§ 40-68-40 — Qualifications to serve as controlling person; background investigation; fingerprinting; effect of conviction of crime; designating agent for service of process; minimum net worth requirement.

(A) To be qualified to serve as a controlling person of a licensee under this chapter, a person must be at least eighteen years of age, be of good moral character, and have educational, managerial, or business experience relevant to: (1) operation of a business entity offering professional employer services; or (2) services as a controlling person of a professional employer organization. For the purposes of this subsection, "good moral character" means a personal history of honesty, trustworthiness, fairness, a good reputation for fair dealing, and respect for the rights of others and for the laws of this State and nation. (B) The department shall conduct a background investigation of each individual applicant and of each controlling person of each applicant and require fingerprinting of each applicant and each controlling person to determine whether the applicant or controlling person is qualified under this chapter. The department may deny an application for the issuance or renewal of a license if it finds that a controlling person is not qualified under this chapter. The investigation shall include: (1) the submission of fingerprints for processing through appropriate local, state, and federal law enforcement agencies; and (2) examination by the department, if necessary, of police or other law enforcement records maintained by local, state, or federal law enforcement agencies. (C) Conviction of a crime does not automatically disqualify a controlling person, require the revocation of a license, or require the denial of an application for a new or renewed license. (D) A licensee shall maintain a registered agent for the service of process in this State. (E) An applicant for an original or renewal license must demonstrate a net worth of at least fifty thousand dollars. The applicant shall demonstrate the net worth to the department by providing the department with the applicant's audited financial statement. The net worth requirement also may be satisfied through guarantees, letters of credit, or other security acceptable to the department in a combined total amount of at least fifty thousand dollars. A guaranty is not acceptable to satisfy this subsection unless the applicant submits sufficient evidence to satisfy the department that the guarantor has adequate resources to satisfy the obligations of the guaranty. For applicants operating a professional employer organization or professional employer organization group on or before January 1, 1991, the net worth requirement will be satisfied by the documentation of a positive net worth. (F) A document submitted to establish net worth must reflect the net worth as of a date not earlier than six months before the date on which the application is submitted, and must be prepared by a certified public accountant. Information supplied regarding net worth is proprietary and confidential and is exempt from disclosure to third parties. (G)(1) An applicant and any controlling person must have at least two years of other related industry experience as approved by the department before the initial license is issued. (2) Notwithstanding subsection (G)(1), an applicant for a nonresident restricted license under Section 40-68-90 may be issued a license without the necessary two years' experience. (3) However, all licensees filed before September 30, 2005, may act as professional employment organizations after that date without regard to the experience requirement of this subsection if they maintain compliance with the continuing professional education requirements of Section 40-68-45 and otherwise comply with this chapter.

Legislative History

HISTORY: 1993 Act No. 169, SECTION 1; 1994 Act No. 466, SECTION 2; 2005 Act No. 112, SECTION 1.