1.1                          A bill for an act 
  1.2             relating to employment; the professional employer 
  1.3             organization act; providing for the establishment and 
  1.4             regulation of professional employer organizations; 
  1.5             providing penalties; amending Minnesota Statutes 1994, 
  1.6             sections 13.99, by adding a subdivision; 116J.70, 
  1.7             subdivision 2a; and 268.04, subdivision 10; proposing 
  1.8             coding for new law as Minnesota Statutes, chapter 181C.
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1994, section 13.99, is 
  1.11  amended by adding a subdivision to read: 
  1.12     Subd. 115.  [PROFESSIONAL EMPLOYER ORGANIZATION DATA.] Data 
  1.13  maintained by the department of commerce under chapter 181C is 
  1.14  governed by section 181C.05. 
  1.15     Sec. 2.  Minnesota Statutes 1994, section 116J.70, 
  1.16  subdivision 2a, is amended to read: 
  1.17     Subd. 2a.  [LICENSE; EXCEPTIONS.] "Business license" or 
  1.18  "license" does not include the following:  
  1.19     (1) any occupational license or registration issued by a 
  1.20  licensing board listed in section 214.01 or any occupational 
  1.21  registration issued by the commissioner of health pursuant to 
  1.22  section 214.13; 
  1.23     (2) any license issued by a county, home rule charter city, 
  1.24  statutory city, township, or other political subdivision; 
  1.25     (3) any license required to practice the following 
  1.26  occupation regulated by the following sections:  
  1.27     (a) abstracters regulated pursuant to chapter 386; 
  2.1      (b) accountants regulated pursuant to chapter 326; 
  2.2      (c) adjusters regulated pursuant to chapter 72B; 
  2.3      (d) architects regulated pursuant to chapter 326; 
  2.4      (e) assessors regulated pursuant to chapter 270; 
  2.5      (f) athletic trainers regulated pursuant to chapter 148; 
  2.6      (g) attorneys regulated pursuant to chapter 481; 
  2.7      (h) auctioneers regulated pursuant to chapter 330; 
  2.8      (i) barbers regulated pursuant to chapter 154; 
  2.9      (j) beauticians regulated pursuant to chapter 155A; 
  2.10     (k) boiler operators regulated pursuant to chapter 183; 
  2.11     (l) chiropractors regulated pursuant to chapter 148; 
  2.12     (m) collection agencies regulated pursuant to chapter 332; 
  2.13     (n) cosmetologists regulated pursuant to chapter 155A; 
  2.14     (o) dentists, registered dental assistants, and dental 
  2.15  hygienists regulated pursuant to chapter 150A; 
  2.16     (p) detectives regulated pursuant to chapter 326; 
  2.17     (q) electricians regulated pursuant to chapter 326; 
  2.18     (r) embalmers regulated pursuant to chapter 149; 
  2.19     (s) engineers regulated pursuant to chapter 326; 
  2.20     (t) insurance brokers and salespersons regulated pursuant 
  2.21  to chapter 60A; 
  2.22     (u) certified interior designers regulated pursuant to 
  2.23  chapter 326; 
  2.24     (v) midwives regulated pursuant to chapter 148; 
  2.25     (w) morticians regulated pursuant to chapter 149; 
  2.26     (x) nursing home administrators regulated pursuant to 
  2.27  chapter 144A; 
  2.28     (y) optometrists regulated pursuant to chapter 148; 
  2.29     (z) osteopathic physicians regulated pursuant to chapter 
  2.30  147; 
  2.31     (aa) pharmacists regulated pursuant to chapter 151; 
  2.32     (bb) physical therapists regulated pursuant to chapter 148; 
  2.33     (cc) physicians and surgeons regulated pursuant to chapter 
  2.34  147; 
  2.35     (dd) plumbers regulated pursuant to chapter 326; 
  2.36     (ee) podiatrists regulated pursuant to chapter 153; 
  3.1      (ff) practical nurses regulated pursuant to chapter 148; 
  3.2      (gg) professional fund raisers regulated pursuant to 
  3.3   chapter 309; 
  3.4      (hh) psychologists regulated pursuant to chapter 148; 
  3.5      (ii) real estate brokers, salespersons, and others 
  3.6   regulated pursuant to chapters 82 and 83; 
  3.7      (jj) registered nurses regulated pursuant to chapter 148; 
  3.8      (kk) securities brokers, dealers, agents, and investment 
  3.9   advisers regulated pursuant to chapter 80A; 
  3.10     (ll) steamfitters regulated pursuant to chapter 326; 
  3.11     (mm) teachers and supervisory and support personnel 
  3.12  regulated pursuant to chapter 125; 
  3.13     (nn) veterinarians regulated pursuant to chapter 156; 
  3.14     (oo) water conditioning contractors and installers 
  3.15  regulated pursuant to chapter 326; 
  3.16     (pp) water well contractors regulated pursuant to chapter 
  3.17  156A; 
  3.18     (qq) water and waste treatment operators regulated pursuant 
  3.19  to chapter 115; 
  3.20     (rr) motor carriers regulated pursuant to chapter 221; 
  3.21     (ss) professional corporations regulated pursuant to 
  3.22  chapter 319A; 
  3.23     (tt) real estate appraisers regulated pursuant to chapter 
  3.24  82B; 
  3.25     (uu) residential building contractors, residential 
  3.26  remodelers, residential roofers, manufactured home installers, 
  3.27  and specialty contractors regulated pursuant to chapter 326; 
  3.28     (vv) professional employer organizations regulated pursuant 
  3.29  to chapter 181C; 
  3.30     (4) any driver's license required pursuant to chapter 171; 
  3.31     (5) any aircraft license required pursuant to chapter 360; 
  3.32     (6) any watercraft license required pursuant to chapter 
  3.33  86B; 
  3.34     (7) any license, permit, registration, certification, or 
  3.35  other approval pertaining to a regulatory or management program 
  3.36  related to the protection, conservation, or use of or 
  4.1   interference with the resources of land, air, or water, which is 
  4.2   required to be obtained from a state agency or instrumentality; 
  4.3   and 
  4.4      (8) any pollution control rule or standard established by 
  4.5   the pollution control agency or any health rule or standard 
  4.6   established by the commissioner of health or any licensing rule 
  4.7   or standard established by the commissioner of human services. 
  4.8      Sec. 3.  [181C.01] [SHORT TITLE.] 
  4.9      This act may be cited as the "Minnesota professional 
  4.10  employer organization act." 
