleted as a controlling person; and

(4) provide a biographical history to the department in

connection with the addition of a new controlling person.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 18, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 26.018, eff.

Sept. 1, 2003.

Sec. 91.049. AGENT FOR SERVICE OF PROCESS. Each license holder

shall maintain a registered agent for the service of process in

this state.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.050. TAX CREDITS AND OTHER INCENTIVES. (a) For the

purpose of determining tax credits, grants, and other economic

incentives provided by this state or other governmental entities

that are based on employment, assigned employees are considered

employees of the client and the client is solely entitled to the

benefit of any tax credit, economic incentive, or other benefit

arising from the employment of assigned employees of the client.

This subsection applies even if the staff leasing services

company is the reporting employer for federal income tax

purposes.

(b) If a grant or the amount of any incentive described by

Subsection (a) is based on the number of employees, each client

shall be treated as employing only those assigned employees

co-employed by the client. Assigned employees working for other

clients of the staff leasing services company may not be included

in the computation.

(c) Each staff leasing services company shall provide, on the

request of a client or an agency of this state, employment

information reasonably required by the state agency responsible

for the administration of any tax credit or economic incentive

described by Subsection (a) and necessary to support a request,

claim, application, or other action by a client seeking the tax

credit or economic incentive.

Added by Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 5, eff. September 1, 2009.

SUBCHAPTER E. PROHIBITED ACTS; PENALTY

Sec. 91.061. PROHIBITED ACTS. A person may not:

(1) engage in or offer staff leasing services without holding a

license under this chapter as a staff leasing services company;

(2) use the name or title "staff leasing company," "employee

leasing company," "licensed staff leasing company," "staff

leasing services company," "professional employer organization,"

or "administrative employer" or otherwise represent that the

entity 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 materially false or forged evidence to the department

in connection with obtaining or renewing a license or in

connection with disciplinary proceedings under this chapter; or

(5) use or attempt to use a license that has expired or been

revoked.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 19, eff.

Sept. 1, 1997.

Sec. 91.062. ACTION BY ATTORNEY GENERAL. (a) The executive

director may notify the attorney general of a violation of this

chapter. The attorney general may apply to a district court in

Travis County for permission to file for quo warranto relief,

injunctive relief, or both.

(b) The attorney general may not be required to post a bond for

injunctive relief under this section.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 2003, 78th Leg., ch. 816, Sec. 26.019,

eff. Sept. 1, 2003.

Sec. 91.063. CRIMINAL PENALTY. (a) A person who violates

Section 91.061 commits an offense.

(b) An offense under this section is a Class A misdemeanor.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

State Codes and Statutes

LABOR CODE

TITLE 2. PROTECTION OF LABORERS

SUBTITLE E. REGULATION OF CERTAIN OCCUPATIONS

CHAPTER 91. STAFF LEASING SERVICES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 91.001. DEFINITIONS. In this chapter:

(1) "Applicant" means a business entity applying for a license

or the renewal of a license under this chapter.

(2) "Assigned employee" means an employee under a staff leasing

services arrangement whose work is performed in this state. The

term does not include an employee hired to support or supplement

a client company's work force in a special work situation,

including:

(A) an employee absence;

(B) a temporary skill shortage;

(C) a seasonal workload; or

(D) a special assignment or project.

(2-a) "Assurance organization" means an independent entity

approved by the commission that:

(A) provides a national program of accreditation and financial

assurance for staff leasing services companies;

(B) has documented qualifications, standards, and procedures

acceptable to the department; and

(C) agrees to provide information, compliance monitoring

services, and financial assurance useful to the department in

accomplishing the provisions of this chapter.

(3) "Client company" means a person that contracts with a

license holder and is assigned employees by the license holder

under that contract.

(4) "Commission" means the Texas Commission of Licensing and

Regulation.

(5) Repealed by Acts 2003, 78th Leg., ch. 816, Sec. 14.010(1).

(6) "Common ownership" means a direct or indirect ownership

interest in excess of 33-1/3 percent. The term includes ownership

through subsidiaries or affiliates.

(7) "Controlling person" means an individual who:

(A) possesses direct or indirect control of 25 percent or more

of the voting securities of a corporation that offers or proposes

to offer staff leasing services;

(B) possesses the authority to set policy and direct management

of a company that offers or proposes to offer staff leasing

services;

(C) is employed, appointed, or authorized by a company that

offers or proposes to offer staff leasing services to enter into

a contract with a client company on behalf of the company; or

(D) a person who is an officer or director of a corporation or a

general partner of a partnership that offers or proposes to offer

staff leasing services.

(8) "Department" means the Texas Department of Licensing and

Regulation.

(8-a) "Executive director" means the executive director of the

department.

(9) "Governmental entity" means this state, or an agency,

county, or municipality of this state.

(10) "Independent contractor" means a person who contracts to

perform work or provide a service for the benefit of another and

who:

(A) is paid by the job, not by the hour or some other

time-measured basis;

(B) is free to hire as many helpers as the person desires and to

determine what each helper will be paid; and

(C) is free to work for other contractors, or to send helpers to

work for other contractors, while under contract to the hiring

employer.

(11) "License holder" means a person licensed under this chapter

to provide staff leasing services.

(12) Repealed by Acts 2009, 81st Leg., R.S., Ch. 188, Sec. 6,

eff. September 1, 2009.

(13) "Offer" means a proposal for acceptance or rejection that

is made in such a form that the promises or performance to be

rendered by each party are reasonably certain.

(14) "Staff leasing services" means an arrangement by which

employees of a license holder are assigned to work at a client

company and in which employment responsibilities are in fact

shared by the license holder 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 license holder. The term includes professional

employer organization services. The term does not include:

(A) temporary help;

(B) an independent contractor;

(C) the provision of services that otherwise meet the definition

of "staff leasing services" by one person solely to other persons

who are related to the service provider by common ownership; or

(D) a temporary common worker employer as defined by Chapter 92.

(15) "Staff leasing services company" means a business entity

that offers staff leasing services. The term includes a

professional employer organization.

(16) "Temporary help " means an arrangement by which an

organization hires its own employees and assigns them to a client

to support or supplement the client's work force in a special

work situation, including:

(A) an employee absence;

(B) a temporary skill shortage;

(C) a seasonal workload; or

(D) a special assignment or project.

(17) "Wages" means:

(A) compensation for labor or services rendered by an assigned

employee, whether computed on a time, task, piece, or other

basis; and

(B) vacation pay, holiday pay, sick leave pay, parental leave

pay, severance pay, bonuses, commissions, stock option grants, or

deferred compensation owed to an assigned employee under a

written agreement.

(18) "Working capital" of an applicant means the applicant's

current assets minus the applicant's current liabilities as

determined by generally accepted accounting principles.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 1, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 1, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.001, 14.010(1),

eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 833, Sec. 1, eff.

Sept. 1, 2003.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 1, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 6, eff. September 1, 2009.

Sec. 91.002. RULES. (a) The commission shall adopt rules as

necessary to administer this chapter.

(b) Each person who offers staff leasing services is subject to

this chapter and the rules adopted by the commission.

(c) Notwithstanding any other provision of this chapter, nothing

in this chapter preempts the existing statutory or rulemaking

authority of any other state agency or entity to regulate staff

leasing services in a manner consistent with the statutory

authority of that state agency or entity.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 2, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 2, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.002, eff. Sept.

1, 2003.

Sec. 91.003. INTERAGENCY COOPERATION. (a) Each state agency

that in performing duties under other law affects the regulation

of staff leasing services shall cooperate with the department and

other state agencies as necessary to implement and enforce this

chapter.

(b) In particular, the Texas Workforce Commission, the division

of workers' compensation of the Texas Department of Insurance,

the Department of Assistive and Rehabilitative Services, and the

attorney general's office shall assist in the implementation of

this chapter and shall provide information to the department on

request.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 3, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 26.016, eff.

