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90_SB1904sam002
LRB9011424JSmbam01
1 AMENDMENT TO SENATE BILL 1904
2 AMENDMENT NO. . Amend Senate Bill 1904, AS AMENDED,
3 by inserting immediately below the last line of Section 15
4 the following:
5 "Section 17. The Employee Leasing Company Act is amended
6 by changing Sections 10, 15, 20, 25, 30, 40, and 50 and
7 adding Section 56 as follows:
8 (215 ILCS 113/10)
9 Sec. 10. Applicability. This Act applies to all lessors
10 and insurers conducting business in this State and to
11 policies issued, renewed, or delivered after the effective
12 date of amendatory this Act of 1998.
13 (Source: P.A. 90-499, eff. 1-1-98.)
14 (215 ILCS 113/15)
15 Sec. 15. Definitions. In this Act:
16 "Department" means the Illinois Department of Insurance.
17 "Employee leasing arrangement" means a contractual an
18 arrangement, including long-term temporary arrangements
19 whereby a lessor obligates itself to perform specified
20 employer responsibilities as to leased employees including
21 the securing of workers' compensation insurance. under
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1 contract or otherwise, whereby one business or other entity
2 leases all or a majority number of its workers from another
3 business. Employee leasing arrangements include, but are not
4 limited to, full service employee leasing arrangements,
5 long-term temporary arrangements, and any other arrangement
6 that involves the allocation of employment responsibilities
7 among 2 or more entities. For purposes of this Act,
8 "employee leasing arrangement" does not include arrangements
9 to provide temporary help service. "Temporary help service"
10 means a service whereby an organization hires its own
11 employees and assigns them to clients for a finite time
12 period to support or supplement the client's work force in
13 special work situations such as employee absences, temporary
14 skill shortages, and seasonal workloads.
15 "Leased employee" or "worker" means a person performing
16 services for a lessee under an employee leasing arrangement.
17 "Lessee" or "client company" means an entity that obtains
18 any all or part of its work force from another entity through
19 an employee leasing arrangement or that employs the services
20 of an entity through an employee leasing arrangement.
21 "Lessor" or "employee leasing company" means an entity
22 that leases any of its workers grants a written lease to a
23 lessee through an employee leasing arrangement.
24 "Long-term temporary arrangement" means an arrangement
25 where one company leases all or a majority number of workers
26 employees from one company are leased to another for a period
27 in excess of 6 months or consecutive periods equal to or
28 greater than one year.
29 "Premium subject to dispute" means the insured has
30 provided a written notice of dispute of the premium to the
31 insurer or service carrier, has initiated any applicable
32 proceeding for resolving these disputes as prescribed by law
33 or rating organization rule, or has initiated litigation
34 regarding the premium dispute. The insured must have
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1 detailed the specific areas of dispute and provided an
2 estimate of the premium the insured believes to be correct.
3 The insured must have paid any undisputed portion of the
4 bill.
5 "Residual market mechanism" means the residual market
6 mechanism as defined in Section 468 of the Illinois Insurance
7 Code.
8 "Temporary help arrangement" means a service whereby an
9 organization hires its own employees and assigns them to
10 clients for a finite time period to support or supplement the
11 client's work force in special work situations such as, but
12 not limited to, employee absences, temporary skill shortages,
13 seasonal workloads, and special assignments and projects.
14 (Source: P.A. 90-499, eff. 1-1-98.)