  4.11     Sec. 4.  [181C.02] [PURPOSE.] 
  4.12     The legislature recognizes that there is a public need for 
  4.13  professional employer organization services and deems it 
  4.14  necessary in the interest of public health, safety, and welfare 
  4.15  to establish standards for the operation, regulation, and 
  4.16  licensing of professional employer organizations in this state. 
  4.17     Sec. 5.  [181C.03] [DEFINITIONS.] 
  4.18     Subdivision 1.  [APPLICANT.] "Applicant" means a person 
  4.19  seeking to be licensed under this chapter. 
  4.20     Subd. 2.  [CLIENT.] "Client" means a person who obtains all 
  4.21  or part of its workforce from another person through a 
  4.22  professional employer arrangement. 
  4.23     Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
  4.24  commissioner of commerce. 
  4.25     Subd. 4.  [CONTROLLING PERSON.] "Controlling person" means: 
  4.26     (1) a natural person who possesses, directly or indirectly, 
  4.27  the power to direct or cause the direction of the management or 
  4.28  policies of a professional employer organization, through 
  4.29  ownership of voting securities, by contract or otherwise; or 
  4.30     (2) a natural person employed, appointed, or authorized by 
  4.31  a professional employer organization to enter into a contractual 
  4.32  relationship with a client on behalf of the professional 
  4.33  employer organization. 
  4.34     Subd. 5.  [LICENSEE.] "Licensee" means a person licensed as 
  4.35  a professional employer organization or professional employer 
  4.36  organization group under this chapter. 
  5.1      Subd. 6.  [PERSON.] "Person" means an individual, 
  5.2   association, company, firm, partnership, or corporation. 
  5.3      Subd. 7.  [PROFESSIONAL EMPLOYER ARRANGEMENT.] (a) 
  5.4   "Professional employer arrangement" means an arrangement, under 
  5.5   contract or otherwise, where: 
  5.6      (1) a professional employer organization assigns employees 
  5.7   to perform services for a client; 
  5.8      (2) the arrangement is intended to be, or is, ongoing 
  5.9   rather than temporary in nature; 
  5.10     (3) the professional employer organization places onto its 
  5.11  payroll at least all nonsupervisory, and optionally also 
  5.12  supervisory, employees of one or more functionally separate 
  5.13  parts of a client company at a worksite; and 
  5.14     (4) the professional employer organization reserves a right 
  5.15  of direction and control over the employees described in clause 
  5.16  (3), whether the right is held or exercised exclusively or 
  5.17  jointly with the client company.  
  5.18     (b) For purposes of this chapter, a professional employer 
  5.19  arrangement does not include:  
  5.20     (1) a temporary employee; 
  5.21     (2) an arrangement where a person, whose principal business 
  5.22  activity is not entering into professional employer 
  5.23  arrangements, shares employees with a commonly owned company 
  5.24  within the meaning of section 414(b) and (c) of the Internal 
  5.25  Revenue Code of 1986, as amended, that does not hold itself out 
  5.26  as a professional employer organization; and 
  5.27     (3) arrangements for which a person assumes full 
  5.28  responsibility for the product or service performed by the 
  5.29  person or an agent and retains and exercises, both legally and 
  5.30  in fact, a complete right of direction and control over the 
  5.31  individuals whose services are supplied under the contractual 
  5.32  arrangements, and the person and the agent perform a specified 
  5.33  function for the recipient that is separate and divisible from 
  5.34  the primary business or operations of the recipient. 
  5.35     Subd. 8.  [PROFESSIONAL EMPLOYER 
  5.36  ORGANIZATION.] "Professional employer organization" means a 
  6.1   person engaged in providing the services of employees under one 
  6.2   or more professional employer arrangements or a person that 
  6.3   represents itself to the public as providing services under a 
  6.4   professional employer arrangement. 
  6.5      Subd. 9.  [PROFESSIONAL EMPLOYER ORGANIZATION 
  6.6   GROUP.] "Professional employer organization group" means two or 
  6.7   more, but not more than five, corporate professional employer 
  6.8   organizations each of which are majority-owned by the same 
  6.9   parent, entity, or person. 
  6.10     Subd. 10.  [TEMPORARY EMPLOYEE.] "Temporary employee" means 
  6.11  a person employed either through another person or directly by 
  6.12  an employer to support or supplement the existing work force in 
  6.13  special situations such as employee absences, temporary skill 
  6.14  shortages, seasonal work loads, and special assignments and 
  6.15  projects with the expectation that the person's position will be 
  6.16  terminated upon the completion of the task or function.  
  6.17  Services performed by temporary employees are not considered 
  6.18  professional employer arrangements. 
  6.19     Sec. 6.  [181C.05] [CONFIDENTIALITY OF INFORMATION.] 
  6.20     Information, statements, transcriptions of proceedings, 
  6.21  transcriptions of recordings, electronic recordings, letters, 
  6.22  memoranda, and other documents and reports obtained from an 
  6.23  applicant, client, employing unit, or employer pursuant to the 
  6.24  administration of this chapter, are confidential data on 
  6.25  individuals as defined in section 13.02, subdivision 3. 
  6.26     Sec. 7.  [181C.06] [LICENSE REQUIRED.] 
  6.27     On or after the effective date of this act, a person who 
  6.28  engages in the business of, or acts as, a professional employer 
  6.29  organization by entering into a professional employer 
  6.30  arrangement with a client relating to business conducted by the 
  6.31  client in this state without first procuring a license, or who 
  6.32  otherwise violates the provisions of this chapter may be 
  6.33  penalized as provided in sections 181C.15 and 181C.16. 
  6.34     Sec. 8.  [181C.07] [EXEMPTIONS.] 
  6.35     This chapter does not apply to a labor organization or to a 
  6.36  political subdivision of this state, the United States, and any 
  7.1   programs or agencies thereof. 
  7.2      Sec. 9.  [181C.08] [APPLICATION FOR INITIAL LICENSE.] 
  7.3      Subdivision 1.  [APPLICATION.] An applicant for an initial 
  7.4   professional employer organization license must file with the 
  7.5   commissioner a completed application on a form prescribed and 
  7.6   furnished by the commissioner together with the forms, 
  7.7   materials, and information necessary to enable the commissioner 
  7.8   to ascertain if the applicant meets the requirements of this 
  7.9   chapter, and a nonrefundable application fee of $........  As a 
  7.10  condition of licensure under this chapter, an applicant that is 
  7.11  not a resident of, or is domiciled outside of, the state of 
  7.12  Minnesota must first be licensed as a professional employer 
  7.13  organization or as a professional employer organization group in 
  7.14  the state in which it is a resident or is domiciled if licensing 
  7.15  is required by that state. 
