Last updated July 28, 2023
THIS SERVICE AGREEMENT, together with all exhibits and Schedules that are incorporated by this reference and made an integral part hereof, (“Agreement“), is made as of the Effective Date (as defined in the Preamble of this Agreement), by and between the Nextep and Customer (as named on page one of this Agreement) with Services to begin on the Effective Date.
For purposes of this Agreement, the definition of Worksite Employee (“WSE”) shall be Customer’s employees that Nextep shall co-employ and provide services to in those job functions identified by the workers’ compensation code classification as set forth on Schedule B. Prior to any WSE becoming co-employed pursuant to this Agreement, Customer represents that for each WSE Customer has completed and delivered to Nextep the following forms: (i) Employee Census; (ii) a W-4 Withholding Form; (iii) I-9 documentation; (iv) any other statutorily required tax or work forms as may be required by Nextep (collectively hereinafter referred to as “Employee Forms”). No WSE shall become a co-employee of Nextep covered by this Agreement, covered by Nextep’s workers’ compensation insurance or any other benefit of employment or issued a payroll check, unless the individual has completed the Employee Forms and they have been submitted to, reviewed by and approved by Nextep and an employee identification number has been issued. Further, Nextep will give written notice of the co-employment relationship between Nextep and Customer to each Worksite Employee who is assigned to perform services at Customer’s location.
1. Customer shall submit completed Employee Forms for all current and newly hired WSEs to Nextep on or before the first day the WSE performs work on behalf of Customer. Customer will examine and review all documents submitted by applicants and complete the I-9 and other immigration forms completely and in accordance with the law. Customer agrees to be solely responsible for properly maintaining all original I-9 forms. Customer warrants and represents that as to each WSE, Customer has examined all identification and work authorizations documents required for completing I-9 forms, and Customer certifies that the information contained on each I-9 form is true and accurate, and that Customer has in good faith reviewed any and all identification documents permitted by law and that such documents are authentic. You may supply copies of I-9s forms to Nextep to store (electronically). Completed Form I-9s must be submitted within three (3) days of hire. Failure to do so may result in a change in a WSE’s date of hire with Nextep.
2. Customer shall be solely responsible for the day-to-day supervision and control of WSE in the conduct of their work, as is necessary to conduct Customer’s business, to discharge any fiduciary responsibility which it may have, or to comply with any applicable licensure requirements. Customer expressly absolves Nextep of responsibility for control over the day-to- day job duties of the WSE and over the job site at which, or from which, WSE perform their work. Customer will be responsible for verifying skills and qualifications for employment. If a license is necessary for the performance of Customer’s work, Customer shall verify the existence, maintenance and validity of such license.
3. All duties and obligations not specifically allocated to Nextep under this Agreement remain Customer’s sole responsibility. Such responsibilities include but are not limited to Customer’s products, services and business operations; verification of skills and qualifications for employment of all WSEs; determination of exempt or non-exempt status of WSEs; federal and state leave laws and plant closing laws; use of independent contractors or any worker who is not a WSE; Customer’s confidential and proprietary information; any licensing or professional standards applicable to Customer’s workplace; payment of any applicable business, franchise, or excise tax; federal and state safety and health laws, including reporting and record-keeping requirements and ensuring use of personal protective equipment; and accessibility requirements under the ADA.
4. Customer shall obtain and provide to Nextep on or before the last day of each pay period complete, timely and accurate, records of actual time worked by each WSE and rates of pay in accordance with federal and state wage and hour laws. Such information including any information needed for the correct and accurate determination of the amount due to a WSE and the payment due to Nextep, must be submitted to Nextep by 12:00 p.m. in Customer’s time zone and no less than forty-eight (48) hours before each Pay Date. Failure to timely provide the necessary information may delay the delivery of payroll checks and will result in Customer being billed an out-of-cycle processing charge of $25.00 per check with a minimum total amount of $100.00 charged, plus any out-of-cycle shipping costs. Customer shall also provide any required health care information necessary to comply with the Affordable Care Act (“ACA”). If there are any changes to the WSE information required to be provided by Customer, Customer shall report those changes to Nextep immediately. Nextep shall rely on this information to issue all payroll deposits and checks, and to calculate and make any required tax or insurance payments. Customer must review and verify the accuracy of payroll information prior to the payment of such payroll. If Customer fails to provide complete, timely or accurate information, Nextep has the right to modify or discontinue Services, terminate this Agreement, or require additional payments. Customer is solely responsible for any damages arising out of Customer’s direct payment to a WSE of any remuneration for services or inaccurate information provided by Nextep. Any unclaimed paychecks in Customer’s possession must be returned to Nextep immediately.
