2019 Tennessee Code
Title 62 - Professions, Businesses and Trades
Chapter 43 - Tennessee Professional Employer Organization Act
§ 62-43-105. Chapter or professional employer agreements do not affect collective bargaining agreements, or federal or state labor relations law -- Limits on chapter or professional employer agreements -- Determination of tax credits and economic incentives.
(a) Nothing contained in this chapter or in any professional employer agreement shall affect, modify or amend any collective bargaining agreement, or the rights or obligations of any client, professional employer organization or covered employee under:
(1) The National Labor Relations Act (29 U.S.C. §§ 151 et seq.), and as amended;
(2) The Railway Labor Act (45 U.S.C. §§ 151 et seq.), and as amended; or
(3) Applicable state labor relations law, compiled in titles 12 and 50 and as amended.
(b) Nothing in this chapter or in any professional employer agreement shall:
(1) Diminish, abolish or remove rights of covered employees to a client or obligations of such client to a covered employee existing prior to the effective date of the professional employer agreement;
(2) Affect, modify or amend any contractual relationship or restrictive covenant between a covered employee and any client in effect at the time a professional employer agreement becomes effective;
(3) Prohibit or amend any contractual relationship or restrictive covenant that is entered into subsequently between a client and a covered employee;
(4) Impose responsibility or liability on a professional employer organization in connection with, or arising out of, any such existing or new contractual relationship or restrictive covenant between the client and a covered employee unless the professional employer organization has specifically agreed otherwise in writing; or
(5) Create any new or additional enforceable right of a covered employee against a professional employer organization that is not specifically provided by the professional employer agreement or this chapter.
(c)
(1) Nothing contained in this chapter or any professional employer agreement shall affect, modify or amend any state, local governmental entity or federal licensing, registration, or certification requirement applicable to any client or covered employee.
(2) A covered employee who must be licensed, registered or certified according to law or regulation is deemed solely an employee of the client for purposes of any such license, registration or certification requirement.
(3) A professional employer organization shall not be deemed to engage in any occupation, trade, profession or other activity that is subject to licensing, registration or certification requirements, or is otherwise regulated by a local governmental entity solely by entering into and maintaining a co-employment relationship with a covered employee who is subject to such requirements or regulation.
(4) A client shall have the sole right of direction and control of the professional or licensed activities of covered employees and of the client's business. Such covered employees and clients shall remain subject to regulation by the state or local governmental entity responsible for licensing, registration or certification of such covered employees or clients.
(d)
(1) For purposes of determination of tax credits and other economic incentives provided by this state, or a local government entity, and based on employment, covered employees may be deemed employees solely of the client.
(2) A client may be eligible for any tax credit, economic incentive, or other benefit arising as the result of the employment of covered employees of the client.
(3) Notwithstanding that the professional employer organization is the W-2 reporting employer, the client may continue to qualify for the benefit, incentive, or credit.
(4) If the grant or amount of any such credit, incentive or benefit is based on the number of employees, then each client shall be treated as employing only those covered employees co-employed by the client. Covered employees working for other clients of the professional employer organization shall not be counted.
(5) Each professional employer organization shall provide, upon request by a client, an agency or department of this state or local governmental entity, employment information reasonably required by any agency or department of this state responsible for administration of any such tax credit, economic incentive or benefit and necessary to support any request, claim, application or other action by a client seeking any such tax credit, economic incentive or benefit.
(e) With respect to a bid, contract, purchase order or agreement entered into with this state or a local governmental entity, a client company's status or certification as a Tennessee small business, minority-owned business, Tennessee service-disabled veteran-owned business, disadvantaged business or woman-owned business, or as a historically underutilized business enterprise, is not affected because the client company has entered into an agreement with a professional employer organization or uses the services of a professional employer organization.
(f) In a co-employment relationship:
(1) The professional employer organization is entitled to enforce only such employer rights, and is subject to only those obligations, specifically allocated to the professional employer organization by the professional employer agreement or this chapter;
(2) The client is entitled to enforce:
(A) The rights, and obligated to provide and perform the employer obligations, allocated to the client by the professional employer agreement and this chapter; and
(B) Any right or obligation, not specifically allocated to the professional employer organization by the professional employer agreement or this chapter.
(g) A person is not a professional employer organization if the person:
(1)
(A) Engages in a principal business activity that does not involve entering into professional employer arrangements;
(B) Does not hold itself out as a professional employer organization; and
(C) Shares employees with a commonly owned company within the meaning of §§ 414(b) and (c) of the Internal Revenue Code of 1986, as amended;
(2) Provides temporary help services; or
(3) Assumes responsibility through independent contractor arrangements for the product produced or service performed by such person or such person's agents and retains and exercises primary direction and control over the work performed by the individuals whose services are supplied under such arrangements.