Sept. 1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.001, eff. September 1, 2005.

Sec. 91.004. EFFECT OF OTHER LAW ON CLIENTS AND EMPLOYEES. (a)

This chapter does not exempt a client of a license holder, or any

assigned employee, from any other license requirements imposed

under local, state, or federal law.

(b) 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.

(c) A license holder is not engaged in the unauthorized practice

of an occupation, trade, or profession that is licensed,

certified, or otherwise regulated by a governmental entity solely

by entering into a staff leasing agreement with a client company

and assigned employees.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 4, eff.

Sept. 1, 1997.

Sec. 91.005. APPLICATION OF CERTAIN PROCUREMENT LAWS. With

respect to a bid, contract, purchase order, or agreement entered

into with the state or a political subdivision of the state, a

client company's status or certification as a small,

minority-owned, disadvantaged, or woman-owned business enterprise

or as a historically underutilized business is not affected

because the client company has entered into an agreement with a

license holder or uses the services of a license holder.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.006. WORKERS' COMPENSATION COVERAGE. (a) A certificate

of insurance coverage showing that a license holder maintains a

policy of workers' compensation insurance constitutes proof of

workers' compensation insurance coverage for the license holder

and the client company with respect to all employees of the

license holder assigned to the client company. The state and a

political subdivision of the state shall accept a certificate of

insurance coverage described by this section as proof of workers'

compensation coverage under Chapter 406.

(b) For a client company that has employees who are not assigned

employees under a staff leasing services agreement, the state or

a political subdivision of the state may require the client

company to furnish separate proof of workers' compensation

insurance coverage for those employees.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.007. APPLICATION OF LABOR RELATIONS LAWS. This chapter

does not relieve a client company of a right, obligation, or duty

under:

(1) Chapter 101;

(2) the federal National Labor Relations Act (29 U.S.C. Section

151 et seq.);

(3) the federal Railway Labor Act (45 U.S.C. Section 151 et

seq.); or

(4) any other law governing labor relations.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.008. APPLICABILITY OF CONTINUING EDUCATION LAW. Section

51.405, Occupations Code, does not apply to this chapter.

Added by Acts 2003, 78th Leg., ch. 816, Sec. 14.003, eff. Sept.

1, 2003.

SUBCHAPTER B. LICENSE REQUIREMENTS

Sec. 91.011. LICENSE REQUIRED. A person may not engage in or

offer staff leasing services in this state unless the person

holds a license issued under this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.012. GENERAL LICENSE REQUIREMENTS. To be qualified to

serve as a controlling person of a license holder under this

chapter, that person must be at least 18 years of age and have

educational, managerial, or business experience relevant to:

(1) operation of a business entity offering staff leasing

services; or

(2) service as a controlling person of a staff leasing services

company.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 5, eff.

Sept. 1, 1997.

Sec. 91.013. BACKGROUND INVESTIGATIONS. (a) On receipt of an

original application for a license, the department shall conduct

a thorough background investigation of each individual applicant

and of each controlling person of each applicant to determine

whether that applicant or controlling person is qualified under

this chapter. The department may deny an application for the

issuance of a license if the department finds that an applicant

or a controlling person is not qualified under this chapter. The

investigation must 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.

(b) Department background investigations are governed by this

chapter, Section 411.122, Government Code, and Chapter 53,

Occupations Code. 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. The department shall consider criminal

convictions as provided by Section 411.122, Government Code, and

Chapter 53, Occupations Code.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 6, eff.

Sept. 1, 1997; Acts 2001, 77th Leg., ch. 1420, Sec. 14.815, eff.

Sept. 1, 2001.

Text of section effective until December 31, 2011

Sec. 91.014. NET WORTH REQUIREMENTS. (a) An applicant for an

original or renewal license must demonstrate a net worth as

follows:

(1) $50,000 if the applicant employs fewer than 250 assigned

employees;

(2) $75,000 if the applicant employs at least 250 but not more

than 750 assigned employees; and

(3) $100,000 if the applicant employs more than 750 assigned

employees.

(b) The applicant may demonstrate the applicant's net worth to

the department by providing the department with the applicant's

financial statement or a copy of the applicant's most recent

federal tax return. The applicant may also satisfy the net worth

requirement through guarantees, letters of credit, a bond in an

amount that demonstrates compliance with the requirements of

Subsection (a), or other security acceptable to the department. 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.

(c) In computing net worth, an applicant shall include adequate

reserves for all taxes and insurance, including reserves for

claims incurred but not paid and for claims incurred but not

reported under plans of self-insurance for health benefits. The

computation of net worth by an applicant is to be made according

to Section 448, Internal Revenue Code (26 U.S.C. Section 448).

(d) A document submitted to establish net worth must show the

net worth on a date not earlier than nine months before the date

on which the application is submitted. A document submitted to

establish net worth must be prepared or certified by an

independent certified public accountant. Information submitted to

or maintained by the department is subject to Chapter 552,

Government Code, other than information related to:

(1) identification of client companies;

(2) net worth;

(3) financial statements; or

(4) federal tax returns.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 7, eff.

Sept. 1, 1997.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 2, eff. December 31, 2011.

Text of section effective on December 31, 2011

Sec. 91.014. WORKING CAPITAL REQUIREMENTS. (a) An applicant

for an original or renewal license must demonstrate positive

working capital in the following amounts:

(1) $50,000 if the applicant employs fewer than 250 assigned

employees;

(2) $75,000 if the applicant employs at least 250 but not more

than 750 assigned employees; and

(3) $100,000 if the applicant employs more than 750 assigned

employees.

(b) The applicant shall demonstrate the applicant's working

capital to the department by providing the department with the

applicant's financial statement. The financial statement must be

prepared in accordance with generally accepted accounting

principles, be audited by an independent certified public

accountant, and be without qualification as to the going concern

status of the applicant. An applicant that has not had

sufficient operating history to have audited financial statements

based on at least 12 months of operations must meet the financial

capacity requirements required by Subsection (a) and provide the

department with financial statements that have been reviewed by a

certified public accountant.The applicant may satisfy any

deficiencies in the working capital requirement through

guarantees, letters of credit, a bond in an amount that

demonstrates compliance with the amounts required under

Subsection (a), or other security acceptable to the department.

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.

(c) Information submitted to or maintained by the department is

subject to Chapter 552, Government Code, other than information

related to:

(1) identification of client companies;

(2) working capital;

(3) financial statements; or

(4) federal tax returns.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 7, eff.

Sept. 1, 1997.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 2, eff. December 31, 2011.

Sec. 91.015. LICENSE APPLICATION. (a) To receive a staff

leasing services company original license, a person shall file

with the department a written application accompanied by the

application fee.

(b) The department shall require an applicant for a license to

provide information necessary to determine that the applicant

meets the licensing requirements of this chapter. The department

shall also require the applicant to provide information necessary

to determine whether individuals affiliated with the applicant

are qualified to serve as controlling persons.

(c) Before denying a license application, the department shall

provide written notice to an applicant specifying the reasons for

the denial. The department shall provide the applicant at least

30 days after the date of the notice to address the reasons for

the denial. For good cause and on a showing of a good faith

effort to remedy the reasons for the denial, the executive

director may grant an additional 30 days to remedy the reasons

for denial.

(d) Removal, demotion, or discharge of a controlling person in

response to notice from the department of the alleged

unsuitability of that controlling person is an affirmative

defense to any claim by that individual based on the removal,

demotion, or discharge.

(e) A controlling person who has been evaluated by the

department under this chapter is not required to be reevaluated

if that person changes the person's affiliation or employment

from one applicant or license holder to another applicant or

license holder.

(f) Following denial or revocation of a license, and prior to

issuing a new license or reinstating a license, the department

shall consider:

(1) the extent to which the applicant or license holder has

adequately corrected any problems; and

(2) whether the applicant or license holder has demonstrated

that the applicant or license holder had exercised due diligence

to avoid the reason or reasons for the denial or revocation.