15 (215 ILCS 113/20)
16 Sec. 20. Registration.
17 (a) A lessor shall register with the Department prior to
18 becoming a qualified self-insured for workers' compensation
19 or becoming eligible to be issued a workers' compensation and
20 employers' liability insurance policy. An employee leasing
21 company may not engage in business in this State without
22 first registering with the Department. A corporation,
23 partnership, sole proprietorship, or other business entity
24 that provides staff, personnel, or employees to be employed
25 in this State to other businesses pursuant to a lease
26 arrangement or agreement shall, before becoming eligible to
27 be issued any policy of workers' compensation insurance,
28 register with the Department. The registration shall:
29 (1) identify the name of the lessor;
30 (2) identify the address of the principal place of
31 business of the lessor and the address of each office it
32 maintains within this State;
33 (3) include the lessor's taxpayer or employer
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1 identification number;
2 (4) include a list by jurisdiction of each and
3 every name that the lessor has operated under in the
4 preceding 5 years including any alternative names and
5 names of predecessors and, if known, successor business
6 entities;
7 (5) include a list of the officers and directors of
8 the lessor and employee leasing company or its
9 predecessors, successors, or alter egos in the preceding
10 5 years; and
11 (6) include a $500 fee for the registration and
12 each annual renewal thereafter.
13 Amounts received as registration fees shall be deposited
14 into the Insurance Producer Administration Fund. list of each
15 and every cancellation or nonrenewal of workers' compensation
16 insurance that has been issued to the lessor or any
17 predecessor in the preceding 5 years. The list shall include
18 the policy or certificate number, name of insurer or other
19 provider of coverage, date of cancellation, and reason for
20 cancellation. If coverage has not been cancelled or
21 nonrenewed, the registration shall include a sworn affidavit
22 signed by the chief executive officer of the lessor attesting
23 to that fact.
24 Each employee leasing company registrant shall pay to the
25 Department upon initial registration, and upon each renewal
26 annually thereafter, a registration fee of $500.
27 Each employee leasing company shall maintain accounting
28 and employment records relating to all employee leasing
29 activities for a minimum of 3 calendar years.
30 (b) (Blank) Any lessor of employees whose workers'
31 compensation insurance has been terminated within the past 5
32 years in any jurisdiction due to a determination that an
33 employee leasing arrangement was being utilized to avoid
34 premium otherwise payable by lessees shall be ineligible to
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1 register with the Department or to remain registered, if
2 previously registered.
3 (c) Lessors registering Persons filing registration
4 statements pursuant to this Section shall notify the
5 Department within 30 days as to any changes in any
6 information provided pursuant to this Section.
7 (d) The Department shall maintain a list of those
8 lessors of employees who are satisfactorily registered with
9 the Department.
10 (e) The Department may prescribe any forms that are
11 necessary to promote the efficient administration of this
12 Section.
13 (f) Any lessor of employees that was doing business in
14 this State prior to enactment of this Act shall register with
15 the Department within 60 days of the effective date of this
16 Act.
17 (Source: P.A. 90-499, eff. 1-1-98.)
18 (215 ILCS 113/25)
19 Sec. 25. Record keeping and reporting requirement.
20 (a) A lessor shall maintain accounting and employment
21 records relating to all employee leasing arrangements for a
22 minimum of 4 calendar years. A lessor shall maintain the
23 address of each office it maintains in this State, at its
24 principal place of business.
25 (b) A lessor shall maintain sufficient information in a
26 manner consistent with a licensed rating organization's data
27 submission requirements to permit the rating organization
28 licensed under Section 459 of the Illinois Insurance Code to
29 calculate an experience modification factor for the lessee.
30 (c) Upon written request of a lessee with an annual
31 payroll attributed to it in excess of $200,000, the lessor
32 shall provide the lessee's experience modification factor to
33 the lessee within 30 days of the request.
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1 (d) Upon request of a lessee with an annual payroll
2 attributed to it of less than $200,000, the lessor shall
3 provide the loss information required to be maintained by
4 this Section to the lessee within 30 days of the request.
