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215 ILCS 113/ Employee Leasing Company Act.

(215 ILCS 113/1)     Sec. 1. Short title. This Act may be cited as the Employee Leasing Company Act. (Source: P.A. 90‑499, eff. 1‑1‑98.)

(215 ILCS 113/5)     Sec. 5. Purpose. For the purpose of ensuring that an employer that leases some or all of its workers properly obtains workers' compensation insurance coverage for all of its employees, including those leased from another entity, and that premium is paid commensurate with exposure and anticipated claim experience, this Act is required to regulate employee leasing companies. (Source: P.A. 90‑499, eff. 1‑1‑98.)

(215 ILCS 113/10)     Sec. 10. Applicability. This Act applies to all lessors and insurers conducting business in this State and to policies issued, renewed, or delivered after the effective date of this amendatory Act of 1998. (Source: P.A. 90‑499, eff. 1‑1‑98; 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/15)     Sec. 15. Definitions. In this Act:     "Department" means the Illinois Department of Insurance.     "Employee leasing arrangement" means a contractual arrangement, including long‑term temporary arrangements whereby a lessor obligates itself to perform specified employer responsibilities as to leased employees including the securing of workers' compensation insurance. For purposes of this Act, "employee leasing arrangement" does not include "temporary help arrangement".     "Leased employee" or "worker" means a person performing services for a lessee under an employee leasing arrangement.     "Lessee" or "client company" means an entity that obtains any of its work force from another entity through an employee leasing arrangement.     "Lessor" or "employee leasing company" means an entity that leases any of its workers to a lessee through an employee leasing arrangement.     "Long‑term temporary arrangement" means an arrangement where one company leases all or a majority number of workers from another for a period in excess of 6 months or consecutive periods equal to or greater than one year.     "Residual market mechanism" means the residual market mechanism as defined in Section 468 of the Illinois Insurance Code.     "Temporary help arrangement" means a service whereby an organization hires its own employees and assigns them to clients for a finite time period to support or supplement the client's work force in special work situations such as, but not limited to, employee absences, temporary skill shortages, seasonal workloads, and special assignments and projects. (Source: P.A. 90‑499, eff. 1‑1‑98; 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/20)     Sec. 20. Registration.     (a) A lessor shall register with the Department prior to becoming a qualified self‑insured for workers' compensation or becoming eligible to be issued a workers' compensation and employers' liability insurance policy. The registration shall:         (1) identify the name of the lessor;         (2) identify the address of the principal place of

business of the lessor;

(3) include the lessor's taxpayer or employer

identification number;

(4) include a list by jurisdiction of each and every

name that the lessor has operated under in the preceding 5 years including any alternative names and names of predecessors;

(5) include a list of the officers and directors of

the lessor and its predecessors, successors, or alter egos in the preceding 5 years; and

(6) include a $1,000 fee for the registration and

each annual renewal thereafter.

Amounts received as registration fees shall be deposited into the Insurance Producer Administration Fund.     (b) (Blank).     (c) Lessors registering pursuant to this Section shall notify the Department within 30 days as to any changes in any information provided pursuant to this Section.     (d) The Department shall maintain a list of those lessors who are registered with the Department.     (e) The Department may prescribe any forms that are necessary to promote the efficient administration of this Section.     (f) Any lessor that was doing business in this State prior to enactment of this Act shall register with the Department within 60 days of the effective date of this Act. (Source: P.A. 93‑32, eff. 7‑1‑03.)

(215 ILCS 113/25)     Sec. 25. Record keeping and reporting requirement.     (a) A lessor shall maintain accounting and employment records relating to all employee leasing arrangements for a minimum of 4 calendar years. A lessor shall maintain the address of each office it maintains in this State, at its principal place of business.     (b) A lessor shall maintain sufficient information in a manner consistent with a licensed rating organization's data submission requirements to permit the rating organization licensed under Section 459 of the Illinois Insurance Code to calculate an experience modification factor for the lessee.     (c) Upon written request of a lessee with an annual payroll attributed to it in excess of $200,000, the lessor shall provide the lessee's experience modification factor to the lessee within 30 days of the request.     (d) Upon request of a lessee with an annual payroll attributed to it of less than $200,000, the lessor shall provide the loss information required to be maintained by this Section to the lessee within 30 days of the request.     (e) Nothing in this Section shall preclude a licensed rating organization from calculating the experience modification factor for each lessee nor an insurer from maintaining and furnishing on behalf of the lessor, such information as required by this Section.     (f) In the event that a lessee's experience modification factor exceeds the lessor's experience modification factor by 50% at the inception of the employee leasing arrangement, the lessee's experience modification factor shall be utilized to calculate the premium or costs charged to the lessee for workers' compensation coverage for a period of 2 years. Thereafter, the premium charged by the insurer for inclusion of a lessee under a lessor's policy may be calculated on the basis of the lessor's experience modification factor. (Source: P.A. 90‑499, eff. 1‑1‑98; 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/30)     Sec. 30. Responsibility for policy issuance and continuance.     (a) When a workers' compensation policy written to cover leased employees is issued to the lessor as the named insured, the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees. The endorsement shall, at a minimum, provide for the following:         (1) Coverage under the endorsement shall be limited

to the named insured's employees leased to the lessees.

(2) The experience of the employees leased to the

particular lessee shall be separately maintained by the lessor as provided in Section 25.