The applicant or license holder shall bear the burden of proof

with respect to Subdivisions (1) and (2).

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 8, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 4, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 26.017, eff. Sept.

1, 2003.

Sec. 91.016. LICENSE ISSUANCE; TERM. (a) The department shall

issue a license to an applicant who the department determines has

met the requirements of this chapter. The department shall notify

an applicant of any deficiency in the application not later than

the 30th day after the date on which the department receives the

application forms. The department shall issue the license not

later than the 90th day after the date on which the completed

application is filed with the department.

(b) A license issued or renewed by the department under this

chapter is valid for one year from the date of the issuance or

renewal. The department shall renew a license on receipt of a

complete renewal application form and payment of the license

renewal fee.

(c) Each applicant or license holder shall disclose to the

department the addition of a new controlling person not later

than the 45th day after the date on which the person assumes the

duties of a controlling person. That person may serve as a

controlling person while the department is conducting any

necessary investigation. If the department determines not to

approve the new controlling person, the department shall notify

the applicant or license holder and that controlling person at

least 20 days before taking action against the applicant or

license holder.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 9, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.004, eff.

Sept. 1, 2003.

Sec. 91.017. FEES. (a) Each applicant for an original or

renewal staff leasing services company license shall pay to the

department before the issuance of the license or license renewal

a fee set by the commission by rule.

(b) The commission is authorized to charge reasonable fees for

license applications and renewals, investigations, inspections,

and any other administrative or enforcement responsibilities

created under this chapter.

(c) Fees collected by the department under this chapter shall be

used to implement this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 10, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.005, eff.

Sept. 1, 2003.

Sec. 91.018. LICENSE NOT ASSIGNABLE; CHANGE OF NAME OR LOCATION.

(a) A license holder may not conduct business under any name

other than that specified in the license. A license issued under

this chapter is not assignable. A license holder 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 license holder that

the public may be confused or misled by the name's use. A license

holder may not conduct business under more than one name unless

the license holder has obtained a separate license for each name.

(b) A license holder may change the license holder's licensed

name at any time by notifying the department and paying a fee for

each change of name. The commission by rule shall set the fee for

a name change. A license holder may change the license holder's

name on renewal of the license without the payment of the name

change fee.

(c) A license holder must notify the department in writing of:

(1) any change in the location of the license holder's primary

business office;

(2) the addition of more business offices; or

(3) a change in the location of business records maintained by

the license holder.

(d) A license holder may amend the name specified in its license

to add a trade name, trademark, service mark, or parent company

name. An amendment made under this subsection must comply with

the requirements imposed under Subsection (a). The department may

charge a fee for processing of such an amendment.

(e) A license holder offering staff leasing services in more

than one state may advertise in this state using the name of its

parent company or under a trade name, trademark, or service mark.

The trade name, trademark, service mark, or parent company name

must be listed on the license in addition to the licensed name

used by the license holder in this state.

(f) Each written proposal provided to a prospective client

company and each contract between a license holder and a client

company or assigned employee shall clearly identify the name of

the license holder. A proposal or contract may also identify the

trade name, trademark, service mark, or parent company name of

the license holder. A license holder may use written materials

including forms, benefit information, letterhead, and business

cards that bear only the trade name, trademark, service mark, or

parent company name of the license holder.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 11, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.006, eff.

Sept. 1, 2003.

Sec. 91.019. LIMITED LICENSE. (a) The commission by rule shall

provide for the issuance of a limited license to a person who

seeks to offer limited staff leasing services in this state.

(b) For purposes of this section, a staff leasing services

company is considered to be offering limited staff leasing

services if the staff leasing services company:

(1) employs fewer than 50 assigned employees in this state at

any one time;

(2) does not provide assigned employees to a client company

based or domiciled in this state; and

(3) does not maintain an office in this state or solicit client

companies located or domiciled in this state.

(c) A staff leasing services company that offers limited staff

leasing services shall complete the application forms and pay the

fees for a limited license as prescribed by the department. A

limited license is valid for one year from the date of issuance

and may be renewed annually on submission of a renewal

application and payment of the required fees.

(d) The department may use information obtained from regulatory

agencies in other states in evaluating an applicant for a limited

license.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 12, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 5, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.007, eff. Sept.

1, 2003.

Sec. 91.020. GROUNDS FOR DISCIPLINARY ACTION. The department

may take disciplinary action against a license holder on any of

the following grounds:

(1) engaging in staff leasing services or offering to engage in

the provision of staff leasing services without a license;

(2) transferring or attempting to transfer a license issued

under this chapter;

(3) violating this chapter or any order or rule issued by the

executive director or commission under this chapter;

(4) failing after the 31st day after the date on which a felony

conviction of a controlling person is final to notify the

department in writing of the conviction;

(5) failing to cooperate with an investigation, examination, or

audit of the license holder's records conducted by the license

holder's insurance company or the insurance company's designee,

as allowed by the insurance contract or as authorized by law by

the Texas Department of Insurance;

(6) failing after the 31st day after the effective date of a

change in ownership, principal business address, or the address

of accounts and records to notify the department and the Texas

Department of Insurance of the change;

(7) failing to correct any tax filings or payment deficiencies

within a reasonable time as determined by the executive director;

(8) refusing, after reasonable notice, to meet reasonable health

and safety requirements within the license holder's control and

made known to the license holder by a federal or state agency;

(9) being delinquent in the payment of the license holder's

insurance premiums other than those subject to a legitimate

dispute;

(10) being delinquent in the payment of any employee benefit

plan premiums or contributions other than those subject to a

legitimate dispute;

(11) knowingly making a material misrepresentation to an

insurance company or to the department or other governmental

agency;

(12) failing to maintain the working capital required under

Section 91.014; or

(13) using staff leasing services to avert or avoid an existing

collective bargaining agreement.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 13, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.008, eff.

Sept. 1, 2003.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 3, eff. September 1, 2009.

Sec. 91.021. ELECTRONIC FILING AND COMPLIANCE. (a) The

commission may adopt rules to permit the acceptance of electronic

filings under this chapter, including the filing of applications,

documents, reports, and other documents required by this chapter.

The rules may provide for the acceptance of electronic filing

and other assurance by an assurance organization, qualified and

approved by the commission, that provides satisfactory assurance

and documentation of compliance acceptable to the department that

meets or exceeds the requirements of this chapter.

(b) A staff leasing services company may authorize an assurance

organization that is qualified and approved by the commission to

act on its behalf in complying with the licensing requirements of

this chapter, including the electronic filing of information and

the payment of application and licensing fees. Use of an

assurance organization is optional and is not mandatory for a

staff leasing services company.

(c) Nothing in this section may be construed to change or affect

the department's authority to issue licenses, revoke licenses,

conduct investigations, or enforce any provision of this chapter.

Added by Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 4, eff. September 1, 2009.

SUBCHAPTER C. STAFF LEASING SERVICES AGREEMENT

Sec. 91.031. AGREEMENT; NOTICE. (a) A license holder shall

establish the terms of a staff leasing services agreement by a

written contract between the license holder and the client

company.

(b) The license holder shall give written notice of the

agreement as it affects assigned employees to each employee

assigned to a client company worksite.

(c) The written notice required by Subsection (b) must be given

to each assigned employee not later than the first payday after

the date on which that individual becomes an assigned employee.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 15, eff.

Sept. 1, 1997.

Sec. 91.032. CONTRACT REQUIREMENTS. (a) A contract between a

license holder and a client company must provide that the license

holder:

(1) shares, as provided by Subsection (b), with the client

company the right of direction and control over employees

assigned to a client's worksites;

(2) assumes responsibility for the payment of wages to the

assigned employees without regard to payments by the client to

the license holder;

(3) assumes responsibility for the payment of payroll taxes and

collection of taxes from payroll on assigned employees;

(4) shares, as provided by Subsection (b), with the client

company the right to hire, fire, discipline, and reassign the

assigned employees; and

(5) shares, as provided by Subsection (b), with the client

company 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.