5 (e) Nothing in this Section shall preclude a licensed
6 rating organization from calculating the experience
7 modification factor for each lessee nor an insurer from
8 maintaining and furnishing on behalf of the lessor, such
9 information as required by this Section. A lessor shall
10 maintain and furnish once every 12 months or in the event of
11 a termination of the employee leasing arrangement sufficient
12 information to the insurer, who shall submit such information
13 to permit the calculation of an experience modification
14 factor by a rating organization licensed under Section 459 of
15 the Illinois Insurance Code for each lessee. This
16 information shall be submitted in a manner consistent with a
17 licensed rating organization's data submission requirements
18 and shall include but not be limited to the following:
19 (1) the lessee's corporate name, or operating name
20 if not a corporation, and address;
21 (2) the lessee's taxpayer or employer
22 identification number;
23 (3) the lessee's risk identification number;
24 (4) a listing of all leased employees associated
25 with each lessee, the applicable classification code, and
26 payroll; and
27 (5) claims information grouped by lessee and any
28 other information necessary to permit the calculation of
29 an experience modification factor for each lessee.
30 (f) (b) In the event that a lessee's experience
31 modification factor exceeds the lessor's experience
32 modification factor by 50% at the inception of the employee
33 leasing arrangement, the lessee's experience modification
34 factor shall be utilized to calculate the premium or costs
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1 charged to the lessee for workers' compensation coverage for
2 a period of 2 years. Thereafter, the premium charged by the
3 insurer insurance company for inclusion of a lessee under a
4 lessor's policy may be calculated on the basis of the
5 lessor's experience modification factor.
6 (Source: P.A. 90-499, eff. 1-1-98.)
7 (215 ILCS 113/30)
8 Sec. 30. Responsibility for policy issuance and
9 continuance.
10 (a) When a workers' compensation policy written to cover
11 leased employees is issued to the lessor employee leasing
12 company as the named insured, the lessee client company shall
13 be identified thereon by the attachment of an appropriate
14 endorsement indicating that the policy provides coverage for
15 leased employees in accordance with Illinois law. The
16 endorsement shall, at a minimum, provide for the following:
17 (1) Coverage under the endorsement policy shall be
18 limited to the named insured's employees leased to the
19 lessees.
20 (2) The experience of the employees leased to the
21 particular lessee shall be separately maintained by the
22 lessor as provided in Section 25.
23 (3) Cancellation of the policy shall not affect the
24 rights and obligations of the named insured as an
25 employee leasing company with respect to any other
26 workers' compensation and employers' liability policy
27 issued to the named insured.
28 (b) (Blank). The insurer of the lessor may take all
29 reasonable steps to ascertain exposure under the policy and
30 collect the appropriate premium through the following
31 procedures:
32 (1) complete description of the lessor's
33 operations;
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1 (2) periodic reporting of the covered lessee's
2 payroll, classifications, experience rating modification
3 factors, and jurisdictions with exposure. This reporting
4 must be supplemented by a submission of Internal Revenue
5 Service Form 941 or its equivalent to the carrier on a
6 quarterly basis;
7 (3) physical inspection of the client company
8 premises;
9 (4) audit of the lessor's operations; and
10 (5) any other reasonable measures to determine the
11 appropriate premium.
12 (c) The lessor shall notify the insurer or a licensed
13 rating organization 30 days prior to the effective date of
14 termination or immediately upon notification of cancellation
15 by the lessor of an employee leasing arrangement with the
16 lessee in order to allow sufficient time to calculate an
17 experience modification factor for the lessee.
18 (d) The insurer lessor shall provide proof of workers'
19 compensation insurance to the lessor and to each applicable
20 lessee within 30 days of the coverage being effected or
21 changed effective date. Notice of any coverage changes shall
22 be provided to the lessor and to each lessee within 30 days
23 of the effective date of the change.
24 (e) Calculation of a lessor's or lessee's premium shall
25 be done in accordance with the insurer's Nothing in this Act
26 shall limit an insurer from utilizing schedule credits,
27 debits, or other rating manual plans filed with the
28 Department for calculation of a lessor's or lessee's premium.
29 (Source: P.A. 90-499, eff. 1-1-98.)
