CHAPTER 278
H.P. 466 - L.D. 633
An Act To Improve the Surety Bond Requirement for Small Payroll Companies
Emergency preamble. Whereas, acts of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, this legislation needs to take effect before the expiration of the 90-day period to help prevent small payroll companies from going out of business; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 10 MRSA §1495-D, sub-§3, as enacted by PL 2003, c. 668, §6 and affected by §12, is amended to read:
3. Proof of surety bond or other security. Except as provided in section 1495-E, subsection 4, an applicant under subsection 1 shall provide to the administrator proof of the surety bond or other security instrument required pursuant to section 1495-E.
Sec. 2. 10 MRSA §1495-D, sub-§3-A is enacted to read:
3-A. Conditional, probationary or provisional licenses. The administrator, within the administrator's discretion, may issue a conditional, probationary or provisional license to an applicant. A conditional, probationary or provisional license may run for any time period the administrator considers appropriate and must be consistent with ensuring the maximum practicable protection for employers.
Sec. 3. 10 MRSA §1495-D, sub-§4, as enacted by PL 2003, c. 668, §6 and affected by §12, is amended to read:
4. Fees. The initial application and annual renewal application must include a fee of $250 $200 if the payroll processor has fewer than 25 employers as payroll processing clients; $500 if the payroll processor has from 25 to 500 employers as payroll processing clients; and $750 $800 for those payroll processors that have more than 500 employers as payroll processing clients. The aggregate of license fees and other fees and assessments provided for by this chapter is appropriated for the use of the administrator. Any balance of these funds does not lapse but must be carried forward to be expended for the same purpose in the following fiscal year.
Sec. 4. 10 MRSA §1495-E, sub-§§1, 2 and 4, as enacted by PL 2003, c. 668, §6 and affected by §12, are amended to read:
1. Bond required; minimum amount; duration. Each application for a license under section 1495-D must be accompanied by evidence of a surety bond, in a form approved by the administrator, in an amount equal to the total of all local, state and federal tax payments and unemployment insurance premiums processed by the payroll processor on behalf of employers in this State in the 3-consecutive-month period of highest volume during the previous calendar year or $100,000 $50,000, whichever is greater, but not to exceed $500,000. The bond must designate the administrator as payee. The bond paid to the administrator may be used for the purposes of the administrator and for the benefit of any employer who may have a cause of action against the payroll processor. The terms of the bond must run continuously until cancelled and the aggregate amount of the bond must be maintained at all times during the licensing period.
2. Modification of bond requirement. If bonding is unavailable under the terms and conditions of subsection 1, the administrator, within the administrator's discretion, may modify those terms and conditions or may permit submission of an irrevocable letter of credit or other alternative form of security so as to ensure the maximum practicable protection for employers.
4. Exceptions. A payroll processor that does not have the authority to access, control, direct, transfer or disburse a client's funds is not subject to this section. A payroll processor that arranges for the transfer of funds from an employer's account directly to taxing authorities for payment of the employer's taxes is not subject to this section, as long as the payroll processor is not authorized to arrange for the transfer of funds for any other uses or to any other accounts. The administrator may construe this subsection through issuance of an advisory ruling or through rules adopted pursuant to section 1495-F.
Sec. 5. 10 MRSA §1495-H, sub-§2, as enacted by PL 2003, c. 668, §6 and affected by §12, is amended to read:
2. Bond or security forfeiture. After notice and hearing, forfeiture of that portion of the required bond or other security instrument as proportionately may make aggrieved parties whole;
Emergency clause. In view of the emergency cited in the preamble, this Act takes effect when approved.
Effective June 2, 2005.
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