(b) Notwithstanding any other provision of this chapter, a

client company retains responsibility for:

(1) the direction and control of assigned employees as necessary

to conduct the client company's business, discharge any

applicable fiduciary duty, or comply with any licensure,

regulatory, or statutory requirement;

(2) goods and services produced by the client company; and

(3) the acts, errors, and omissions of assigned employees

committed within the scope of the client company's business.

(c) Notwithstanding Subsection (a)(2), a client company is

solely obligated to pay any wages for which:

(1) obligation to pay is created by an agreement, contract,

plan, or policy between the client company and the assigned

employee; and

(2) the staff leasing services company has not contracted to

pay.

(d) Each staff leasing services company shall disclose the

requirements of Subsection (c) in writing to each assigned

employee.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1999, 76th Leg., ch. 771, Sec. 7, eff.

Sept. 1, 1999; Acts 2003, 78th Leg., ch. 833, Sec. 2, eff. Sept.

1, 2003.

SUBCHAPTER D. POWERS AND DUTIES OF LICENSE HOLDER

Sec. 91.041. EMPLOYEE BENEFIT PLANS; REQUIRED DISCLOSURE; OTHER

REPORTS. (a) A license holder may sponsor and maintain employee

benefit plans for the benefit of assigned employees. A client

company may include assigned employees in any benefit plan

sponsored by the client company.

(b) With respect to any insurance or benefit plan provided by a

license holder for the benefit of its assigned employees, a

license holder shall disclose the following information to the

department, each client company, and its assigned employees:

(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 in 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.

(c) The commission by rule may require a license holder to file

other reports that are reasonably necessary for the

implementation of this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 16, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.009, eff.

Sept. 1, 2003.

Sec. 91.042. WORKERS' COMPENSATION INSURANCE. (a) A license

holder may elect to obtain workers' compensation insurance

coverage for the license holder's assigned employees through an

insurance company as defined under Section 401.011(28) or through

self-insurance as provided under Chapter 407.

(b) If a license holder maintains workers' compensation

insurance, the license holder shall pay workers' compensation

insurance premiums based on the experience rating of the client

company for the first two years the client company has a contract

with the license holder and as further provided by rule by the

Texas Department of Insurance.

(c) For workers' compensation insurance purposes, a license

holder and the license holder's client company shall be

coemployers. If a license holder elects to obtain workers'

compensation insurance, the client company and the license holder

are subject to Sections 406.034 and 408.001.

(d) If a license holder does not elect to obtain workers'

compensation insurance, both the license holder and the client

company are subject to Sections 406.004 and 406.033.

(e) After the expiration of the two-year period under Subsection

(b), if the client company obtains a new workers' compensation

insurance policy in the company's own name or adds the company's

former assigned workers to an existing policy, the premium for

the workers' compensation insurance policy of the company shall

be based on the lower of:

(1) the experience modifier of the company before entering into

the staff leasing arrangement; or

(2) the experience modifier of the license holder at the time

the staff leasing arrangement terminated.

(f) On request, the Texas Department of Insurance shall provide

the necessary computations to the prospective workers'

compensation insurer of the client company to comply with

Subsection (e).

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.043. HEALTH BENEFIT PLANS. (a) A license holder may

not sponsor a plan of self-insurance for health benefits except

as permitted by the Employee Retirement Income Security Act of

1974 (29 U.S.C. Section 1001 et seq.).

(b) For purposes of this section, a "plan of self-insurance"

includes any arrangement except an arrangement under which an

insurance carrier authorized to do business in this state has

issued an insurance policy that covers all of the obligations of

the health benefits plan.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.044. UNEMPLOYMENT TAXES; PAYROLL. (a) A license holder

is the employer of an assigned employee for purposes of Subtitle

A, Title 4, and, except for wages subject to Section 91.032(c),

for purposes of Chapter 61. In addition to any other reports

required to be filed by law, a license holder shall report

quarterly to the Texas Workforce Commission on a form prescribed

by the Texas Workforce Commission the name, address, telephone

number, federal income tax identification number, and

classification code as described in the "Standard Industrial

Classification Manual" published by the United States Office of

Management and Budget of each client company.

(b) For purposes of Subtitle A, Title 4, in the event of the

termination of a contract between a license holder and a client

company or the failure by a staff leasing entity to submit

reports or make tax payments as required by that subtitle, the

contracting client company shall be treated as a new employer

without a previous experience record unless that client company

is otherwise eligible for an experience rating.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 17, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 833, Sec. 3, eff. Sept.

1, 2003.

Sec. 91.045. POSTING REQUIREMENTS. (a) Each license holder

shall post in a conspicuous place in the license holder's

principal place of business in this state the license issued

under this chapter.

(b) Each license holder 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.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.046. CONTRACTUAL DUTIES. Each license holder is

responsible for the license holder's contractual duties and

responsibilities to manage, maintain, collect, and make timely

payments for:

(1) insurance premiums;

(2) benefit and welfare plans;

(3) other employee withholding; and

(4) any other expressed responsibility within the scope of the

contract for fulfilling the duties imposed under this section and

Sections 91.032, 91.047, and 91.048.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.047. COMPLIANCE WITH OTHER LAWS. Each license holder

shall comply with all appropriate state and federal laws relating

to reporting, sponsoring, filing, and maintaining benefit and

welfare plans.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.048. REQUIRED INFORMATION. Each license holder shall:

(1) maintain adequate books and records regarding the license

holder's duties and responsibilities;

(2) maintain and make available at all times to the executive

director the following information, which shall be treated as

proprietary and confidential and is exempt from disclosure to

persons other than other governmental agencies having a

reasonable, legitimate purpose for obtaining the information:

(A) the correct name, address, and telephone number of each

client company;

(B) each client company contract; and

(C) a listing by classification code as described in the

"Standard Industrial Classification Manual" published by the

United States Office of Management and Budget, of each client

company;

(3) notify the department of any addition or deletion of a

controlling person as listed on the license application or

renewal form by providing the name of the person not later than

the 45th day after the date on which the person is added or

deleted as a controlling person; and

(4) provide a biographical history to the department in

connection with the addition of a new controlling person.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 18, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 26.018, eff.

Sept. 1, 2003.

Sec. 91.049. AGENT FOR SERVICE OF PROCESS. Each license holder

shall maintain a registered agent for the service of process in

this state.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.050. TAX CREDITS AND OTHER INCENTIVES. (a) For the

purpose of determining tax credits, grants, and other economic

incentives provided by this state or other governmental entities

that are based on employment, assigned employees are considered

employees of the client and the client is solely entitled to the

benefit of any tax credit, economic incentive, or other benefit

arising from the employment of assigned employees of the client.

This subsection applies even if the staff leasing services

company is the reporting employer for federal income tax

purposes.

(b) If a grant or the amount of any incentive described by

Subsection (a) is based on the number of employees, each client

shall be treated as employing only those assigned employees

co-employed by the client. Assigned employees working for other

clients of the staff leasing services company may not be included

in the computation.

(c) Each staff leasing services company shall provide, on the

request of a client or an agency of this state, employment

information reasonably required by the state agency responsible

for the administration of any tax credit or economic incentive

described by Subsection (a) and necessary to support a request,

claim, application, or other action by a client seeking the tax

credit or economic incentive.

Added by Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 5, eff. September 1, 2009.