  7.16     Subd. 2.  [STANDARDS.] An applicant for licensing as a 
  7.17  professional employer organization or professional employer 
  7.18  organization group must meet the following minimum standards in 
  7.19  paragraphs (a) to (j). 
  7.20     (a) If an individual, the applicant must have reached the 
  7.21  age of 18. 
  7.22     (b) If a partnership, the applicant must state the names 
  7.23  and home addresses of all partners and indicate whether each 
  7.24  partner is a general or a limited partner.  The applicant must 
  7.25  include a copy of the partnership agreement, or an affidavit 
  7.26  signed by all partners to the effect that no written partnership 
  7.27  agreement exists. 
  7.28     (c) If a corporation, the applicant must state the names 
  7.29  and home addresses of all officers, directors, and shareholders 
  7.30  who own a five percent or greater interest in the corporation 
  7.31  and a list of shareholders who formerly owned a five percent or 
  7.32  greater interest in the corporation or its predecessors in the 
  7.33  preceding five years.  The applicant must include a certificate 
  7.34  of good standing from the secretary of state evidencing its 
  7.35  qualification to do business in this state. 
  7.36     (d) If a group, the parent entity or other entity 
  8.1   authorized to act on behalf of the group must be the applicant.  
  8.2   The applicant must include for each professional employer 
  8.3   organization within the group the information required in this 
  8.4   subdivision.  The applicant must also include a guarantee, on a 
  8.5   form approved by the commissioner, executed by each professional 
  8.6   employer organization within the group guaranteeing payment of 
  8.7   all financial obligations with respect to wages, employment 
  8.8   taxes, insurance premiums, and employee benefits of each other 
  8.9   member within the group.  A professional employer organization 
  8.10  group may satisfy the reporting and financial requirements of 
  8.11  this chapter on a consolidated basis. 
  8.12     (e) The applicant must provide the trade name or names 
  8.13  under which the applicant conducts business, its taxpayer or 
  8.14  employer identification number, and the address of its principal 
  8.15  place of business in this state and the address of any other 
  8.16  office within this state through which the applicant intends to 
  8.17  conduct business as a professional employer organization or 
  8.18  professional employer organization group.  If the applicant's 
  8.19  principal place of business is located in another state, that 
  8.20  address must be provided. 
  8.21     (f) The applicant must provide a list, by jurisdiction, of 
  8.22  each name under which the applicant has operated in the 
  8.23  preceding five years, including alternative names, names of 
  8.24  predecessors, and names of related business entities with common 
  8.25  majority ownership.  The applicant must also provide detailed 
  8.26  information on the background of each controlling person to the 
  8.27  extent deemed necessary by the commissioner. 
  8.28     (g) The applicant must provide other information that the 
  8.29  commissioner deems necessary to show that the applicant and each 
  8.30  controlling person are of good moral character, business 
  8.31  integrity, and financial responsibility.  As used in this 
  8.32  chapter, "good moral character" means a personal history of 
  8.33  honesty, trustworthiness, fairness, a good reputation for fair 
  8.34  dealings, and respect for the rights of others and for the laws 
  8.35  of this state and nation.  A thorough background investigation 
  8.36  of the individual's good moral character must be instituted by 
  9.1   the commissioner.  The investigation must require: 
  9.2      (1) the submission of fingerprints for processing through 
  9.3   appropriate law enforcement agencies by the applicant and the 
  9.4   examination of police records by the commissioner; and 
  9.5      (2) other investigation of the individual as the 
  9.6   commissioner deems necessary. 
  9.7      (h) The commissioner may deny an application for licensure 
  9.8   or renewal citing lack of good moral character.  Conviction of a 
  9.9   crime within the last seven years shall not automatically bar 
  9.10  any applicant or licensee from obtaining a license or continuing 
  9.11  as a licensee.  The commissioner shall consider the type of 
  9.12  crime committed, the crime's relevancy to the professional 
  9.13  employer industry, the length of time since the conviction, and 
  9.14  any other factors deemed relevant by the commissioner. 
  9.15     (i) The applicant must demonstrate for the commissioner and 
  9.16  maintain a tangible accounting net worth of not less than 
  9.17  $50,000 by providing a financial statement prepared in 
  9.18  accordance with generally accepted accounting principles, 
  9.19  consistently applied, and accompanied by at least a compilation 
  9.20  report by an independent certified public accountant.  Documents 
  9.21  submitted to establish net worth must reflect net worth as of a 
  9.22  date not more than six months prior to the date on which the 
  9.23  application is submitted.  All financial statements submitted 
  9.24  shall be attested by the president, chief financial officer, and 
  9.25  at least one controlling person of the professional employer 
  9.26  organization or professional employer organization group.  In 
  9.27  meeting the specified net worth requirement, the applicant may 
  9.28  provide to the commissioner a surety bond, letter of credit, or 
  9.29  marketable securities acceptable to the commissioner.  A surety 
  9.30  will not be acceptable to satisfy this requirement unless the 
  9.31  applicant submits sufficient evidence to satisfy the 
  9.32  commissioner that the surety has adequate resources to satisfy 
  9.33  the obligations of the surety.  This provision is subject to 
  9.34  audit or verification by the commissioner. 
  9.35     (j) The applicant must demonstrate for the commissioner and 
  9.36  maintain positive working capital, as determined in accordance 
 10.1   with generally accepted accounting principles, consistently 
 10.2   applied. 
 10.3      Subd. 3.  [NONRESIDENTS.] The commissioner shall license by 
 10.4   reciprocity as a nonresident professional employer organization 
 10.5   or nonresident professional employer group, an applicant that is 
 10.6   licensed as a professional employer organization or professional 
 10.7   employer organization group in another state, and that is 
 10.8   otherwise qualified under this chapter except as to residence or 
 10.9   domicile, if under the laws of the state of the applicant's 
 10.10  residence or domicile, a similar privilege is granted to persons 
 10.11  resident or domiciled and licensed in Minnesota under this 
 10.12  chapter. 
 10.13     Subd. 4.  [RESTRICTED LICENSE.] The commissioner may issue 
 10.14  a restricted license to a professional employer organization or 
 10.15  professional employer organization group resident or domiciled 
 10.16  in another state for limited operation within this state under 
 10.17  the following conditions in paragraphs (a) to (c). 