5. Customer agrees that Nextep shall provide applicable consultative and system tracking services to Client regarding compliance with the ACA and all related Federal and state laws based solely off of the information provided to Nextep by Customer. Customer agrees that Nextep will only provide the services listed herein with regard to the ACA and that Customer shall remain responsible for compliance with all Federal and state laws, including, but not limited to, the ACA and the IRC, as it relates to Customers business and employees. Customer agrees to indemnify Nextep from any damages, costs, fines, and penalties incurred by Nextep relating in any way to Customer’s failure to comply with the ACA and all related Federal and state regulations and laws.
6. Customer will provide Nextep with accurate, complete and timely information necessary for Nextep to perform the SUTA management services (collection and remittance of SUTA taxes), including without limitations, unemployment claimants’ names, relevant dates, wage and separation information, state-specific required information (if any), reporting agent authorization, state unemployment account information and documentation, limited powers of attorney, and other documentation to support responses to unemployment compensation agencies. If Customer fails to provide the requested information timely, then Nextep shall assess a $100 fee per month plus a quarterly (based on calendar quarters) fee of $250 until such information is submitted to Nextep. Some states require Nextep to report and remit SUTA taxes using the Customer’s account information. If Customer has WSEs in these states, Nextep shall charge an administrative fee equivalent to $50 per employee per month.
7. Customer agrees to abide by employment policies and procedures, if any, issued by Nextep. Customer shall report any complaint, claim, accident, injury or other employment-related issue concerning WSEs to Nextep within twenty-four (24) hours after it becomes known to Customer and cooperate with Nextep in the investigation and resolution of same. If a WSE is injured at work and Nextep provides workers’ compensation coverage to Customer’s WSEs, Customer agrees to notify Nextep’s Risk Management Department by telephone or via electronic mail within twenty-four (24) hours of the injury and to cooperate in any investigation following the accident; to provide transportation to a medical facility; and, if required, due to medical restrictions, to permit the WSE (as required by law) to work in a modified-duty capacity. If Customer does not timely notify Nextep of the injury, Nextep may assess Client a $500 late reporting fee.
8. Customer agrees that Nextep has no obligation to pay sick leave, vacation, or other leave granted by Customer, and that upon termination of this Agreement, Customer shall assume sole responsibility for tracking all accumulated, but unused, sick leave and vacation time for WSE.
9. Customer shall immediately notify Nextep if it becomes a government contractor, has unionized employees or is subject to a collective bargaining agreement, for which Nextep assumes no obligations or responsibilities.
10. Customer shall pay all Fees upon delivery of the invoice to Customer at least one (1) day prior to each Pay Date. Payment shall have been made only when Nextep has received final, irrevocable credit at Nextep’s bank. If payment is refused by Customer’s bank for any reason, Customer agrees to pay any bank or other service charges imposed upon Nextep. Customer agrees to inform Nextep immediately of any situation in which payment will not be immediately forthcoming and if Customer fails to make payment as provided in this Agreement, Customer assumes full liability and responsibility for any wages, taxes, insurances and employment matters arising subsequent to the last pay period of which Customer paid according to these terms. If payment is not made when due, Nextep may, in its sole discretion, charge, in addition to all other amounts due, a three percent (3%) administration charge on the delinquent amount. In addition, Customer shall pay one and one-half percent (1½%) of the undisputed delinquent amount for each thirty (30) day period that the unpaid balance remains outstanding, but in no event shall the amount exceed the lawful rate of interest. Fees and taxes may be adjusted upon the effective date of any: (1) statutory increase in employment taxes, including but not limited to, changes to FUTA and FICA tax rates; (2) insurance rates; (3) cost of any benefits or programs offered or provided to WSEs; (4) if Customer requests a different level of service; (5) when there are variations in the number of WSEs or the state in which the WSEs are located; and/or (6) the amount of gross payroll or the job functions change. Nextep reserves the right to adjust the administrative fee in accordance with any Cost-Of-Living-Adjustment (or COLA) issued by the US Social Security Administration upon thirty (30) days’ written notice to Customer. Nextep also provides a variety of optional services that generally represent one-time or on-going special services to Customer or Customer’s Worksite Employees. If Customer requests such services, Customer will be billed at amounts agreed by Nextep and Customer and such fees will be added to Customer’s invoice when the services are delivered. All fees are based on Total Gross Wages prior to pre-tax deductions. If Customer in good faith believes there is an error on an invoice, Customer shall contact Nextep within three (3) business days of receipt of the invoice and Nextep will use commercially reasonable efforts to correct the invoice.