SUBCHAPTER E. PROHIBITED ACTS; PENALTY

Sec. 91.061. PROHIBITED ACTS. A person may not:

(1) engage in or offer staff leasing services without holding a

license under this chapter as a staff leasing services company;

(2) use the name or title "staff leasing company," "employee

leasing company," "licensed staff leasing company," "staff

leasing services company," "professional employer organization,"

or "administrative employer" or otherwise represent that the

entity 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 materially false or forged evidence to the department

in connection with obtaining or renewing a license or in

connection with disciplinary proceedings under this chapter; or

(5) use or attempt to use a license that has expired or been

revoked.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 19, eff.

Sept. 1, 1997.

Sec. 91.062. ACTION BY ATTORNEY GENERAL. (a) The executive

director may notify the attorney general of a violation of this

chapter. The attorney general may apply to a district court in

Travis County for permission to file for quo warranto relief,

injunctive relief, or both.

(b) The attorney general may not be required to post a bond for

injunctive relief under this section.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 2003, 78th Leg., ch. 816, Sec. 26.019,

eff. Sept. 1, 2003.

Sec. 91.063. CRIMINAL PENALTY. (a) A person who violates

Section 91.061 commits an offense.

(b) An offense under this section is a Class A misdemeanor.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

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Statutes > Texas > Labor-code > Title-2-protection-of-laborers > Chapter-91-staff-leasing-services

LABOR CODE

TITLE 2. PROTECTION OF LABORERS

SUBTITLE E. REGULATION OF CERTAIN OCCUPATIONS

CHAPTER 91. STAFF LEASING SERVICES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 91.001. DEFINITIONS. In this chapter:

(1) "Applicant" means a business entity applying for a license

or the renewal of a license under this chapter.

(2) "Assigned employee" means an employee under a staff leasing

services arrangement whose work is performed in this state. The

term does not include an employee hired to support or supplement

a client company's work force in a special work situation,

including:

(A) an employee absence;

(B) a temporary skill shortage;

(C) a seasonal workload; or

(D) a special assignment or project.

(2-a) "Assurance organization" means an independent entity

approved by the commission that:

(A) provides a national program of accreditation and financial

assurance for staff leasing services companies;

(B) has documented qualifications, standards, and procedures

acceptable to the department; and

(C) agrees to provide information, compliance monitoring

services, and financial assurance useful to the department in

accomplishing the provisions of this chapter.

(3) "Client company" means a person that contracts with a

license holder and is assigned employees by the license holder

under that contract.

(4) "Commission" means the Texas Commission of Licensing and

Regulation.

(5) Repealed by Acts 2003, 78th Leg., ch. 816, Sec. 14.010(1).

(6) "Common ownership" means a direct or indirect ownership

interest in excess of 33-1/3 percent. The term includes ownership

through subsidiaries or affiliates.

(7) "Controlling person" means an individual who:

(A) possesses direct or indirect control of 25 percent or more

of the voting securities of a corporation that offers or proposes

to offer staff leasing services;

(B) possesses the authority to set policy and direct management

of a company that offers or proposes to offer staff leasing

services;

(C) is employed, appointed, or authorized by a company that

offers or proposes to offer staff leasing services to enter into

a contract with a client company on behalf of the company; or

(D) a person who is an officer or director of a corporation or a

general partner of a partnership that offers or proposes to offer

staff leasing services.

(8) "Department" means the Texas Department of Licensing and

Regulation.

(8-a) "Executive director" means the executive director of the

department.

(9) "Governmental entity" means this state, or an agency,

county, or municipality of this state.

(10) "Independent contractor" means a person who contracts to

perform work or provide a service for the benefit of another and

who:

(A) is paid by the job, not by the hour or some other

time-measured basis;

(B) is free to hire as many helpers as the person desires and to

determine what each helper will be paid; and

(C) is free to work for other contractors, or to send helpers to

work for other contractors, while under contract to the hiring

employer.

(11) "License holder" means a person licensed under this chapter

to provide staff leasing services.

(12) Repealed by Acts 2009, 81st Leg., R.S., Ch. 188, Sec. 6,

eff. September 1, 2009.

(13) "Offer" means a proposal for acceptance or rejection that

is made in such a form that the promises or performance to be

rendered by each party are reasonably certain.

(14) "Staff leasing services" means an arrangement by which

employees of a license holder are assigned to work at a client

company and in which employment responsibilities are in fact

shared by the license holder 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 license holder. The term includes professional

employer organization services. The term does not include:

(A) temporary help;

(B) an independent contractor;

(C) the provision of services that otherwise meet the definition

of "staff leasing services" by one person solely to other persons

who are related to the service provider by common ownership; or

(D) a temporary common worker employer as defined by Chapter 92.

(15) "Staff leasing services company" means a business entity

that offers staff leasing services. The term includes a

professional employer organization.

(16) "Temporary help " means an arrangement by which an

organization hires its own employees and assigns them to a client

to support or supplement the client's work force in a special

work situation, including:

(A) an employee absence;

(B) a temporary skill shortage;

(C) a seasonal workload; or

(D) a special assignment or project.

(17) "Wages" means:

(A) compensation for labor or services rendered by an assigned

employee, whether computed on a time, task, piece, or other

basis; and

(B) vacation pay, holiday pay, sick leave pay, parental leave

pay, severance pay, bonuses, commissions, stock option grants, or

deferred compensation owed to an assigned employee under a

written agreement.

(18) "Working capital" of an applicant means the applicant's

current assets minus the applicant's current liabilities as

determined by generally accepted accounting principles.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 1, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 1, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.001, 14.010(1),

eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 833, Sec. 1, eff.

Sept. 1, 2003.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 1, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 6, eff. September 1, 2009.

Sec. 91.002. RULES. (a) The commission shall adopt rules as

necessary to administer this chapter.

(b) Each person who offers staff leasing services is subject to

this chapter and the rules adopted by the commission.

(c) Notwithstanding any other provision of this chapter, nothing

in this chapter preempts the existing statutory or rulemaking

authority of any other state agency or entity to regulate staff

leasing services in a manner consistent with the statutory

authority of that state agency or entity.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 2, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 2, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.002, eff. Sept.

1, 2003.

Sec. 91.003. INTERAGENCY COOPERATION. (a) Each state agency

that in performing duties under other law affects the regulation

of staff leasing services shall cooperate with the department and

other state agencies as necessary to implement and enforce this

chapter.

(b) In particular, the Texas Workforce Commission, the division

of workers' compensation of the Texas Department of Insurance,

the Department of Assistive and Rehabilitative Services, and the

attorney general's office shall assist in the implementation of

this chapter and shall provide information to the department on

request.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 3, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 26.016, eff.

Sept. 1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.001, eff. September 1, 2005.

Sec. 91.004. EFFECT OF OTHER LAW ON CLIENTS AND EMPLOYEES. (a)

This chapter does not exempt a client of a license holder, or any

assigned employee, from any other license requirements imposed

under local, state, or federal law.

(b) 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.

(c) A license holder is not engaged in the unauthorized practice

of an occupation, trade, or profession that is licensed,

certified, or otherwise regulated by a governmental entity solely

by entering into a staff leasing agreement with a client company

and assigned employees.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 4, eff.

Sept. 1, 1997.

Sec. 91.005. APPLICATION OF CERTAIN PROCUREMENT LAWS. With

respect to a bid, contract, purchase order, or agreement entered

into with the state or a political subdivision of the state, a

client company's status or certification as a small,

minority-owned, disadvantaged, or woman-owned business enterprise

or as a historically underutilized business is not affected

because the client company has entered into an agreement with a

license holder or uses the services of a license holder.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.006. WORKERS' COMPENSATION COVERAGE. (a) A certificate

of insurance coverage showing that a license holder maintains a

policy of workers' compensation insurance constitutes proof of

workers' compensation insurance coverage for the license holder

and the client company with respect to all employees of the

license holder assigned to the client company. The state and a

political subdivision of the state shall accept a certificate of

insurance coverage described by this section as proof of workers'

compensation coverage under Chapter 406.