 10.18     (a) If the applicant's state of domicile or residence 
 10.19  provides for licensing of professional employer organizations, 
 10.20  the applicant is licensed and in good standing in its state of 
 10.21  domicile or residence, and that state grants a similar privilege 
 10.22  for restricted licensing to professional employer organizations 
 10.23  or professional employer organizations groups resident or 
 10.24  domiciled and licensed in Minnesota under this chapter. 
 10.25     (b) The applicant does not maintain an office, a sales 
 10.26  force, or have a sales representative in this state, nor in any 
 10.27  way solicits clients resident or domiciled within this state. 
 10.28     (c) The applicant does not have more than 100 assigned 
 10.29  employees working in this state. 
 10.30     Subd. 5.  [EXEMPTION.] An applicant to be granted a 
 10.31  restricted license shall be exempt from the requirements of 
 10.32  subdivision 2, paragraph (i). 
 10.33     Subd. 6.  [AGENT; SERVICE.] An applicant for a nonresident 
 10.34  or restricted license must file, on a form provided, an 
 10.35  appointment of a recognized and approved entity as its attorney 
 10.36  to receive service of legal process issued against it in this 
 11.1   state. 
 11.2      Subd. 7.  [RETURN.] A license issued remains the property 
 11.3   of the commissioner, and a licensee shall immediately return the 
 11.4   license to the commissioner upon demand by the commissioner. 
 11.5      Sec. 10.  [181C.09] [DENIAL OF APPLICATION FOR LICENSE.] 
 11.6      Subdivision 1.  [STANDARDS.] The commissioner shall deny an 
 11.7   application for license: 
 11.8      (1) if the application is not fully completed, properly 
 11.9   executed, or is otherwise deficient on its face; 
 11.10     (2) if documents required to supplement the application are 
 11.11  not included in the application packet or are otherwise 
 11.12  inadequate; 
 11.13     (3) if the nonrefundable required application fees or the 
 11.14  license fee required is not submitted or is incorrectly 
 11.15  submitted with the application packet; 
 11.16     (4) if the applicant, or a person named in the application, 
 11.17  has made a material misrepresentation in the application; 
 11.18     (5) upon a finding that a person named in the application 
 11.19  is not of good moral character, business integrity, or financial 
 11.20  responsibility; or 
 11.21     (6) upon a finding that the applicant has failed to meet or 
 11.22  maintain any other requirement of this chapter or that there is 
 11.23  good and sufficient reason within the meaning and purpose of 
 11.24  this chapter to deny the application. 
 11.25     Subd. 2.  [STATEMENT; HEARING.] The commissioner shall 
 11.26  furnish the applicant with a written statement of the reasons 
 11.27  for denying the application.  The applicant may request a 
 11.28  hearing before the commissioner within 30 days of receipt of the 
 11.29  written statement.  The hearing and any further appeal shall 
 11.30  proceed as provided in chapter 14.  The applicant may continue 
 11.31  to operate during the hearing and appeal to the extent otherwise 
 11.32  permitted by law.  If the application is rejected, the applicant 
 11.33  shall have 30 days from receipt of written notification to cease 
 11.34  all operations with the state. 
 11.35     Subd. 3.  [REAPPLICATION.] An applicant or licensee is 
 11.36  ineligible to reapply for a license for a period of one year 
 12.1   following final department action on the denial or revocation of 
 12.2   a license applied for or issued under this chapter.  This time 
 12.3   restriction does not apply to administrative denials or 
 12.4   revocations if the basis for denial was: 
 12.5      (1) an inadvertent error or omission on the application; 
 12.6      (2) the experience documented to the commissioner was 
 12.7   insufficient at the time of the previous application; 
 12.8      (3) the commissioner was unable to complete the background 
 12.9   investigation due to insufficient information from one or more 
 12.10  governmental agencies; 
 12.11     (4) failure to submit required fees; or 
 12.12     (5) if an applicant or licensed professional employer 
 12.13  organization has been deemed ineligible for a license because of 
 12.14  a lack of good moral character of an individual when the 
 12.15  individual is no longer associated with the professional 
 12.16  employer organization in a manner that affects licensure. 
 12.17     Sec. 11.  [181C.10] [RENEWAL OF LICENSE.] 
 12.18     Subdivision 1.  [REQUIREMENTS.] A license issued under this 
 12.19  chapter remains in force, unless revoked, for ....... year(s) 
 12.20  from the date of issue of the license.  A licensee shall 
 12.21  demonstrate continued compliance with all requirements of this 
 12.22  chapter, including the requirements for initial application. 
 12.23     Subd. 2.  [APPLICATION.] At least 30 days prior to the 
 12.24  expiration of its license, the licensee shall submit an 
 12.25  application for renewal of license on a form prescribed by the 
 12.26  commissioner accompanied by a nonrefundable application fee of 
 12.27  $........  Late renewal applications may not be processed prior 
 12.28  to the expiration of the licensee's current license, thereby 
 12.29  resulting in a time period of unlicensed activity.  Those 
 12.30  engaged in unlicensed activity are subject to the penalties set 
 12.31  out in section 181C.16. 
 12.32     Subd. 3.  [DENIAL.] An application for renewal of license 
 12.33  shall be denied by the commissioner upon any ground set out in 
 12.34  section 181C.09, subdivision 1.  The denied applicant shall have 
 12.35  the procedures of section 181C.09, subdivision 2, available to 
 12.36  review the denial and to continue or cease operations within the 
 13.1   state. 
 13.2      Sec. 12.  [181C.11] [FEES FOR LICENSES.] 
 13.3      Subdivision 1.  [RESIDENT; NONRESIDENT.] The annual fee for 
 13.4   an unrestricted initial license is $....... for resident and 
 13.5   nonresident professional employer organizations and $....... for 
 13.6   resident and nonresident professional employer organization 
 13.7   groups.  The fee for the renewal of a license is $....... for 
 13.8   resident and nonresident professional employer organizations and 
 13.9   $....... for resident and nonresident professional employer 
 13.10  organization groups. 
 13.11     Subd. 2.  [RESTRICTED.] The fee for restricted initial and 
 13.12  renewal licenses is $.......  A restricted license shall not be 
 13.13  granted to a professional employer organization or professional 
 13.14  employer organization group resident of or domiciled in another 
 13.15  state, if the state requires licensing but does not grant a 
 13.16  similar privilege for restricted licensing to licensees under 
 13.17  this chapter who are a resident of or domiciled in this state. 
