SB 877 - This act establishes regulations and registration requirements relating to professional employer organizations (PEO's).

Under this act, no person is permitted to provide, advertise, or otherwise hold itself out as providing professional employer services unless such person is registered with the Department of Insurance, Financial Institutions, and Professional Registration under the provisions of this act.

A PEO is eligible for limited registration if it is domiciled outside the state, licensed as a PEO in another state, does not maintain an office in this state or directly solicit clients in this state, and does not have more than 50 employees employed or domiciled in this state on any given day. PEO's may further register as a PEO Group.

The Department shall maintain a list of PEO's registered in this state. The Department may prescribe forms to be used for registration but shall permit the acceptance of electronic filings by either the PEO or an independent qualified assurance organization authorized by the PEO to act on the PEO's behalf.

PEO's shall pay an initial registration fee not to exceed $500 with an annual renewal fee not exceed $250. PEO's seeking limited registration shall pay a registration fee not to exceed $250. The Department shall determine a fee to be paid by PEO groups. No fee shall exceed the amount reasonably necessary for the administration of the act.

Each PEO or PEO group shall maintain either positive working capital or provide a bond, irrevocable letter of credit, or securities with a minimum market value equaling the deficiency plus one hundred thousand dollars to the department. PEO's seeking limited registration are not required to meet these stipulations.

The act establishes the conditions under which a client and a PEO may enter into a professional employment agreement as well as the rights and responsibilities of each party.

Persons may be sanctioned by the Department for providing professional employer services without registering with the Department, or for providing false or fraudulent information to the Department in conjunction with any registration, renewal, or report required by this act. Such sanctions may include revocation of license or the imposition of an administrative penalty of not more than $1,000, among other potential penalties.

For purposes of this act, covered employees shall be considered employees solely of the client and not the PEO. Moreover, the client shall have the sole right of direction and control of the professional or licensed activities of covered employees and of the client's business.

With respect to a bid, contract, purchase order, or agreement entered into with the state or a political subdivision of the state, a client's status or certification as a minority-owned or woman-owned business enterprise shall not be affected because such client has entered into an agreement with a PEO or uses the services of a PEO.

For purposes of workers' compensation laws as well as retirement and welfare benefit plans, both the client and the PEO shall be considered an employer, however the responsibility to obtain workers' compensation coverage for covered employees shall be specifically allocated in the professional employer agreement.

The act modifies the definition of "lessor employing unit" for the purposes of unemployment law provisions to include PEO's.

This act is substantially similar to HB 1703 (2016) and HB 2203 (2014).


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