(b) For a client company that has employees who are not assigned

employees under a staff leasing services agreement, the state or

a political subdivision of the state may require the client

company to furnish separate proof of workers' compensation

insurance coverage for those employees.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.007. APPLICATION OF LABOR RELATIONS LAWS. This chapter

does not relieve a client company of a right, obligation, or duty

under:

(1) Chapter 101;

(2) the federal National Labor Relations Act (29 U.S.C. Section

151 et seq.);

(3) the federal Railway Labor Act (45 U.S.C. Section 151 et

seq.); or

(4) any other law governing labor relations.

Added by Acts 1999, 76th Leg., ch. 771, Sec. 3, eff. Sept. 1,

1999.

Sec. 91.008. APPLICABILITY OF CONTINUING EDUCATION LAW. Section

51.405, Occupations Code, does not apply to this chapter.

Added by Acts 2003, 78th Leg., ch. 816, Sec. 14.003, eff. Sept.

1, 2003.

SUBCHAPTER B. LICENSE REQUIREMENTS

Sec. 91.011. LICENSE REQUIRED. A person may not engage in or

offer staff leasing services in this state unless the person

holds a license issued under this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.012. GENERAL LICENSE REQUIREMENTS. To be qualified to

serve as a controlling person of a license holder under this

chapter, that person must be at least 18 years of age and have

educational, managerial, or business experience relevant to:

(1) operation of a business entity offering staff leasing

services; or

(2) service as a controlling person of a staff leasing services

company.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 5, eff.

Sept. 1, 1997.

Sec. 91.013. BACKGROUND INVESTIGATIONS. (a) On receipt of an

original application for a license, the department shall conduct

a thorough background investigation of each individual applicant

and of each controlling person of each applicant to determine

whether that applicant or controlling person is qualified under

this chapter. The department may deny an application for the

issuance of a license if the department finds that an applicant

or a controlling person is not qualified under this chapter. The

investigation must 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.

(b) Department background investigations are governed by this

chapter, Section 411.122, Government Code, and Chapter 53,

Occupations Code. 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. The department shall consider criminal

convictions as provided by Section 411.122, Government Code, and

Chapter 53, Occupations Code.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 6, eff.

Sept. 1, 1997; Acts 2001, 77th Leg., ch. 1420, Sec. 14.815, eff.

Sept. 1, 2001.

Text of section effective until December 31, 2011

Sec. 91.014. NET WORTH REQUIREMENTS. (a) An applicant for an

original or renewal license must demonstrate a net worth as

follows:

(1) $50,000 if the applicant employs fewer than 250 assigned

employees;

(2) $75,000 if the applicant employs at least 250 but not more

than 750 assigned employees; and

(3) $100,000 if the applicant employs more than 750 assigned

employees.

(b) The applicant may demonstrate the applicant's net worth to

the department by providing the department with the applicant's

financial statement or a copy of the applicant's most recent

federal tax return. The applicant may also satisfy the net worth

requirement through guarantees, letters of credit, a bond in an

amount that demonstrates compliance with the requirements of

Subsection (a), or other security acceptable to the department. 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.

(c) In computing net worth, an applicant shall include adequate

reserves for all taxes and insurance, including reserves for

claims incurred but not paid and for claims incurred but not

reported under plans of self-insurance for health benefits. The

computation of net worth by an applicant is to be made according

to Section 448, Internal Revenue Code (26 U.S.C. Section 448).

(d) A document submitted to establish net worth must show the

net worth on a date not earlier than nine months before the date

on which the application is submitted. A document submitted to

establish net worth must be prepared or certified by an

independent certified public accountant. Information submitted to

or maintained by the department is subject to Chapter 552,

Government Code, other than information related to:

(1) identification of client companies;

(2) net worth;

(3) financial statements; or

(4) federal tax returns.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 7, eff.

Sept. 1, 1997.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 2, eff. December 31, 2011.

Text of section effective on December 31, 2011

Sec. 91.014. WORKING CAPITAL REQUIREMENTS. (a) An applicant

for an original or renewal license must demonstrate positive

working capital in the following amounts:

(1) $50,000 if the applicant employs fewer than 250 assigned

employees;

(2) $75,000 if the applicant employs at least 250 but not more

than 750 assigned employees; and

(3) $100,000 if the applicant employs more than 750 assigned

employees.

(b) The applicant shall demonstrate the applicant's working

capital to the department by providing the department with the

applicant's financial statement. The financial statement must be

prepared in accordance with generally accepted accounting

principles, be audited by an independent certified public

accountant, and be without qualification as to the going concern

status of the applicant. An applicant that has not had

sufficient operating history to have audited financial statements

based on at least 12 months of operations must meet the financial

capacity requirements required by Subsection (a) and provide the

department with financial statements that have been reviewed by a

certified public accountant.The applicant may satisfy any

deficiencies in the working capital requirement through

guarantees, letters of credit, a bond in an amount that

demonstrates compliance with the amounts required under

Subsection (a), or other security acceptable to the department.

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.

(c) Information submitted to or maintained by the department is

subject to Chapter 552, Government Code, other than information

related to:

(1) identification of client companies;

(2) working capital;

(3) financial statements; or

(4) federal tax returns.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 7, eff.

Sept. 1, 1997.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 2, eff. December 31, 2011.

Sec. 91.015. LICENSE APPLICATION. (a) To receive a staff

leasing services company original license, a person shall file

with the department a written application accompanied by the

application fee.

(b) The department shall require an applicant for a license to

provide information necessary to determine that the applicant

meets the licensing requirements of this chapter. The department

shall also require the applicant to provide information necessary

to determine whether individuals affiliated with the applicant

are qualified to serve as controlling persons.

(c) Before denying a license application, the department shall

provide written notice to an applicant specifying the reasons for

the denial. The department shall provide the applicant at least

30 days after the date of the notice to address the reasons for

the denial. For good cause and on a showing of a good faith

effort to remedy the reasons for the denial, the executive

director may grant an additional 30 days to remedy the reasons

for denial.

(d) Removal, demotion, or discharge of a controlling person in

response to notice from the department of the alleged

unsuitability of that controlling person is an affirmative

defense to any claim by that individual based on the removal,

demotion, or discharge.

(e) A controlling person who has been evaluated by the

department under this chapter is not required to be reevaluated

if that person changes the person's affiliation or employment

from one applicant or license holder to another applicant or

license holder.

(f) Following denial or revocation of a license, and prior to

issuing a new license or reinstating a license, the department

shall consider:

(1) the extent to which the applicant or license holder has

adequately corrected any problems; and

(2) whether the applicant or license holder has demonstrated

that the applicant or license holder had exercised due diligence

to avoid the reason or reasons for the denial or revocation.

The applicant or license holder shall bear the burden of proof

with respect to Subdivisions (1) and (2).

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 8, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 4, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 26.017, eff. Sept.

1, 2003.

Sec. 91.016. LICENSE ISSUANCE; TERM. (a) The department shall

issue a license to an applicant who the department determines has

met the requirements of this chapter. The department shall notify

an applicant of any deficiency in the application not later than

the 30th day after the date on which the department receives the

application forms. The department shall issue the license not

later than the 90th day after the date on which the completed

application is filed with the department.

(b) A license issued or renewed by the department under this

chapter is valid for one year from the date of the issuance or

renewal. The department shall renew a license on receipt of a

complete renewal application form and payment of the license

renewal fee.

(c) Each applicant or license holder shall disclose to the

department the addition of a new controlling person not later

than the 45th day after the date on which the person assumes the

duties of a controlling person. That person may serve as a

controlling person while the department is conducting any

necessary investigation. If the department determines not to

approve the new controlling person, the department shall notify

the applicant or license holder and that controlling person at

least 20 days before taking action against the applicant or

license holder.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 9, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.004, eff.

Sept. 1, 2003.

Sec. 91.017. FEES. (a) Each applicant for an original or

renewal staff leasing services company license shall pay to the

department before the issuance of the license or license renewal

a fee set by the commission by rule.

