Emergency clause. In view of the emergency cited in the preamble, this Act takes effect when approved.

SUMMARY

This bill strengthens the laws regarding payroll processors in the following ways:

1. It requires a payroll processor to maintain a surety bond equal to the 4-year aggregate of all employer and employee taxes handled by the payroll processor. A new payroll processor or a processor without a 4-year history is required to obtain a bond of at least $100,000;

2. It restricts the use of the funds held by the payroll processor to deposits in insured financial institutions or investments in government bonds or the stocks, bonds or commercial paper of other specific institutions as long as those institutions are highly rated by a nationally recognized statistical rating organization;

3. It requires a bonding company to immediately notify the Department of Professional and Financial Regulation of the cancellation, termination or lapse of a surety bond;

4. It imposes a civil penalty of up to $1,000 per day for each day that the payroll processor fails to maintain the required surety bond and a civil penalty up to or equal to the amount illegally invested by the payroll processor;

5. It requires the payroll processor to submit to annual audits to be conducted by the Department of Professional and Financial Regulation; and

6. It shifts from the State Tax Assessor to the Department of Professional and Financial Regulation oversight and responsibility for payroll processors.