 13.18     Subd. 3.  [WHEN DUE.] Fees for an initial license or a 
 13.19  renewal license shall be submitted at the time of application 
 13.20  and made payable to the state of Minnesota.  The fees are 
 13.21  nonrefundable except in cases where the commissioner rejects an 
 13.22  application for license. 
 13.23     Sec. 13.  [181C.12] [SUSPENSION OR REVOCATION OF LICENSE.] 
 13.24     Subdivision 1.  [CAUSE.] In addition to imposition of the 
 13.25  penalties set out in this chapter, the commissioner may suspend 
 13.26  for up to 12 months, or may permanently revoke or refuse to 
 13.27  renew a license issued, if, after notice to the licensee of the 
 13.28  charges against it and after hearing, the commissioner finds any 
 13.29  one or more of the following causes exist: 
 13.30     (1) any cause for which issuance of the license could have 
 13.31  been refused had it then existed and been known to the 
 13.32  commissioner; 
 13.33     (2) violation of or noncompliance with any applicable 
 13.34  provision of this chapter or of any order of the commissioner; 
 13.35     (3) obtaining or attempting to obtain any license through 
 13.36  misrepresentation or fraud; 
 14.1      (4) conviction of the licensee, or a controlling person 
 14.2   designated in the license, of a felony; 
 14.3      (5) if in the conduct of business under the license, the 
 14.4   licensee violates the provisions of section 181C.13 or 181C.14; 
 14.5      (6) failure to provide a written response to a written 
 14.6   inquiry from the commissioner within 30 days after receipt of 
 14.7   the inquiry; or 
 14.8      (7) failure to meet or maintain any other requirement of 
 14.9   this chapter. 
 14.10     Subd. 2.  [PARTNERSHIPS; CORPORATIONS; GROUPS.] The license 
 14.11  of a partnership, corporation, or group may be suspended, 
 14.12  revoked, or not renewed for any of the causes set out in 
 14.13  subdivision 1, as the cause relates to a controlling person 
 14.14  designated in the license to exercise powers of the partnership, 
 14.15  corporation, or group. 
 14.16     Subd. 3.  [NOTIFICATION; APPEAL.] Upon suspension or 
 14.17  revocation of license, the commissioner shall immediately: 
 14.18     (1) notify the licensee by mail, the licensee may appeal 
 14.19  the decision of the commissioner, under chapter 14; 
 14.20     (2) notify the department of labor and industry; 
 14.21     (3) notify the department of economic security; 
 14.22     (4) notify the secretary of state; and 
 14.23     (5) require the licensee to notify each client by certified 
 14.24  mail, return receipt requested, of the suspension or revocation 
 14.25  using the language the commissioner requires and furnish the 
 14.26  commissioner with evidence of notification. 
 14.27     Sec. 14.  [181C.13] [LICENSEE REQUIREMENTS.] 
 14.28     Subdivision 1.  [GENERALLY.] A licensed professional 
 14.29  employer organization or professional employer organization 
 14.30  group shall perform the following general responsibilities as a 
 14.31  licensee.  The professional employer arrangement must: 
 14.32     (1) have a written contract between the client and the 
 14.33  professional employer organization setting forth the 
 14.34  responsibilities and duties of each party.  The contract must 
 14.35  disclose to the client the services to be rendered, including 
 14.36  costs, the respective rights and obligations of the parties, and 
 15.1   provide that the professional employer organization: 
 15.2      (i) reserve a right of direction and control over employees 
 15.3   assigned to the client's location.  The client retains 
 15.4   sufficient direction and control over employees as necessary to 
 15.5   conduct the client's business and without which the client would 
 15.6   be unable to conduct its business, discharge any fiduciary 
 15.7   responsibility that it may have, or comply with any applicable 
 15.8   licensure, regulatory, or statutory requirement of the client; 
 15.9      (ii) assume responsibility for the payment of wages of 
 15.10  employees, payroll-related taxes, and employee benefits from its 
 15.11  own accounts without regard to payments by the client to the 
 15.12  professional employer organization; and 
 15.13     (iii) retain authority to hire, terminate, discipline, and 
 15.14  reassign employees.  The client may have the right to accept or 
 15.15  cancel the assignment of an employee; 
 15.16     (2) give written notice of the general nature of the 
 15.17  relationship between the professional employer organization and 
 15.18  the client to each employee assigned to perform services at the 
 15.19  client's worksite; 
 15.20     (3) submit to the commissioner, within 90 days of the end 
 15.21  of each calendar quarter, a certification by an independent 
 15.22  certified public accountant or independent public accountant 
 15.23  that for that quarter all applicable payroll taxes have been 
 15.24  paid on a timely basis.  Upon a showing of reasonable cause, one 
 15.25  30-day extension per quarter shall be granted; 
 15.26     (4) maintain and make available for the commissioner's 
 15.27  inspection of all records concerning the licensee's conduct of 
 15.28  business under its license. The records shall be maintained for 
 15.29  a period of three years after termination of the employment 
 15.30  relationship or professional employer organization staffing 
 15.31  arrangement; 
 15.32     (5) notify the commissioner in writing of a change of 
 15.33  business address within 30 days of change; 
 15.34     (6) notify the commissioner in writing within 30 days of a 
 15.35  change among partners, directors, officers, members, and 
 15.36  controlling persons designated in the license; and 
 16.1      (7) post the license in a conspicuous place in the 
 16.2   principal place of business and display in clear public view in 
 16.3   each licensee's office in this state a notice stating that the 
 16.4   professional employer organization is licensed and regulated by 
 16.5   the commissioner and that any questions or complaints should be 
 16.6   directed to the commissioner. 
 16.7      Subd. 2.  [RESPONSIBILITIES.] A licensed professional 
 16.8   employer organization shall be deemed an employer of its 
 16.9   employees and shall have a right to and shall perform the 
 16.10  following responsibilities: 
 16.11     (1) pay wages and collect, report, and pay employment taxes 
 16.12  from its own accounts; 
 16.13     (2) pay unemployment taxes as required by chapter 268; and 
 16.14     (3) secure or provide workers' compensation coverage for 
 16.15  all of its employees. 
 16.16     No license shall be issued to a professional employer 
 16.17  organization until the professional employer organization 
 16.18  company files with the commissioner evidence of workers' 
 16.19  compensation coverage for all employees assigned to clients in 
 16.20  this state.  A licensed professional employer organization shall 
 16.21  promptly notify the commissioner and its workers' compensation 
 16.22  insurance carrier of the termination of the professional 
 16.23  employer organization's relationship with any client. 
