November 6, 2008, Introduced by Rep. Condino and referred to the Committee on Labor.
A bill to amend 1936 (Ex Sess) PA 1, entitled
"Michigan employment security act,"
(MCL 421.1 to 421.75) by adding section 13m.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 13m. (1) A professional employer organization (PEO) shall
use 1 of the following methods for employer reporting and
contributions obligations under this act:
(a) The PEO shall file quarterly wage reports and unemployment
contribution reports or reimbursing employer quarterly payroll
reports as the employer of its covered employees based on the
account information of each client employer. The PEO shall provide
the unemployment agency with a schedule showing the covered
employees and unemployment insurance employer account number of
each client employer as a part of each report. Each calendar
quarter in the manner required by R 421.121 of the Michigan
administrative code, the PEO shall pay the unemployment agency the
total amount due from each of its client employers for covered
employees, based on the individual contribution payments or
reimbursement payments in lieu of contributions, itemized by client
employer account number. When the full and timely contribution
payment is made to the unemployment agency for a calendar quarter,
it shall certify that fact to the United States department of
treasury, internal revenue service, to preserve the full tax credit
for the PEO against the tax imposed by the federal unemployment tax
act, 26 USC 3301 to 3311. A PEO shall notify the unemployment
agency within 30 days after any employer becomes a client of the
PEO and within 30 days after the PEO discontinues an association
with a client employer. A PEO may operate under this subdivision
for the tax year 2009 only if the PEO has submitted an affidavit
making the election to the unemployment agency by April 1, 2009. In
addition, all of the following apply to a PEO and reports under
this subdivision:
(i) Notwithstanding the rates established in section 19, the
following rates apply to a business entity under this section that
is a contributing employer and was a client employer of the PEO on
the date that the PEO changed to the reporting method provided in
this subdivision:
(A) Except as provided in sub-subparagraphs (B) and (C), the
contribution rate of the client employer for the next 2 succeeding
tax years shall be the greater of the client employer's most
recently calculated contribution rate during the 24 calendar
quarters immediately before becoming a client of the PEO or 2.7%.
The rate for the third and subsequent years shall be calculated as
if the employer had more than 4 consecutive years of liability as
provided in section 19.
(B) If the business entity was a client employer of the PEO
for less than 8 full calendar quarters and the client employer's
most recently calculated contribution rate before becoming a client
of the PEO was less than 2.7%, the contribution rate for the next 2
succeeding tax years shall be the client employer's most recently
calculated contribution rate. The rate for the third and subsequent
years shall be calculated as if the employer had more than 4
consecutive years of liability as provided in section 19.
(C) If a client employer did not have a contribution rate at
any time during the 24 calendar quarters immediately before
becoming a client of the PEO, the contribution rate for the next 2
succeeding tax years shall be 2.7%. In the third succeeding tax
year, the client employer's contribution rate shall be 1/3 of the
client employer's chargeable benefits component calculated under
section 19 plus 1.8%. In the fourth succeeding tax year, the client
employer's contribution rate shall be 2/3 of the client employer's
chargeable benefits component calculated under section 19 plus
1.0%. In the fifth and subsequent tax years, the client employer's
contribution rate shall be the client employer's chargeable
benefits component calculated under section 19, plus the client
employer's calculated account building component, plus the client
employer's calculated nonchargeable benefits component.
(ii) A business entity that becomes a client employer of a PEO
on or after January 1, 2009 shall retain its existing contribution
rate or establish a new rate as provided in section 19, if the
client employer is a contributing employer.
(b) The PEO shall make quarterly reports and payments of
contributions, penalties, and interest on wages for covered
employees under its own employer number and rate. The election to
report under this subdivision shall apply to all commonly owned,
managed, and controlled entities of the PEO. In addition, a PEO
that operates under this subdivision shall do all of the following:
(i) Within 30 days after the inception of each new PEO
agreement, provide the unemployment agency with the name and
employer identification number of each client under the agreement.
Include a list of any active or inactive unemployment insurance
account number associated with that client and an explanation of
any client account that will remain open.
(ii) Within 30 days after the termination of a service contract
with a client, provide the unemployment agency with the name and
employer identification number of each client separated under the
terminated agreement and the date of the separation.
(iii) By March 31, 2009, provide the unemployment agency with
the name and employer identification number of each existing
client. Include a list of any active or inactive unemployment
insurance account number associated with that client and an
explanation of any client account that will remain open.
(2) If a PEO that reports as provided in subsection (1)(b) is
a member of a licensed PEO group that reports payroll for client
companies on multiple unemployment insurance account numbers, the
PEO shall do all of the following:
(a) Notify the unemployment agency within 30 days after any
transfer of employees between unemployment insurance accounts. The
notice shall be on forms prescribed by the unemployment agency for
purposes of transferring experience and shall include the
unemployment insurance account numbers involved in the transfer,
the client name, and the worksite employees that have been
transferred between the accounts.
(b) Certify quarterly to the unemployment agency that no
employees have been transferred between accounts unless the
experience has also been transferred and the unemployment agency
has been notified of the transfer.
(c) Post and maintain a surety bond issued by a corporate
surety entity authorized to do business in this state in an amount
set by the unemployment agency not to exceed 1/12 of the
unemployment insurance tax contributions or payments in lieu of
contributions for which the PEO was liable in the last calendar
year. In lieu of the surety bond, the PEO may do 1 of the
following:
(i) Deposit in a depository, securities with a market value
equivalent to the amount required for the surety bond under this
subdivision. The securities shall include authorization to the
unemployment agency to sell any securities in an amount sufficient
to pay delinquent contributions.
(ii) Provide the unemployment agency with an irrevocable letter
of credit issued by a state or federally chartered financial
institution in an amount equal to the amount required for a surety
bond under this subdivision.
(iii) Provide a certificate of deposit issued by a state or
federally chartered financial institution in an amount required for
a surety bond under this subdivision and pledged to the
unemployment agency.
(iv) Provide sufficient evidence that the PEO has been
accredited by a bonded, independent, and qualified assurance
organization approved by the director that provides satisfactory
assurance of compliance acceptable to the unemployment agency.
(3) Upon written request by the PEO and written approval of
the unemployment agency, a PEO may change from reporting under
subsection (1)(b) to reporting as provided under subsection (1)(a).
A PEO that has elected to report as provided in subsection (1)(a)
shall not change its reporting method.
(4) A report required under this act may be submitted
electronically.
(5) The requirements in this section do not preclude the
unemployment agency from enforcing any provision of this act based
on any act or omission by a PEO that occurred before January 1,
2009.
(6) As used in this section:
(a) "Covered employee" means an individual providing services
to a client organization under a professional employer agreement
with a PEO as provided in the Michigan professional employer
agreement regulation act.
(b) "Professional employer organization" or "PEO" means that
term as defined in section 3 of the Michigan professional employer
agreement regulatory act.
Enacting section 1. This amendatory act takes effect January
1, 2009.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No.____ (request no.
07735'08) of the 94th Legislature is enacted into law.