30 (215 ILCS 113/40)
31 Sec. 40. Insurer or service carrier audit. Insurers
32 shall audit policies issued through the residual market
33 pursuant to Section 30 of this Act within 90 days of the
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1 policy effective date and may conduct quarterly audits
2 thereafter. Insurers may audit policies issued through the
3 voluntary market within 90 days of the policy effective date
4 and shall conduct audits during the normal course of business
5 thereafter. The purpose of the audit will be to determine
6 whether all classifications, experience modification factors,
7 and estimated payroll utilized with respect to the
8 development of the premium charged to the lessor are
9 appropriate.
10 (Source: P.A. 90-499, eff. 1-1-98.)
11 (215 ILCS 113/50)
12 Sec. 50. Grounds for removal of eligibility; order;
13 hearing; review.
14 (a) Any registration issued under this Act may be
15 revoked or an application for registration may be denied if
16 the Director finds that the lessor or applicant:
17 (1) has willfully violated any provision of this
18 Act or any rule promulgated by the Director;
19 (2) has intentionally made a material misstatement
20 in the application for a registration;
21 (3) has obtained or attempted to obtain a
22 registration through misrepresentation or fraud;
23 (4) has misappropriated or converted to his own, or
24 improperly withheld, money required to be held in a
25 fiduciary capacity;
26 (5) has used fraudulent, coercive, or dishonest
27 practices, or has demonstrated incompetence,
28 untrustworthiness, or financial irresponsibility;
29 (6) has been, within the past 3 years, convicted of
30 a felony, unless the person demonstrates to the Director
31 sufficient rehabilitation to warrant the public trust;
32 (7) has failed to appear without reasonable cause
33 or excuse in response to a subpoena lawfully issued by
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1 the Director;
2 (8) has had its registration or license suspended
3 or revoked or its application denied in any other state,
4 district, territory, or province; Any registration issued
5 under this Act may be revoked or an application for
6 registration may be denied, if the Director finds that
7 the lessor or applicant;
8 (1) has willfully violated any provision of the Act
9 or any rule or regulation promulgated by the Director;
10 (b) (a) When the Director of Insurance has cause to
11 believe that grounds for the refusal, denial, or revocation
12 removal of a registration registrant's eligibility under this
13 Section exists, the Director he or she shall issue an order
14 to the lessor employee leasing company stating the grounds
15 upon which the refusal, denial, or revocation removal is
16 based. The order shall be sent to the lessor employee
17 leasing company by certified or registered mail. The lessor
18 employee leasing company may in writing request a hearing in
19 writing within 30 days of the mailing receipt of the order.
20 If no written request is received by the Director made, the
21 order shall be final upon the expiration of the 30 days.
22 (c) (b) If the lessor employee leasing company requests
23 a hearing pursuant to this Section, the Director shall issue
24 a written notice of hearing sent to the lessor employee
25 leasing company by certified or registered mail stating the
26 following:
27 (1) a specified time for the hearing, which may not
28 be less than 20 days nor more than 30 days after the
29 mailing receipt of the notice of hearing; and
30 (2) a specific place for the hearing, which may be
31 either in the city of Springfield or Chicago or in the
32 county where the lessor's employee leasing company's
33 principal place of business is located.
34 (d) (c) After the hearing, or upon the failure of the
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1 lessor employee leasing company to appear at the hearing, the
2 Director of Insurance shall take such action as is deemed
3 advisable on written findings that shall be served on the
4 lessor employee leasing company. The action of the Director
5 of Insurance shall be subject to review under and in
6 accordance with the Administrative Review Law.
7 (Source: P.A. 90-499, eff. 1-1-98.)
8 (215 ILCS 113/56 new)
9 Sec. 56. Rulemaking authority. The Director shall have
10 the authority to promulgate rules to enforce this Act.
11 (215 ILCS 113/35 rep.)
12 (215 ILCS 113/55 rep.)
13 Section 18. The Employee Leasing Company Act is amended
14 by repealing Sections 35 and 55.".