(b) (Blank).     (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee.     (d) The insurer shall provide proof of workers' compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed.     (e) Calculation of a lessor's or lessee's premium shall be done in accordance with the insurer's rating manual filed with the Department. (Source: P.A. 90‑499, eff. 1‑1‑98; 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/35)     Sec. 35. (Repealed). (Source: P.A. 90‑499, eff. 1‑1‑98. Repealed by 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/40)     Sec. 40. Insurer or service carrier audit. Insurers shall audit policies issued through the residual market pursuant to Section 30 of this Act within 90 days of the policy effective date and may conduct quarterly audits thereafter. Insurers may audit policies issued through the voluntary market within 90 days of the policy effective date and shall conduct audits during the normal course of business thereafter. (Source: P.A. 90‑499, eff. 1‑1‑98; 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/45)     Sec. 45. Exclusivity and vicarious liability. Subject to any contrary provisions of the contract between the client and the employee leasing company, the employee leasing arrangement that exists between an employee leasing company and its clients shall be interpreted for purposes of insurance, bonding, and employers' liability as follows:         (1) The employee leasing company shall be entitled

along with the client to the exclusivity of the remedy under both the workers' compensation and employers' liability provisions of a workers' compensation policy or plan that either party has secured.

(2) An employee leasing company is not liable for

the acts, errors, or omissions of a client or of any leased employee acting under the sole and exclusive direction and control of a client. A client shall not be liable for the acts, errors, or omissions of an employee leasing company or of any employee of an employee leasing company acting under the sole and exclusive direction or control of an employee leasing company. Nothing herein shall limit any contractual liability between an employee leasing company and the client company, nor shall the same limit any liability or responsibility imposed by this Act.

(3) Employees leased to a client by an employee

leasing company shall be considered as the employees of the client for the purposes of general liability insurance, automobile insurance, fidelity bonds, surety bonds, and liquor liability insurance carried by the client. Employees leased to a client by an employee leasing company are not deemed employees of the employee leasing company for purposes of general liability insurance, automobile insurance, fidelity bonds, surety bonds, and liquor liability insurance carried by the employee leasing company unless the employees are included by specific reference in the applicable employment arrangement contract, insurance contract, or bond.

(Source: P.A. 90‑499, eff. 1‑1‑98.)

(215 ILCS 113/50)     Sec. 50. Grounds for removal of eligibility; order; hearing; review.     (a) Any registration issued under this Act may be revoked or an application for registration may be denied if the Director finds that the lessor or applicant:         (1) has willfully violated any provision of this Act

or any rule promulgated by the Director;

(2) has intentionally made a material misstatement

in the application for a registration;

(3) has obtained or attempted to obtain a

registration through misrepresentation or fraud;

(4) has misappropriated or converted to his own, or

improperly withheld, money required to be held in a fiduciary capacity;

(5) has used fraudulent, coercive, or dishonest

practices, or has demonstrated incompetence, untrustworthiness, or financial irresponsibility;

(6) has been, within the past 3 years, convicted of

a felony, unless the person demonstrates to the Director sufficient rehabilitation to warrant the public trust;

(7) has failed to appear without reasonable cause or

excuse in response to a subpoena lawfully issued by the Director;

(8) has had its registration or license suspended or

revoked or its application denied in any other state, district, territory, or province;

(b) When the Director of Insurance has cause to believe that grounds for the refusal, denial, or revocation of a registration under this Section exists, the Director shall issue an order to the lessor stating the grounds upon which the refusal, denial, or revocation is based. The order shall be sent to the lessor by certified or registered mail. The lessor may request a hearing in writing within 30 days of the mailing of the order. If no written request is received by the Director, the order shall be final upon the expiration of the 30 days.     (c) If the lessor requests a hearing pursuant to this Section, the Director shall issue a written notice of hearing sent to the lessor by certified or registered mail stating the following:         (1) a specified time for the hearing, which may not

be less than 20 days nor more than 30 days after the mailing of the notice of hearing; and

(2) a specific place for the hearing, which may be

either in the city of Springfield or Chicago or in the county where the lessor's principal place of business is located.

(d) After the hearing, or upon the failure of the lessor to appear at the hearing, the Director of Insurance shall take such action as is deemed advisable on written findings that shall be served on the lessor. The action of the Director of Insurance shall be subject to review under and in accordance with the Administrative Review Law. (Source: P.A. 90‑499, eff. 1‑1‑98; 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/55)     Sec. 55. (Repealed). (Source: P.A. 90‑499, eff. 1‑1‑98. Repealed by 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/56)     Sec. 56. Rulemaking authority. The Director shall have the authority to promulgate rules to enforce this Act. (Source: P.A. 90‑794, eff. 8‑14‑98.)

(215 ILCS 113/91)     Sec. 91. (Amendatory provisions; text omitted). (Source: P.A. 90‑499, eff. 8‑19‑97; text omitted.)

(215 ILCS 113/93)     Sec. 93. (Amendatory provisions; text omitted). (Source: P.A. 90‑499, eff. 1‑1‑98; text omitted.)

(215 ILCS 113/95)     Sec. 95. The Illinois Insurance Code is amended by repealing Section 107.14. (Source: P.A. 90‑499, eff. 1‑1‑98.)

(215 ILCS 113/97)     Sec. 97. The Illinois Insurance Code is amended by repealing Section 493.1. (Source: P.A. 90‑499, eff. 8‑19‑97.)

(215 ILCS 113/99)     Sec. 99. Effective date. This Section and Sections 91 and 97 of this Act take effect upon becoming law; Sections 1 through 55, 93, and 95 of this Act take effect January 1, 1998. (Source: P.A. 90‑499, eff. 8‑19‑97.)