11. In connection with performing the duties and obligations outlined above as well as any other duties and obligations under this Agreement, Customer agrees that:
In the event that at any time during the term of this Agreement or thereafter in connection with this Agreement Customer has reason to provide, share, or otherwise make available to Nextep personally identifiable information of an individual, it represents and warrants that Customer (i) has provided any and all required notices and obtained any and all consents and/or authorizations to permit it to do so; (ii) will provide only the minimum necessary personally identifiable information; (iii) will do so in a secure manner, such as by encrypting any electronic transmissions of sensitive personal information.
Customer will adopt, implement, and maintain reasonable administrative, physical, and technical safeguards to ensure the confidentiality, security, integrity, and accessibility of personally identifiable information of WSE and their family members as required by law.
In the event Customer or any of its employees become aware of an actual or potential security incident that may affect either the Customer’s or Nextep’s information systems, it will notify Nextep as soon as practicable but not later than two business days.
It will promptly cooperate with any investigation by Nextep of an actual or potential security incident that may affect either the Customer’s or Nextep’s information systems.
Customer agrees to provide and maintain:
1. Motor vehicle liability insurance for all vehicles used in Customer’s business which will insure against public liability for bodily injury, death and property damage with a minimum combined single limit of One Million Dollars ($1,000,000) and uninsured motorist insurance with a minimum combined single limit of One Million Dollars ($1,000,000), in states where no fault laws apply.
2. Comprehensive general liability insurance policy in the minimum limit of One Million Dollars ($1,000,000) insuring Customer against bodily injury and property damage caused by Customer’s premises-operations or completed operations.
3. If any WSE performs any duties which requires the maintenance of a professional license and corresponding professional liability insurance, professional liability insurance which shall cover any acts, errors or omissions, including but not limited to the negligent acts of the WSE with a minimum limit of One Million Dollars ($1,000,000).
4. Workers’ compensation insurance for any Customer employees or workers not covered by this Agreement, or for WSEs in those states that require Customer to maintain separate workers’ compensation insurance.
5. Not later than five business days after its execution and delivery of this Agreement, Customer shall cause its insurance carrier to issue a certificate of insurance to Nextep verifying such coverage and providing for not less than 30 days’ prior written notice to Nextep of cancellation of or any changes to such coverage and identify Nextep as an additional insured.
6. All insurance policies maintained by Customer shall provide coverage which will be primary and/or exclusive in the event of any claim. All insurance policies shall waive Customer’s subrogation rights in favor of Nextep. Customer’s obligations under this Section shall survive termination of this Agreement.
1. Customer agrees to defend, indemnify and hold Nextep and its officers, directors, shareholders, affiliates, subsidiaries, employees and agents (collectively, the “Nextep Indemnified Parties”) harmless from and against any losses, liabilities, claims, obligations and/or expenses including, without limitation, court costs and reasonable attorneys’ fees (collectively “Damages”) incurred by or asserted against the Nextep Indemnified Parties as a result of: (i) any breach of this Agreement by Customer; (ii) any claims related to Customer’s business; (iii) any claims or liabilities which may arise from any acts which occurred prior to the Effective Date of this Agreement; (iv) any claims asserted by or liability to third parties arising from or related to, in whole or in part, Customer’s business; and (v) the actions of any Worksite Employee or the actions of any non-WSE employed by Client, or of any other individual, including without limitation, any violation of any local, state and/or federal law, regulation, ordinance, directive or rule whatsoever, and all employment-related matters which shall include but not be limited to all matters arising under local, state and/or federal right-to-know laws, environmental laws, all laws within the jurisdiction of the NLRB, OSHA, and EEOC, including Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act (including without limitation those aspects relating to employment, public access and public accommodation), the WARN Act, ERISA, all laws governing wages and hours (including without limitation: prevailing wage rate; exempt and non-exempt status; child labor; and minimum wage and overtime matters), all laws governing race, sex, sexual harassment, retaliation, religion, national origin, color, age, veteran status, disability, and marital status, all laws governing disclosed and undisclosed benefit plans, and all other labor laws.