(b) The commission is authorized to charge reasonable fees for

license applications and renewals, investigations, inspections,

and any other administrative or enforcement responsibilities

created under this chapter.

(c) Fees collected by the department under this chapter shall be

used to implement this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 10, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.005, eff.

Sept. 1, 2003.

Sec. 91.018. LICENSE NOT ASSIGNABLE; CHANGE OF NAME OR LOCATION.

(a) A license holder may not conduct business under any name

other than that specified in the license. A license issued under

this chapter is not assignable. A license holder 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 license holder that

the public may be confused or misled by the name's use. A license

holder may not conduct business under more than one name unless

the license holder has obtained a separate license for each name.

(b) A license holder may change the license holder's licensed

name at any time by notifying the department and paying a fee for

each change of name. The commission by rule shall set the fee for

a name change. A license holder may change the license holder's

name on renewal of the license without the payment of the name

change fee.

(c) A license holder must notify the department in writing of:

(1) any change in the location of the license holder's primary

business office;

(2) the addition of more business offices; or

(3) a change in the location of business records maintained by

the license holder.

(d) A license holder may amend the name specified in its license

to add a trade name, trademark, service mark, or parent company

name. An amendment made under this subsection must comply with

the requirements imposed under Subsection (a). The department may

charge a fee for processing of such an amendment.

(e) A license holder offering staff leasing services in more

than one state may advertise in this state using the name of its

parent company or under a trade name, trademark, or service mark.

The trade name, trademark, service mark, or parent company name

must be listed on the license in addition to the licensed name

used by the license holder in this state.

(f) Each written proposal provided to a prospective client

company and each contract between a license holder and a client

company or assigned employee shall clearly identify the name of

the license holder. A proposal or contract may also identify the

trade name, trademark, service mark, or parent company name of

the license holder. A license holder may use written materials

including forms, benefit information, letterhead, and business

cards that bear only the trade name, trademark, service mark, or

parent company name of the license holder.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 11, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.006, eff.

Sept. 1, 2003.

Sec. 91.019. LIMITED LICENSE. (a) The commission by rule shall

provide for the issuance of a limited license to a person who

seeks to offer limited staff leasing services in this state.

(b) For purposes of this section, a staff leasing services

company is considered to be offering limited staff leasing

services if the staff leasing services company:

(1) employs fewer than 50 assigned employees in this state at

any one time;

(2) does not provide assigned employees to a client company

based or domiciled in this state; and

(3) does not maintain an office in this state or solicit client

companies located or domiciled in this state.

(c) A staff leasing services company that offers limited staff

leasing services shall complete the application forms and pay the

fees for a limited license as prescribed by the department. A

limited license is valid for one year from the date of issuance

and may be renewed annually on submission of a renewal

application and payment of the required fees.

(d) The department may use information obtained from regulatory

agencies in other states in evaluating an applicant for a limited

license.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 12, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 771, Sec. 5, eff. Sept.

1, 1999; Acts 2003, 78th Leg., ch. 816, Sec. 14.007, eff. Sept.

1, 2003.

Sec. 91.020. GROUNDS FOR DISCIPLINARY ACTION. The department

may take disciplinary action against a license holder on any of

the following grounds:

(1) engaging in staff leasing services or offering to engage in

the provision of staff leasing services without a license;

(2) transferring or attempting to transfer a license issued

under this chapter;

(3) violating this chapter or any order or rule issued by the

executive director or commission under this chapter;

(4) failing after the 31st day after the date on which a felony

conviction of a controlling person is final to notify the

department in writing of the conviction;

(5) failing to cooperate with an investigation, examination, or

audit of the license holder's records conducted by the license

holder's insurance company or the insurance company's designee,

as allowed by the insurance contract or as authorized by law by

the Texas Department of Insurance;

(6) failing after the 31st day after the effective date of a

change in ownership, principal business address, or the address

of accounts and records to notify the department and the Texas

Department of Insurance of the change;

(7) failing to correct any tax filings or payment deficiencies

within a reasonable time as determined by the executive director;

(8) refusing, after reasonable notice, to meet reasonable health

and safety requirements within the license holder's control and

made known to the license holder by a federal or state agency;

(9) being delinquent in the payment of the license holder's

insurance premiums other than those subject to a legitimate

dispute;

(10) being delinquent in the payment of any employee benefit

plan premiums or contributions other than those subject to a

legitimate dispute;

(11) knowingly making a material misrepresentation to an

insurance company or to the department or other governmental

agency;

(12) failing to maintain the working capital required under

Section 91.014; or

(13) using staff leasing services to avert or avoid an existing

collective bargaining agreement.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 13, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.008, eff.

Sept. 1, 2003.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 3, eff. September 1, 2009.

Sec. 91.021. ELECTRONIC FILING AND COMPLIANCE. (a) The

commission may adopt rules to permit the acceptance of electronic

filings under this chapter, including the filing of applications,

documents, reports, and other documents required by this chapter.

The rules may provide for the acceptance of electronic filing

and other assurance by an assurance organization, qualified and

approved by the commission, that provides satisfactory assurance

and documentation of compliance acceptable to the department that

meets or exceeds the requirements of this chapter.

(b) A staff leasing services company may authorize an assurance

organization that is qualified and approved by the commission to

act on its behalf in complying with the licensing requirements of

this chapter, including the electronic filing of information and

the payment of application and licensing fees. Use of an

assurance organization is optional and is not mandatory for a

staff leasing services company.

(c) Nothing in this section may be construed to change or affect

the department's authority to issue licenses, revoke licenses,

conduct investigations, or enforce any provision of this chapter.

Added by Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 4, eff. September 1, 2009.

SUBCHAPTER C. STAFF LEASING SERVICES AGREEMENT

Sec. 91.031. AGREEMENT; NOTICE. (a) A license holder shall

establish the terms of a staff leasing services agreement by a

written contract between the license holder and the client

company.

(b) The license holder shall give written notice of the

agreement as it affects assigned employees to each employee

assigned to a client company worksite.

(c) The written notice required by Subsection (b) must be given

to each assigned employee not later than the first payday after

the date on which that individual becomes an assigned employee.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 15, eff.

Sept. 1, 1997.

Sec. 91.032. CONTRACT REQUIREMENTS. (a) A contract between a

license holder and a client company must provide that the license

holder:

(1) shares, as provided by Subsection (b), with the client

company the right of direction and control over employees

assigned to a client's worksites;

(2) assumes responsibility for the payment of wages to the

assigned employees without regard to payments by the client to

the license holder;

(3) assumes responsibility for the payment of payroll taxes and

collection of taxes from payroll on assigned employees;

(4) shares, as provided by Subsection (b), with the client

company the right to hire, fire, discipline, and reassign the

assigned employees; and

(5) shares, as provided by Subsection (b), with the client

company 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.

(b) Notwithstanding any other provision of this chapter, a

client company retains responsibility for:

(1) the direction and control of assigned employees as necessary

to conduct the client company's business, discharge any

applicable fiduciary duty, or comply with any licensure,

regulatory, or statutory requirement;

(2) goods and services produced by the client company; and

(3) the acts, errors, and omissions of assigned employees

committed within the scope of the client company's business.

(c) Notwithstanding Subsection (a)(2), a client company is

solely obligated to pay any wages for which:

(1) obligation to pay is created by an agreement, contract,

plan, or policy between the client company and the assigned

employee; and

(2) the staff leasing services company has not contracted to

pay.

(d) Each staff leasing services company shall disclose the

requirements of Subsection (c) in writing to each assigned

employee.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1999, 76th Leg., ch. 771, Sec. 7, eff.

Sept. 1, 1999; Acts 2003, 78th Leg., ch. 833, Sec. 2, eff. Sept.

1, 2003.