 16.24     Subd. 3.  [BENEFIT PLANS.] A licensed professional employer 
 16.25  organization shall be deemed the employer for the purposes of 
 16.26  sponsoring and maintaining employee benefit and welfare plans 
 16.27  for its employees.  The plans, if limited to the employees of 
 16.28  the professional employer organization, shall not be deemed to 
 16.29  be multiple employer welfare arrangements within the meaning of 
 16.30  applicable law. 
 16.31     Subd. 4.  [DISCLOSURE.] A licensed professional employer 
 16.32  organization shall disclose to the commissioner, to each of its 
 16.33  client companies, and to its employees information on any health 
 16.34  or life fringe benefit program provided for the benefit of its 
 16.35  employees.  The information shall include for each plan: 
 16.36     (1) the types of benefits; 
 17.1      (2) the identity of each insurer for each type of coverage; 
 17.2      (3) the amount of benefits for each type of coverage and to 
 17.3   whom or on whose behalf benefits will be paid; 
 17.4      (4) the policy limits on each insurance policy; and 
 17.5      (5) whether the coverage is fully insured, partially 
 17.6   insured, or fully self-funded. 
 17.7      Disclosure under this section may be made by any written 
 17.8   means reasonably calculated to adequately inform the employees.  
 17.9   The written means may include a summary plan description that 
 17.10  meets the requirements of the Employee Retirement Income 
 17.11  Security Act of 1974, as amended. 
 17.12     Subd. 5.  [INTERPRETATION.] Subject to any contrary 
 17.13  provisions of the contract between the client and the 
 17.14  professional employer organization, the professional employer 
 17.15  arrangement that exists between a professional employer 
 17.16  organization and its clients shall be interpreted for purposes 
 17.17  of insurance, bonding, and employer's liability as follows in 
 17.18  paragraphs (a) to (c). 
 17.19     (a) A professional employer organization shall be entitled 
 17.20  along with the client to the exclusivity of the remedy under 
 17.21  both the workers' compensation and employer's liability 
 17.22  provisions of a workers' compensation policy or plan that either 
 17.23  party has secured. 
 17.24     (b) A professional employer organization shall not be 
 17.25  liable for the acts, errors, or omissions of a client or of an 
 17.26  employee acting under the direction and control of a client.  A 
 17.27  client shall not be liable for the acts, errors, or omissions of 
 17.28  a professional employer organization or of an employee of a 
 17.29  professional employer organization acting under the direction 
 17.30  and control of the professional employer organization.  Nothing 
 17.31  in this paragraph limits any contractual liability between the 
 17.32  professional employer organization and the client, nor does this 
 17.33  paragraph limit the liabilities of a professional employer 
 17.34  organization or client as defined elsewhere in this chapter. 
 17.35     (c) Employees assigned to a client by a professional 
 17.36  employer organization shall be considered the employees of the 
 18.1   client for purposes of general liability insurance, automobile 
 18.2   insurance, fidelity bonds, surety bonds, employer's liability, 
 18.3   and liquor liability insurance carried by the client.  Employees 
 18.4   assigned to a client by a professional employer organization are 
 18.5   not deemed employees of the professional employer organization 
 18.6   for purposes of general liability insurance, automobile 
 18.7   insurance, fidelity bonds, surety bonds, employer's liability, 
 18.8   or liquor liability insurance carried by the professional 
 18.9   employer organization unless the employees are included by 
 18.10  specific reference in the applicable employment arrangement 
 18.11  contract, insurance contract, or bond. 
 18.12     Subd. 6.  [SALE.] The sale of professional employer 
 18.13  services in conformance with the provisions of this chapter do 
 18.14  not constitute the sale of insurance within the meaning of 
 18.15  applicable state law. 
 18.16     Sec. 15.  [181C.14] [DECEPTIVE PRACTICES PROHIBITED.] 
 18.17     The following acts and omissions constitute deceptive 
 18.18  practices and are prohibited for professional employer 
 18.19  organizations and professional employer organization groups: 
 18.20     (1) making, issuing, circulating, or causing to be made, 
 18.21  issued, or circulated, any estimate, illustration, circular, 
 18.22  statement, advertisement, sales presentation, omission, or 
 18.23  comparison that misrepresents the benefits, advantages, 
 18.24  conditions, or terms of professional employer organization 
 18.25  staffing arrangement, or is otherwise untrue, deceptive, or 
 18.26  misleading; 
 18.27     (2) entering into an agreement to commit or, by any 
 18.28  concerted action, committing an act of boycott, coercion, or 
 18.29  intimidation resulting in or tending to result in unreasonable 
 18.30  restraint of, or monopoly in, the business of professional 
 18.31  employer services; 
 18.32     (3) filing with the commissioner or other public official 
 18.33  or making, publishing, disseminating, circulating, or delivering 
 18.34  to any person, or placing before the public or causing, directly 
 18.35  or indirectly, to be made, published, disseminated, circulated, 
 18.36  or delivered to a person, any false statement of financial 
 19.1   condition of a person with intent to deceive; 
 19.2      (4) knowingly making a false entry of a material fact in a 
 19.3   book, report, or statement of any person or knowingly omitting 
 19.4   to make a true entry of any material fact pertaining to the 
 19.5   business of the person in a book, report, or statement of that 
 19.6   person; 
 19.7      (5) permitting to be used or using, permitting to be filed 
 19.8   or filing any name, trade name, fictitious name, or business 
 19.9   identity that is the same as, similar to, or may be confused 
 19.10  with the name, trade name, fictitious name, or business identity 
 19.11  of an existing licensee, a governmental agency, or a nonprofit 
 19.12  organization; and 
 19.13     (6) any other practice that the commissioner determines by 
 19.14  rule or otherwise after notice and hearing, to be a deceptive 
 19.15  practice. 