2. Nextep agrees to defend, indemnify and hold Customer and its officers, directors, shareholders, affiliates, subsidiaries, employees and agents (collectively, the “Customer Indemnified Parties”) harmless from and against any Damages incurred by or asserted against the Customer Indemnified Parties as a result of: (i) any breach of this Agreement by Nextep; (ii) any claims related to Nextep’s business; and (iii) any claims asserted by or liability to third parties arising from or related to, in whole or in part, Nextep’s business.
3. Notwithstanding anything herein to the contrary, both Parties expressly agree that neither party shall be liable to the other party for any special, incidental or consequential damages of any nature whatsoever arising under or relating to this Agreement. These indemnifications shall survive the termination of this Agreement.
4. Customer acknowledges that when providing guidance, recommendations, or other forms of consulting services, Nextep is relying solely upon data, facts, and/or information provided by Customer. Customer understands that inherent in any decision regarding the employment relationship is a risk of claims or litigation by the employee. Customer assumes the risk for all employment related decisions it may make regarding WSEs and non-WSE employees including, without limitation, hiring, discipline, raises, demotions, promotions, transfers, job reassignments, and termination of employment.
1. Noticed Termination. This Agreement shall commence on the Effective Date and remain in full force and effect for a period of one (1) year (“Initial Term”), unless either Party provides at least 45 days’ written notice prior to the expiration of the Term of its intent to terminate the Agreement to the other Party. If Customer terminates the Agreement at any time during the Initial Term, then Customer shall reimburse Nextep the remaining Administrative Fees Nextep would have collected from the date of termination to the end of the Initial Term. After the Initial Term, this Agreement shall automatically renew for successive one (1) year periods (each a “Renewal Term”) unless terminated by Customer by providing at least forty-five (45) days’ written notice prior to the effective date of termination (the “Termination Period”). During the Termination Period the Parties will continue to meet the obligations set forth in this Agreement, including without limitation, the obligation of Customer to pay all Nextep invoices. If Customer fails to provide at least the applicable notice stated above prior to termination, Customer agrees to pay Nextep two (2) months of administrative fees based on the average fees charged during the immediately preceding six (6) months. If Customer terminates this Agreement prior to end of the Initial Term, Customer agrees to pay to Nextep an early termination fee equal to the average monthly Administrative Fee times the number of months remaining within the Initial Term which shall be included on the final invoice to Customer.
2. Immediate Termination. Nextep may also terminate this Agreement immediately if: (i) Customer fails to pay any invoice in full when due; (ii) Customer fails to comply with any federal, state or local law; (iii) Customer becomes financially insecure or in financial distress as defined under WARN; (iv) Customer, or any of its owners or affiliates, suffers, or, in Nextep’s sole discretion, becomes likely to suffer bankruptcy or insolvency; (v) Customer fails to report all wages earned or all time worked by WSEs; (vi) Customer fails to promptly report newly-hired WSEs; (vii) fails to report payroll for one or more payroll periods; (viii) any payment by Customer to Nextep is returned for insufficient funds or otherwise refused by Customer’s financial institution; (ix) Customer’s number of WSEs is reduced by 40% or more at any time during the Term or Renewal Term (as measured against the highest numbers of WSEs at any time during the Term or Renewal Term; (x) Customer fails to comply with a Nextep directive when such directive is for the purpose of compliance with applicable law; (xi) Customer’s failure to reasonably cooperate with Nextep as to any matter under this Agreement; (xii) Customer’s failure to comply with a directive by an insurance carrier providing coverage to WSEs; (xiv) Customer’s failure to maintain a safe workplace as required under this Agreement; or (xv)) materially breaches any term of this Agreement. If any breach is cured within three (3) business days, Nextep has the option to reinstate the Agreement. Notwithstanding Section 1 or Section 2 of Article 5, Nextep reserves the right to terminate the Agreement at any time and for any reason by providing Customer thirty (30) days’ written notice.
