PRINTER'S NO. 460
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
497
Session of
2021
INTRODUCED BY DRISCOLL, ISAACSON, HILL-EVANS, BURGOS, SANCHEZ,
KENYATTA, FREEMAN, DeLUCA, CIRESI, WARREN, DELLOSO, ROZZI AND
HENNESSEY, FEBRUARY 10, 2021
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 10, 2021
AN ACT
Providing for proof of fidelity insurance and surety bonds by
payroll processors and imposing a penalty.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Payroll Bond
Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of Revenue of the Commonwealth.
"Payroll processing services." Preparing and issuing payroll
checks, preparing and filing Federal and State income
withholding tax reports or unemployment contribution reports, or
collecting, holding and turning over income withholding taxes to
the department or Federal or local tax authorities as provided
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under Federal and State law.
"Payroll processor." A person that provides a payroll
processing service for one or more employers.
"Secretary." The Secretary of Revenue of the Commonwealth.
Section 3. Proof of fidelity insurance.
A payroll processor that issues payroll checks shall annually
provide to the secretary proof of one of the following, at the
payroll processor's option, in an amount two times the highest
weekly payroll processed by the payroll processor in the
preceding year or in the amount of $5,000,000, whichever is
less:
(1) fidelity bond;
(2) employee dishonesty bond;
(3) third-party fidelity coverage; or
(4) liability insurance, including crime coverage.
Section 4. Surety bonds.
(a) General rule.--Each payroll processor shall annually
provide evidence of a surety bond, in a form approved by the
secretary, in an amount equal to the total of all Federal, State
and local tax payments and unemployment insurance premiums
processed by the payroll processor on behalf of employers in
this Commonwealth in the three-consecutive-month period of
highest volume during the previous calendar year or $50,000,
whichever is greater, but not to exceed $500,000.
(b) Designation and use.--The bond shall designate the
secretary as payee and the bond may be used for the purposes of
the secretary and for the benefit of an employer who may have a
cause of action against the payroll processor.
(c) Terms.--The terms of the bond shall run continuously
until canceled and the aggregate amount of the bond shall be
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maintained at all times while the payroll processor operates in
this Commonwealth.
(d) Notice by surety companies.--A surety company issuing a
bond under this section shall immediately notify the secretary
when that bond is canceled, terminates or lapses. The following
shall apply:
(1) The notice shall include the name and address of the
payroll processor and the amount of the bond.
(2) The cancellation, termination or lapse shall not be
effective until at least 30 days after the secretary receives
notice.
Section 5. Penalty.
(a) Fine.--A payroll processor which does not secure
sufficient bonding and is found in violation of this act shall
be fined $1,000 for the first offense and $5,000 for each
subsequent offense.
(b) Deposit of proceeds.--All fines or penalties collected
under this act shall be paid into the State Treasury through the
department and deposited in to the General Fund.
Section 6. Effective date.
This act shall take effect in 60 days.
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