 19.16     Sec. 16.  [181C.15] [DISCIPLINE.] 
 19.17     Subdivision 1.  [GROUNDS.] The following constitute grounds 
 19.18  for which disciplinary action against a licensee may be taken by 
 19.19  the commissioner: 
 19.20     (1) being convicted of or found guilty of, or entering a 
 19.21  plea of nolo contendere to, regardless of adjudication, bribery, 
 19.22  fraud, or willful misrepresentation in obtaining, attempting to 
 19.23  obtain, or renewing a license; 
 19.24     (2) being convicted or found guilty of, or entering a plea 
 19.25  of nolo contendere to, regardless of adjudication, a crime in 
 19.26  any jurisdiction that relates to the operation of a professional 
 19.27  employer organization or the ability to engage in business as a 
 19.28  professional employer organization; 
 19.29     (3) being convicted of or found guilty of, or entering a 
 19.30  plea of nolo contendere to, regardless of adjudication, fraud, 
 19.31  deceit, or misconduct in the classification of employees and 
 19.32  reporting of employee wages under chapter 176; 
 19.33     (4) being convicted of or found guilty of, or entering a 
 19.34  plea of nolo contendere to, regardless of adjudication, fraud, 
 19.35  deceit, or misconduct in the establishment or maintenance of 
 19.36  workers' compensation or health coverage, regardless of whether 
 20.1   self-insured or otherwise; 
 20.2      (5) being convicted of or found guilty of, or entering a 
 20.3   plea of nolo contendere to, regardless of adjudication, fraud, 
 20.4   deceit, or misconduct in the operation of a professional 
 20.5   employer organization; 
 20.6      (6) conducting business without a valid and active license; 
 20.7      (7) failing to maintain evidence of the workers' 
 20.8   compensation insurance required by chapter 176; 
 20.9      (8) transferring or attempting to transfer a license issued 
 20.10  under this chapter; 
 20.11     (9) violating a provision of this chapter or a lawful order 
 20.12  or rule issued under this chapter; 
 20.13     (10) failing to notify the commissioner in writing of any 
 20.14  change of the primary business address or the addresses of any 
 20.15  of the licensee's offices in the state; 
 20.16     (11) having been confined in a county jail, 
 20.17  postadjudication, or being confined in a state or federal prison 
 20.18  or mental institution, or if through mental disease or 
 20.19  deterioration, the licensee can no longer safely be entrusted to 
 20.20  deal with the public or in a confidential capacity; 
 20.21     (12) having been found guilty for a second time of a 
 20.22  misconduct that warrants suspension or being found guilty of a 
 20.23  course of conduct or practices that show that the licensee is so 
 20.24  incompetent, negligent, dishonest, or untruthful that the money, 
 20.25  property, transactions, and rights of investors or those with 
 20.26  whom the licensee may sustain a confidential relation, may not 
 20.27  safely be entrusted to the licensee; 
 20.28     (13) failing to inform the commissioner in writing within 
 20.29  30 days after being convicted of or found guilty of, or entering 
 20.30  a plea of nolo contendere to a felony, regardless of 
 20.31  adjudication; 
 20.32     (14) determination of liability for civil fraud by a court 
 20.33  of competent jurisdiction in any state; 
 20.34     (15) adverse material final action by a state or federal 
 20.35  regulatory agency for violations within the scope of control of 
 20.36  the licensee; 
 21.1      (16) failure to inform the commissioner in writing within 
 21.2   30 days of an adverse material final action by a state or 
 21.3   federal regulatory agency; 
 21.4      (17) failure to meet or maintain the requirements for 
 21.5   licensure as a professional employer organization; or 
 21.6      (18) attempting to obtain, obtaining, or renewing a license 
 21.7   as a professional employer organization or professional employer 
 21.8   organization group by bribery, misrepresentation, or fraud. 
 21.9      Subd. 2.  [ACTIONS.] Upon finding that a licensee has 
 21.10  violated one or more provisions of subdivision 1, the 
 21.11  commissioner may take one or more of the following actions: 
 21.12     (1) deny an application for licensure; 
 21.13     (2) revoke, suspend, restrict, or decline to renew a 
 21.14  license; 
 21.15     (3) impose an administrative fine not to exceed $....... 
 21.16  for every count or separate offense; 
 21.17     (4) issue a reprimand; 
 21.18     (5) place the licensee on probation for a period of time 
 21.19  and subject to such conditions as the commissioner may specify; 
 21.20  or 
 21.21     (6) impose upon the licensee the cost of investigation and 
 21.22  prosecution, including reasonable attorney fees. 
 21.23     Subd. 3.  [LICENSE; RETURN.] Upon revocation or suspension 
 21.24  of a license, the licensee shall immediately return to the 
 21.25  commissioner the license that was revoked or suspended. 
 21.26     Sec. 17.  [181C.16] [PENALTIES.] 
 21.27     Subdivision 1.  [CIVIL.] A person who engages in the 
 21.28  business of or acts as a professional employer organization 
 21.29  without first procuring a license or otherwise violates the 
 21.30  provisions of this chapter or any rules adopted by the 
 21.31  commissioner, shall be liable for a civil penalty for each 
 21.32  offense of $....... for each count or separate offense. 
 21.33     Subd. 2.  [INJUNCTION.] In addition to the penalties 
 21.34  described in subdivision 1, the commissioner shall have the 
 21.35  power to enjoin or restrain by bringing an action in the 
 21.36  district court against any person who engages in the business of 
 22.1   or acts as a professional employer organization without having 
 22.2   first procured a license for so engaging or acting. 
 22.3      Sec. 18.  [181C.17] [INVESTIGATIONS; AUDITS; REVIEWS.] 
 22.4      The commissioner may conduct investigations, audits, or 
 22.5   reviews as it deems necessary to determine whether a person has 
 22.6   violated or is in danger of violating any provision of this 
 22.7   chapter or to aid in the enforcement of this chapter, including 
 22.8   any rules adopted hereunder. 
 22.9      Sec. 19.  [181C.18] [FEES; APPROPRIATION.] 
 22.10     All fees collected under this chapter are appropriated to 
 22.11  the general fund of the state. 
 22.12     Sec. 20.  [181C.19] [OTHER LAW.] 
 22.13     Nothing in this chapter exempts a client of a professional 
 22.14  employer organization nor an employee leased to a client by a 
 22.15  professional employer organization from any other state, local, 
 22.16  or federal license, or registration requirement.  An individual 
 22.17  who must be licensed, registered, or certified according to law 
 22.18  and who is an employee assigned to a client location is an 
 22.19  employee of the client for purposes of the license, 
 22.20  registration, or certification.  Except to the extent provided 
 22.21  otherwise in the contract with a client, a professional employer 
 22.22  organization is not liable for the general debts, obligations, 
 22.23  loss of profits, business goodwill, or other consequential, 
 22.24  special, or incidental damages of a client with which it has 
 22.25  entered into a professional employer arrangement. 