3. Upon termination for any reason, Customer shall: (i) pay all outstanding invoices; (ii) obtain replacement health insurance for WSEs; (iii) pay the COBRA participant fee outlined in Section 1(b) of the Schedule of Services; (iv) assume sole and exclusive responsibility and liability for all legal obligations as an employer of WSEs including but not limited to obtaining workers’ compensation coverage for WSEs; (v) continue to cooperate with Nextep in relation to any issue involving WSEs or this Agreement; and (vi) inform WSEs that this Agreement has been terminated.
1. Either party may, in connection with performing its obligations under this Agreement, be exposed to, create, or obtain, certain trade secret, employee, proprietary or competitively sensitive information of the other party’s business not generally known to the public outside the other party’s organization, which the other party take steps to protect against unauthorized use and disclosure (“Confidential Information”). Such information shall include, without limitation, the terms of this Agreement, lists, descriptions and contact and other personal information of either party’s employees, members, and non-member prospects, marketing plans, business and financial information, plans regarded for either party’s products and services, information developed or obtained by either party relating to the Program including member feedback, and information and documents designated by either party from time to time by marking the same as “Confidential.” Both parties agree that they will not, and that its employees, agents or independent contractors will not, use, directly or indirectly, any such Confidential Information for the benefit or advantage of themselves other than as and strictly for the purposes contemplated by this Agreement, or the benefit or advantage of any other person, entity, or organization, other than the parties, or disclose such Confidential Information to any third party other than bona fide Vendor employees, agents or independent contractors with a need to know such information for those purposes, without the express prior written authorization of disclosing party. Notwithstanding the above, Customer agrees that Nextep may need to disclose Confidential Information to bona fide third-party vendors to perform its obligations under the Agreement and Customer consents to this disclose. The disclosing party shall be responsible for ensuring that every employee, agent or independent contractor who is permitted access to Confidential Information in accordance with this provision is aware of this provision and has agreed in writing to be bound by it. This provision shall apply either during or after the Term, for so long as such information retains the characteristics of Confidential Information as defined herein. The receiving party of any Confidential information further agrees to keep, safeguard and protect Confidential Information and personal information of the disclosing party from unauthorized access, use, damage, loss, or disclosure using information, data and physical security measures consistent with standards prevailing in the insurance industry.
2. Customer agrees that all computer hardware and software, including, but not limited to, all computer programs, web designs provided by Nextep (unless such property was created by a third party) (the “Nextep Property”), are Confidential and the sole property of Nextep. Customer acknowledges and understands that Customer has been granted a limited license to use the computer software programs and databases provided by Nextep, and that this license is exclusive to Customer, and the license will terminate when this Agreement terminates. Customer agrees not to: (i) copy, distribute, lend, or reproduce any Nextep Property; or (ii) recompile, decompile, disassemble, reverse engineer, or make or distribute any other form of, or any derivative work from the Nextep Property. Customer also agrees to abide by the terms and conditions of any user license or other agreement relating to the Nextep Property.
3. The Parties will comply with all applicable Data Privacy Laws relating to the collection, use, processing, or disclosure of Personal Information. Personal Information includes “protected health information” as defined by the United States Health Insurance Portability and Accountability Act of 1996. The Parties will: (i) safeguard such Personal Information, including names, addresses and credit information, against unauthorized disclosure, access or use; and (ii) not disclose such Personal Information to any third party or use the Personal Information for any purpose, other than as authorized pursuant to this Agreement or permitted for purposes of Nextep fulfilling its duties under this Agreement.
1. Governing Law. The laws of the State of Oklahoma shall govern the construction, interpretation and enforceability of this Agreement. Venue shall lie in Cleveland County, Oklahoma. Customer, to the full extent permitted by law, hereby knowingly, intentionally and voluntarily, with and upon advice of competent counsel: (i) submits to personal jurisdiction in the State of Oklahoma over any suit, action or proceeding by any person arising from or relating to Customer, this Agreement, or the relationship of the parties hereto; (ii) agrees that any such action, suit or proceeding shall be brought in any state or federal court of competent jurisdiction sitting in Cleveland County, Oklahoma; (iii) submits to the jurisdiction and venue of such courts; (iv) to the fullest extent permitted by law, agrees that it will not bring any action, suit or proceeding in any forum other than as provided in this Agreement; and (v) irrevocably waives its right to a jury trial.
