Friday, March 25, 2005

Texas PEO law and Unemployment Claims

For some time, Texas law has addressed unemployment claims by worksite employees. Section 207.045(i) of the Texas Labor Code requires worksite employees to report back to the PEO and request reassignment, as a condition of receiving unemployment benefits. The PEO rule is essentially identical to the longstanding rule for temporary staffing firms at 207.045(h).

Here is what the existing law actually says:

(i) An assigned employee of a staff leasing services company is considered to have left the assigned employee's last work without good cause if the staff leasing services company
demonstrates that:
(1) the staff leasing services company gave written notice to the assigned employee to contact the staff leasing services company on termination of assignment at a client company;
and
(2) the assigned employee did not contact the staff leasing services company regarding reassignment or continued employment; provided that the assigned employee may show that good cause existed for the assigned employee's failure to contact the staff leasing services company.

In short, the statute lays down three rules:
(A) When a worksite employee is fired, the employee must report back to the PEO for reassignment, or face denial of unemployment benefits.
(B) However, benefits will only be denied if the PEO proves that it gave the employee written notice to the employee of the requirement to report back to the PEO on terimination of employment.
(C) If the worksite employee fails to report back benefits will be denied, unless the employee can show "good cause" for failure to report back.

HB1939 would change the rules on this issue. Specifically, the bill would make the following changes:

  • The written notice currently required under 207.045(i) would have to be provided by the PEO to the worksite employees in a separate written document.
  • The employee must receive a copy of the notice.
  • The employee must sign the notice.
  • The notice must be printed in bold face, capital letters or other conspicuous print.
  • The notice must substantially conform to the language specified in the bill. In otherwords, the bill would provide the wording for the standard notice.
  • The notice must be given to the employee at the conclusion of employment.
The effect of the bill would be to require PEOs to obtain a separate signed statement from the employee at the time of termination of employment.