SUBCHAPTER D. POWERS AND DUTIES OF LICENSE HOLDER

Sec. 91.041. EMPLOYEE BENEFIT PLANS; REQUIRED DISCLOSURE; OTHER

REPORTS. (a) A license holder may sponsor and maintain employee

benefit plans for the benefit of assigned employees. A client

company may include assigned employees in any benefit plan

sponsored by the client company.

(b) With respect to any insurance or benefit plan provided by a

license holder for the benefit of its assigned employees, a

license holder shall disclose the following information to the

department, each client company, and its assigned employees:

(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 in 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.

(c) The commission by rule may require a license holder to file

other reports that are reasonably necessary for the

implementation of this chapter.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 16, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 14.009, eff.

Sept. 1, 2003.

Sec. 91.042. WORKERS' COMPENSATION INSURANCE. (a) A license

holder may elect to obtain workers' compensation insurance

coverage for the license holder's assigned employees through an

insurance company as defined under Section 401.011(28) or through

self-insurance as provided under Chapter 407.

(b) If a license holder maintains workers' compensation

insurance, the license holder shall pay workers' compensation

insurance premiums based on the experience rating of the client

company for the first two years the client company has a contract

with the license holder and as further provided by rule by the

Texas Department of Insurance.

(c) For workers' compensation insurance purposes, a license

holder and the license holder's client company shall be

coemployers. If a license holder elects to obtain workers'

compensation insurance, the client company and the license holder

are subject to Sections 406.034 and 408.001.

(d) If a license holder does not elect to obtain workers'

compensation insurance, both the license holder and the client

company are subject to Sections 406.004 and 406.033.

(e) After the expiration of the two-year period under Subsection

(b), if the client company obtains a new workers' compensation

insurance policy in the company's own name or adds the company's

former assigned workers to an existing policy, the premium for

the workers' compensation insurance policy of the company shall

be based on the lower of:

(1) the experience modifier of the company before entering into

the staff leasing arrangement; or

(2) the experience modifier of the license holder at the time

the staff leasing arrangement terminated.

(f) On request, the Texas Department of Insurance shall provide

the necessary computations to the prospective workers'

compensation insurer of the client company to comply with

Subsection (e).

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.043. HEALTH BENEFIT PLANS. (a) A license holder may

not sponsor a plan of self-insurance for health benefits except

as permitted by the Employee Retirement Income Security Act of

1974 (29 U.S.C. Section 1001 et seq.).

(b) For purposes of this section, a "plan of self-insurance"

includes any arrangement except an arrangement under which an

insurance carrier authorized to do business in this state has

issued an insurance policy that covers all of the obligations of

the health benefits plan.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.044. UNEMPLOYMENT TAXES; PAYROLL. (a) A license holder

is the employer of an assigned employee for purposes of Subtitle

A, Title 4, and, except for wages subject to Section 91.032(c),

for purposes of Chapter 61. In addition to any other reports

required to be filed by law, a license holder shall report

quarterly to the Texas Workforce Commission on a form prescribed

by the Texas Workforce Commission the name, address, telephone

number, federal income tax identification number, and

classification code as described in the "Standard Industrial

Classification Manual" published by the United States Office of

Management and Budget of each client company.

(b) For purposes of Subtitle A, Title 4, in the event of the

termination of a contract between a license holder and a client

company or the failure by a staff leasing entity to submit

reports or make tax payments as required by that subtitle, the

contracting client company shall be treated as a new employer

without a previous experience record unless that client company

is otherwise eligible for an experience rating.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 17, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 833, Sec. 3, eff. Sept.

1, 2003.

Sec. 91.045. POSTING REQUIREMENTS. (a) Each license holder

shall post in a conspicuous place in the license holder's

principal place of business in this state the license issued

under this chapter.

(b) Each license holder 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.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.046. CONTRACTUAL DUTIES. Each license holder is

responsible for the license holder's contractual duties and

responsibilities to manage, maintain, collect, and make timely

payments for:

(1) insurance premiums;

(2) benefit and welfare plans;

(3) other employee withholding; and

(4) any other expressed responsibility within the scope of the

contract for fulfilling the duties imposed under this section and

Sections 91.032, 91.047, and 91.048.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.047. COMPLIANCE WITH OTHER LAWS. Each license holder

shall comply with all appropriate state and federal laws relating

to reporting, sponsoring, filing, and maintaining benefit and

welfare plans.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.048. REQUIRED INFORMATION. Each license holder shall:

(1) maintain adequate books and records regarding the license

holder's duties and responsibilities;

(2) maintain and make available at all times to the executive

director the following information, which shall be treated as

proprietary and confidential and is exempt from disclosure to

persons other than other governmental agencies having a

reasonable, legitimate purpose for obtaining the information:

(A) the correct name, address, and telephone number of each

client company;

(B) each client company contract; and

(C) a listing by classification code as described in the

"Standard Industrial Classification Manual" published by the

United States Office of Management and Budget, of each client

company;

(3) notify the department of any addition or deletion of a

controlling person as listed on the license application or

renewal form by providing the name of the person not later than

the 45th day after the date on which the person is added or

deleted as a controlling person; and

(4) provide a biographical history to the department in

connection with the addition of a new controlling person.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 18, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 816, Sec. 26.018, eff.

Sept. 1, 2003.

Sec. 91.049. AGENT FOR SERVICE OF PROCESS. Each license holder

shall maintain a registered agent for the service of process in

this state.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

Sec. 91.050. TAX CREDITS AND OTHER INCENTIVES. (a) For the

purpose of determining tax credits, grants, and other economic

incentives provided by this state or other governmental entities

that are based on employment, assigned employees are considered

employees of the client and the client is solely entitled to the

benefit of any tax credit, economic incentive, or other benefit

arising from the employment of assigned employees of the client.

This subsection applies even if the staff leasing services

company is the reporting employer for federal income tax

purposes.

(b) If a grant or the amount of any incentive described by

Subsection (a) is based on the number of employees, each client

shall be treated as employing only those assigned employees

co-employed by the client. Assigned employees working for other

clients of the staff leasing services company may not be included

in the computation.

(c) Each staff leasing services company shall provide, on the

request of a client or an agency of this state, employment

information reasonably required by the state agency responsible

for the administration of any tax credit or economic incentive

described by Subsection (a) and necessary to support a request,

claim, application, or other action by a client seeking the tax

credit or economic incentive.

Added by Acts 2009, 81st Leg., R.S., Ch.

188, Sec. 5, eff. September 1, 2009.

SUBCHAPTER E. PROHIBITED ACTS; PENALTY

Sec. 91.061. PROHIBITED ACTS. A person may not:

(1) engage in or offer staff leasing services without holding a

license under this chapter as a staff leasing services company;

(2) use the name or title "staff leasing company," "employee

leasing company," "licensed staff leasing company," "staff

leasing services company," "professional employer organization,"

or "administrative employer" or otherwise represent that the

entity 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 materially false or forged evidence to the department

in connection with obtaining or renewing a license or in

connection with disciplinary proceedings under this chapter; or

(5) use or attempt to use a license that has expired or been

revoked.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 1997, 75th Leg., ch. 1379, Sec. 19, eff.

Sept. 1, 1997.

Sec. 91.062. ACTION BY ATTORNEY GENERAL. (a) The executive

director may notify the attorney general of a violation of this

chapter. The attorney general may apply to a district court in

Travis County for permission to file for quo warranto relief,

injunctive relief, or both.

(b) The attorney general may not be required to post a bond for

injunctive relief under this section.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995. Amended by Acts 2003, 78th Leg., ch. 816, Sec. 26.019,

eff. Sept. 1, 2003.

Sec. 91.063. CRIMINAL PENALTY. (a) A person who violates

Section 91.061 commits an offense.

(b) An offense under this section is a Class A misdemeanor.

Added by Acts 1995, 74th Leg., ch. 76, Sec. 9.20(a), eff. Sept.

1, 1995.

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