South Carolina Code of Laws
Chapter 68 - Regulation Of Professional Employer Organizations
Section 40-68-70. Requirements of contract between licensee and client company; investigation of client company's work force; securing workers' compensation insurance coverage; licensee considered employer of assigned employees.

(A) A contract between a licensee and a client company must provide that the licensee:
(1) reserves the right of direction and control over employees assigned to a client company;
(2) assumes responsibility for the payment of wages to the assigned employees without regard to payments by the client to the licensee;
(3) assumes responsibility for the payment of payroll taxes and collection of taxes from payroll on assigned employees;
(4) retains the right to hire, fire, discipline, and reassign the assigned employees;
(5) retains the right of direction and control over the adoption of employment and safety policies and the management of workers' compensation claims, claim filings, and related procedures on joint agreement by the client company and the licensee; and
(6) agrees that:
(a) notice to or acknowledgment of the occurrence of an injury on the part of the client company is notice to or knowledge on the part of the licensee and its workers' compensation insurer;
(b) for the purposes of Title 42, the jurisdiction of the client company is the jurisdiction of the licensee and its workers' compensation insurer;
(c) the licensee and its workers' compensation insurer is bound by and subject to the awards, judgments, or decrees rendered against them under the provisions of Title 42; and
(d) insolvency, bankruptcy, or discharge in bankruptcy of the licensee or client company does not relieve the licensee, client company, their respective workers' compensation insurers from payment of compensation for disability or death sustained by an employee during the life of a workers' compensation insurance policy; and
(7) with a client company, in the contract, shall specify whether the licensee, the client company, or both, are securing workers' compensation liability.
(B) A licensee, who secures workers' compensation insurance for a client company before the execution of the contract and on an annual basis, shall conduct a good faith investigation of the client company's business. The investigation must determine if the client company engages any nonassigned employees, including those considered employees under Title 42, in any part of the client company's trade, business, or occupation. Upon a determination that a client company's entire work force includes nonassigned employees, the contract must require the client company to secure and maintain workers' compensation insurance.
(C) Upon the failure or neglect of a client company to secure and maintain workers' compensation insurance, the licensee and its workers' compensation carrier agree and are liable to pay to a worker employed in the work of the client company compensation under Title 42 which the licensee would have been liable to pay if the worker had been employed by the licensee as provided in Section 40-68-120.
(D) A licensee's workers' compensation insurer providing coverage to a client company's assigned employees must be provided the information derived from the licensee's investigation of the client company's business.
(E) The licensee is the employer of the employees assigned to a client company. The rights and remedies granted by Title 42 to an employee when he and the licensee have accepted the provisions of Title 42 to pay and accept compensation exclude all other rights as provided in Section 42-1-540. This chapter does not affect the rights, duties, or liabilities of licensees, client companies, or employees under federal law.
HISTORY: 1993 Act No. 169, Section 1; 2005 Act No. 112, Section 1.