 22.26     Sec. 21.  Minnesota Statutes 1994, section 268.04, 
 22.27  subdivision 10, is amended to read: 
 22.28     Subd. 10.  [EMPLOYER.] "Employer" means:  (1) Any employing 
 22.29  unit which, for some portion of a day, in each of 20 different 
 22.30  weeks, whether or not such weeks are or were consecutive, and 
 22.31  whether or not all of such weeks of employment are or were 
 22.32  within the state within either the current or preceding calendar 
 22.33  year, has or had in employment one or more individuals 
 22.34  (irrespective of whether the same individual or individuals were 
 22.35  employed in each such day) or in any calendar quarter in either 
 22.36  the current or preceding calendar year paid $1,500 or more for 
 23.1   services in employment, except as provided in clause (18) of 
 23.2   this subdivision; 
 23.3      (2) Any employing unit (whether or not an employing unit at 
 23.4   the time of acquisition) which acquired the organization, trade, 
 23.5   or business, or substantially all of the assets thereof, of 
 23.6   another employing unit which at the time of such acquisition was 
 23.7   an employer subject to this law; or which acquired a part of the 
 23.8   organization, trade, or business of another employing unit which 
 23.9   at the time of such acquisition was an employer subject to this 
 23.10  law; 
 23.11     (3) For purposes of clause (1), employment shall include 
 23.12  service which would constitute employment but for the fact that 
 23.13  such service is deemed to be performed entirely within another 
 23.14  state pursuant to an election under an arrangement entered into 
 23.15  (in accordance with section 268.13, subdivision 1) by the 
 23.16  commissioner and an agency charged with the administration of 
 23.17  any other state or federal unemployment compensation law; 
 23.18     (4) For purposes of clause (1), if any week includes both 
 23.19  December 31 and January 1, the days of that week up to January 1 
 23.20  shall be deemed one calendar week and the days beginning January 
 23.21  1 another such week; 
 23.22     (5) Any employing unit which acquired the organization, 
 23.23  trade, or business, or substantially all the assets thereof, of 
 23.24  another employing unit, and which, if treated as a single unit 
 23.25  with such other employing unit, would be an employer under 
 23.26  clause (1); 
 23.27     (6) Any employing unit which, together with one or more 
 23.28  other employing units, is owned or controlled (by legally 
 23.29  enforceable means or otherwise) directly or indirectly by the 
 23.30  same interests, or which owns or controls one or more other 
 23.31  employing units (by legally enforceable means or otherwise) and 
 23.32  which, if treated as a single unit with such other employing 
 23.33  units or interests or both, would be an employer under clause 
 23.34  (1), except as provided in clause (18); 
 23.35     (7) Any joint venture composed of one or more employers as 
 23.36  otherwise defined herein; 
 24.1      (8) Any nonresident employing unit which employs within 
 24.2   this state one or more employees for one or more weeks; 
 24.3      (9) Any employing unit for which service in employment, as 
 24.4   defined in subdivision 12, clause (9), is performed; 
 24.5      (10) Any employing unit which, having become an employer 
 24.6   under the preceding clauses or clause (15), (16) or (17), has 
 24.7   not, under section 268.11, ceased to be an employer subject to 
 24.8   these sections; 
 24.9      (11) For the effective period of its election pursuant to 
 24.10  section 268.11, subdivision 3, any other employing unit which 
 24.11  has elected to become subject to sections 268.03 to 268.231; 
 24.12     (12) Notwithstanding any inconsistent provisions of 
 24.13  sections 268.03 to 268.231, any employing unit not an employer 
 24.14  by reason of any other clause of this subdivision for which 
 24.15  service is performed with respect to which such employing unit 
 24.16  is liable for any federal tax against which credit may be taken 
 24.17  for contributions required to be paid into a state unemployment 
 24.18  compensation fund or which, as a condition for the approval of 
 24.19  this law for full tax credit against the tax imposed by the 
 24.20  federal unemployment tax act, is required pursuant to such act, 
 24.21  to be an "employer" under the law; 
 24.22     (13) Except as provided in clause (12), and notwithstanding 
 24.23  any other provisions of sections 268.03 to 268.231, no employing 
 24.24  unit shall be initially determined a subject employer on the 
 24.25  basis of covered employment performed more than four years prior 
 24.26  to the year in which such determination is made, unless the 
 24.27  commissioner finds that the records of such employment 
 24.28  experience were fraudulently concealed or withheld for the 
 24.29  purpose of escaping liability under said sections; 
 24.30     (14) Any employing unit for which service in employment, as 
 24.31  defined in subdivision 12, clause (7), is performed; 
 24.32     (15) Any employing unit for which service in employment as 
 24.33  defined in subdivision 12, clause (8) is performed; 
 24.34     (16) Any employing unit for which agricultural labor as 
 24.35  defined in subdivision 12, clause (13) is performed; 
 24.36     (17) Any employing unit for which domestic service in 
 25.1   employment as defined in subdivision 12, clause (14) is 
 25.2   performed; 
 25.3      (18) (a) In determining whether or not an employing unit 
 25.4   for which domestic service and other than domestic service is 
 25.5   performed is an employer under clause (1) or (6), the wages 
 25.6   earned or the employment of an employee performing domestic 
 25.7   service shall not be taken into account. 
 25.8      (b) In determining whether or not an employing unit for 
 25.9   which agricultural labor and other than agricultural labor is 
 25.10  performed is an employer under clause (1), (9) or (17), the 
 25.11  wages earned or the employment of an employee performing service 
 25.12  in agricultural labor after December 31, 1977 shall not be taken 
 25.13  into account.  If an employing unit is an employer of 
 25.14  agricultural labor the determination of whether it is an 
 25.15  "employer" shall be governed by clause (1)~~.~~; 
 25.16     (19) Any employing unit that provides an employee to 
 25.17  perform services for a client, in a professional employer 
 25.18  arrangement, shall be the employer of the employee if: 
 25.19     (a) there is a written contract between the provider and 
 25.20  the client specifying the services to be rendered, the costs, 
 25.21  and the respective rights of the parties; 
 25.22     (b) the provider reserves a right of direction and control 
 25.23  over employees assigned to the client's location, provided the 
 25.24  client may retain sufficient direction and control over the 
 25.25  employees to conduct its business; 
 25.26     (c) the provider assumes responsibility for the payment of 
 25.27  wages of employees, payroll related taxes, and employee related 
 25.28  benefits from its own accounts; and 
 25.29     (d) the provider retains authority to hire, terminate, 
 25.30  discipline, and reassign employees, provided the client has a 
 25.31  right to accept or reject the assignment of any employee.