2. Notices. All notices required or permitted to be given hereunder shall be in writing and personally delivered or sent by courier, facsimile, overnight mail, registered mail, or certified mail, postage prepaid, return receipt requested. Notice shall be deemed effective upon delivery. All notices shall be sent as follows: (i) all notices to Customer shall be sent to the address and contact person named for Customer on page one of this Agreement; (ii) all notices to Nextep shall be sent to the address and contact person named for Nextep on page one of this Agreement; and (iii) a copy of all notices to Nextep shall be sent with attention to Nextep’s Legal Compliance Department at: 1800 N. Interstate Drive, Norman, OK 73072.
3. Relationship of the Parties. Each Party hereto is an independent contractor. Nothing contained in or done pursuant to this Agreement shall be construed as creating a partnership, agency, joint employment, joint venture, or franchisor-franchisee relationship between Nextep and Customer.
4. Force Majeure. Neither party shall be liable to the other party for damages for failure to perform due to contingencies beyond the party’s reasonable control, including (without limitation) fire, storm, flood, earthquake, explosion, accidents, public disorders, sabotage, lockouts, riots, pandemics or acts of God.
5. Entire Agreement. This Agreement, including the Term Sheet, Schedules, Terms and Conditions and applicable addenda constitutes the entire agreement between the parties regarding the subject matter of this Agreement, and supersedes any and all prior agreements pertaining to the subject matter hereof.
6. Modification. This Agreement may not be modified except by written instrument duly executed by the Parties.
7. Assignments. This Agreement cannot be assigned by Customer without the written consent of Nextep. It is expressly understood and agreed between the Parties that this Agreement may be assigned by Nextep at its sole discretion at any time without notice to the Customer. Customer agrees that Nextep may provide services described in the Agreement through an affiliate.
8. Waiver. The failure of any Party to enforce at any time the provisions of this Agreement shall not be construed as a waiver of any provision or of the right of such party thereafter to enforce each and every provision of this Agreement.
9. Severability. Should any term, condition or provision of this Agreement be held to be invalid or unenforceable, the balance of this Agreement shall remain in force and shall stand as if the unenforceable part did not exist.
10. Counterparts. This Agreement may be executed in any number of counterparts all of which together shall be considered one instrument.
11. Representations. Customer represents and warrants that (a) it has full power, authority and legal right to execute, deliver and perform this Agreement; (b) it has disclosed all investigations, lawsuits, adversarial proceedings, employment agreements, collective bargaining agreements, and employment related claims to Nextep; (c) that all wages and benefits due prior to the Effective Date have been paid to WSEs; (d) it is not a government contractor; and (e) all WSEs are United States citizens or have provided proof of employment eligibility documents accepted by the USCIS or its predecessors at the time of WSE’s hire.
12. Interpretation. With respect to any dispute concerning the meaning of this Agreement, this Agreement shall be interpreted as a whole with reference to its relevant provisions and in accordance with its fair meaning, and no part of this Agreement shall be construed against Nextep on the basis that Nextep drafted it. This Agreement shall be viewed as if prepared jointly by Nextep and Customer.
13. Survival. All of the confidentiality, liability and indemnification provisions of this Agreement, and all other provisions of this Agreement that by their nature should survive, shall survive the termination or expiration of this Agreement.
14. Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
15. No Third Party Beneficiary. The Parties acknowledge and agree that this Agreement creates no rights for or in favor of any person or third party not a party to this Agreement, and that no such person may place any reliance hereon.
16. State Licensure. For purposes of applicable state licensing laws, we are operating as a professional employer organization (also referred to as in some states as a Staff Leasing Company, PEO or Employee Leasing Company). In addition, the term Worksite Employee, as used herein, is synonymous with the terms “Assigned Employee,” “Leased Employee,” “Covered Employee,” and “Co-employee” as used in various state licensing statutes.