A.
Definitions.
(1) "Biennium" means the
two-year licensing cycle which ends on September 30 of every odd-numbered
year.
(2) "Co-employer" means
either a professional employer organization or a client company, as defined in
Section
40-68-10(2) and
(10).
B. Application Procedure; Application Form;
Fees; Denial of Application; Request for Hearing.
(1) Applicants for licensure as a
professional employer organization or as a controlling person shall file a
completed application on forms provided by the Department. An application is
complete when all items on the application have been fully answered, all
required documentation has been submitted and the applicable fees as specified
in Section
40-68-30
have been paid.
(2) An applicant
must cure all deficiencies in its application as noted by the Department within
30 days from the date of the letter notifying the applicant of the deficiency
or the application will be denied as incomplete. Applicants who have not cured
all deficiencies within 30 days of the notification will be required to re-file
with the Department a new application accompanied by a non-refundable
application fee.
(3) Any entity
applying for licensure as a professional employer organization or professional
employer organization group, must be validly organized in the State of South
Carolina, or otherwise appropriately registered as a foreign entity with the
South Carolina Secretary of State.
(4) The burden of showing qualification for
licensure shall be on the applicant.
(5) If the department determines that an
applicant is not qualified for licensure, it shall notify the applicant in
writing, citing the specific reason for that determination. Any person
aggrieved by the decision shall be entitled to a contested case hearing before
the Administrative Law Court in accordance with the court's rules of
procedure.
C. License
Renewal Procedures; Inactive License Renewal.
In the event any licensee fails to renew the license, the license
shall automatically become delinquent. A license delinquent 30 days or less may
be returned to active status by the payment of the biennial license renewal fee
and a delinquent fee of five hundred dollars.
D. Assessment on Gross South Carolina
Payroll.
Licensees who do not submit assessment fees to the department by
the assessment due date must pay the assessment fee and a late penalty fee of
one hundred fifty dollars for every thirty days or portion thereof it is late.
If it is late more than sixty days, the licensee may be subject to disciplinary
action as set forth in Section
40-68-160(C).
E. The Documentation Submitted to
Demonstrate Net Worth.
(1) The documentation
submitted to establish net worth must be prepared by an independent Certified
Public Accountant licensed to practice public accounting as of the date of the
accountant's report and must be in the format of independently audited accrual
basis financial statements, as determined by generally accepted accounting
principles, for the two (2) most recent annual accounting periods preceding the
date of application, except that if the most recent accounting period ends
within 180 days of the date of application, the current year's financial
statement shall be submitted within 180 days of the end of the accounting
period.
(2) The following
additional documents must be submitted for a determination and verification of
the amount of net worth of a professional employer organization or a
professional employer organization group:
(a)
Verification that federal, state, and local payroll taxes (including
unemployment compensation taxes/insurance) have been paid on a timely basis as
required by regulations of each taxing authority;
(b) Verification that all health insurance,
life insurance, worker's compensation insurance premiums and any other employee
benefits accruing either to employees or their dependents have been and are
being paid on a timely basis to the proper payees as required by contract, law,
or other obligatory documents.
(3) Any documentation submitted to the
department to verify the amount of net worth or the payment of payroll taxes
and other obligations shall be prepared as of a date not earlier than six
months or 180 days before the date of application. Information supplied
regarding net worth is proprietary and confidential and is exempt from
disclosure to third parties.
(4) At
the time of an application for an initial license by a professional employer
organization that has not had sufficient operating history to have audited
financial statements based upon at least twelve months of operating history,
the applicant must meet the net worth requirements of S.C. Code Ann. Section
40-68-40(E)
and present a business plan and pro forma financial statements reviewed by a
certified public accountant. Thereafter, such applicant shall present, within
180 days after the end of its fiscal year, audited financial
statements.
F. Quarterly
Financial Reporting and the Maintenance of Sufficient Working Capital.
In order to be in compliance with the net worth requirements of
Section
40-68-40(E),
licensed professional employer organizations and professional employer
organization groups are required to file a quarterly financial attestation with
the department. This quarterly attestation report shall be executed by the
chief financial officer, the chief executive officer, and a controlling person
of the professional employer organization. Copies of the current quarter's
balance sheet and income statement shall be submitted with the quarterly
financial attestation report. Quarterly financial statements are due to be
submitted to the department within 75 days after the end of each quarter.
Quarterly financial reports that are submitted late without prior approval from
the department will be assessed a late reporting fee of one hundred fifty
dollars for every thirty days or portion thereof they are late. If they are
late more than sixty days, the licensee may be subject to a disciplinary action
as set forth in Section
40-68-160(C).
The following attestations will be made in the quarterly report:
(1) Health insurance, life insurance,
worker's compensation insurance and their respective premiums and any other
employee benefits have been paid to the proper payees;
(2) Working capital is sufficient to meet the
licensee's ongoing obligations;
(3)
Federal, state, and local payroll taxes have been paid as required by
regulations of each taxing authority.
G. Restricted License.
(1) The holder of a restricted license shall
provide to the department quarterly reports on a form developed by the
department with information and documentation necessary to show that the holder
continues to qualify for a restricted license.
(2) When any condition for an issuance of a
restricted license ceases to exist, the licensee shall apply within thirty days
for a license pursuant to Sections
40-68-30,
40-68-40,
40-68-50
and any other applicable provision of the professional Employer Organization
Act and accompanying regulations or cease operations in the State.
H. Certification of Workers'
Compensation Coverage.
Professional employer organizations must maintain workers'
compensation coverage issued by an insurance carrier licensed in South
Carolina. The certificate must name the Department of Consumer Affairs as
Certificate Holder and provide for thirty (30) days' notice of cancellation to
the Department.
I. Notices
Required to be Posted.
The licensee shall cause each client company to display, in a
place that is in clear and unobstructed public view, a notice stating that the
business operated at the location is in a co-employer relationship with the
professional employer organization licensed and regulated by the department and
that any questions or complaints regarding the professional employer
organization should be directed to the department. The notice shall contain the
Department's mailing address, web address and phone number. A copy of such
notice shall be provided to the Department. A substantially similar notice
shall be included in the contract between a licensee and a client company.
J. Inspections;
Investigations; Complaints.
The department may conduct inspections or investigations as
necessary to ascertain compliance with and to enforce the provisions of the
Professional Employer Organization Act, accompanying regulations or an order of
the administrator or the Administrative Law Court related to these provisions.
The department may investigate or examine the business of the licensee and
examine the books, accounts, records, and files of the licensee or other person
relating to the examination or matter under investigation. The records must be
available for examination to the administrator or his designee upon request. In
conducting such an inspection or investigation of a person, the department may
enter the business premises of the person during reasonable business hours.
K. Reporting of Change of
Status Required; Effect on Licensees.
Licensed companies and controlling persons shall report to the
Department upon the occurrence of any event delineated in the Act. The
Department shall specify the information required to be filed for all changes
in the status, and the deadlines for filing such changes with the
department.
