HB 1795 — An Act providing for proof of fidelity insurance and surety bonds by payroll processors; and imposing a penalty.

PRINTER'S NO.    2208

                   THE GENERAL ASSEMBLY OF PENNSYLVANIA



                        HOUSE BILL
                        No. 1795
                                              Session of
                                                2025

     INTRODUCED BY GALLAGHER, WAXMAN, GIRAL, HOHENSTEIN, KHAN, KUZMA,
        HADDOCK, CEPEDA-FREYTIZ, SANCHEZ, HILL-EVANS, DONAHUE,
        DELLOSO, WARREN, FLEMING, KENYATTA, CERRATO, GREEN AND
        INGLIS, AUGUST 10, 2025

     REFERRED TO COMMITTEE ON LABOR AND INDUSTRY, AUGUST 11, 2025


                                   AN ACT
 1   Providing for proof of fidelity insurance and surety bonds by
 2      payroll processors; and imposing a penalty.
 3      The General Assembly of the Commonwealth of Pennsylvania
 4   hereby enacts as follows:
 5   Section 1.   Short title.
 6      This act shall be known and may be cited as the Payroll Bond
 7   Act.
 8   Section 2.   Definitions.
 9      The following words and phrases when used in this act shall
10   have the meanings given to them in this section unless the
11   context clearly indicates otherwise:
12      "Department."   The Department of Revenue of the Commonwealth.
13      "Payroll processing service."   Preparing and issuing payroll
14   checks, preparing and filing Federal and State income
15   withholding tax reports or unemployment contribution reports, or
16   collecting, holding and turning over income withholding taxes to
17   the department or Federal or local tax authorities as provided
 1   under Federal and State law.
 2      "Payroll processor."        A person that provides a payroll
 3   processing service for one or more employers.
 4      "Secretary."     The Secretary of Revenue of the Commonwealth.
 5   Section 3.     Proof of fidelity insurance.
 6      A payroll processor that issues payroll checks shall annually
 7   provide to the secretary proof of one of the following, at the
 8   payroll processor's option, in an amount two times the highest
 9   weekly payroll processed by the payroll processor in the
10   preceding year or in the amount of $5,000,000, whichever is
11   less:
12            (1)   fidelity bond;
13            (2)   employee dishonesty bond;
14            (3)   third-party fidelity coverage; or
15            (4)   liability insurance, including crime coverage.
16   Section 4.     Surety bonds.
17      (a)   Evidence.--Each payroll processor shall annually provide
18   evidence of a surety bond, in a form approved by the secretary,
19   in an amount equal to the total of all Federal, State and local
20   tax payments and unemployment insurance premiums processed by
21   the payroll processor on behalf of employers in this
22   Commonwealth in the three-consecutive-month period of highest
23   volume during the previous calendar year or $50,000, whichever
24   is greater, but not to exceed $500,000.
25      (b)   Designation and use.--The bond shall designate the
26   secretary as payee and the bond may be used for the purposes of
27   the secretary and for the benefit of an employer who may have a
28   cause of action against the payroll processor.
29      (c)   Terms.--The terms of the bond shall run continuously
30   until canceled and the aggregate amount of the bond shall be

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 1   maintained at all times while the payroll processor operates in
 2   this Commonwealth.
 3      (d)   Notice by surety companies.--A surety company issuing a
 4   bond under this section shall immediately notify the secretary
 5   when that bond is canceled, terminates or lapses. The following
 6   shall apply:
 7            (1)   The notice shall include the name and address of the
 8      payroll processor and the amount of the bond.
 9            (2)   The cancellation, termination or lapse shall not be
10      effective until at least 30 days after the secretary receives
11      notice.
12   Section 5.     Penalty.
13      (a)   Fine.--A payroll processor which does not secure
14   sufficient bonding and is found in violation of this act shall
15   be fined $1,000 for the first offense and $5,000 for each
16   subsequent offense.
17      (b)   Deposit of proceeds.--All fines or penalties collected
18   under this act shall be paid into the State Treasury through the
19   department and deposited into the General Fund.
20   Section 6.     Effective date.
21      This act shall take effect in 60 days.




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