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This entry was published on 2014-09-22
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SECTION 922
General requirements and provisions
Labor (LAB) CHAPTER 31, ARTICLE 31
§ 922. General requirements and provisions. 1. A professional employer
organization shall meet the following standards:

(a) Have a written professional employer agreement between the client
and the professional employer organization setting forth the
responsibilities and duties of each party. The professional employer
agreement shall contain a description of the type of services to be
rendered by the professional employer organization and the respective
rights and obligations of the parties and the professional employer
agreement shall also provide that the professional employer
organization:

(i) reserves a right of direction and control over the worksite
employees. However, the client shall maintain such direction and control
over the worksite employees as is necessary to conduct the client's
business and without which the client would be unable to conduct its
business, discharge any fiduciary responsibility which it may have, or
comply with any applicable licensure;

(ii) assumes responsibility for the withholding and remittance of
payroll-related taxes and employee benefits for worksite employees and
for which the professional employer organization has contractually
assumed responsibility from its own accounts, as long as the
professional employer agreement between the client and professional
employer organization remains in force; and

(iii) retains authority to hire, terminate and discipline the worksite
employees.

(b) Provide written notice of the general nature of the relationship
between the professional employer organization and the client to the
worksite employees located at the client worksite.

2. A professional employer organization shall be considered an
employer for the purposes of withholding state income tax of the
worksite employees pursuant to section six hundred seventy-one of the
tax law.

3. As long as the professional employer organization's professional
employer agreement with a client remains in force, the professional
employer organization shall have a right to and shall assume the
following responsibilities:

(a) pay wages and collect, report and remit employment taxes of its
worksite employees from its own accounts;

(b) pay unemployment insurance as required by the unemployment
insurance law;

(c) secure and provide required workers' compensation coverage for its
worksite employees either in its own name or in its client's name.

4. Both the client and the professional employer organization shall be
considered the employer for the purpose of coverage under the workers'
compensation law and both the professional employer organization and its
client shall be entitled to protection of the exclusive remedy provision
of the workers' compensation law irrespective of which entity secures
and provides such workers' compensation coverage.

5. A registered professional employer organization shall be deemed for
purposes of state law an employer for purposes of sponsoring welfare
benefit plans for its worksite employees. Worksite employees
participating in that professional employer organization's fully insured
welfare benefit plan or plans shall be considered employees
participating in a single employer welfare benefit plan or plans. A
fully insured welfare benefit plan or plans offered by a registered
professional employer organization to its employees and/or worksite
employees shall not be considered for purposes of state law a multiple
employer welfare arrangement.

6. Subject to any contrary provisions contained in the written
professional employer agreement between the client and the professional
employer organization, the professional employer arrangement that exists
between a professional employer organization and its client or clients
shall be interpreted for the purposes of insurance and bonding as
follows:

(a) Nothing in this section shall serve to limit any contractual
liability, as may be expressly agreed upon, between the professional
employer organization and the client, nor shall this section in any way
limit the liabilities of any professional employer organization or
client as defined elsewhere in this article; and

(b) Worksite employees are not automatically deemed pursuant to this
section to be employees of the professional employer organization for
purposes of general liability, insurance, automobile insurance, fidelity
bonds, surety bonds, employer's liability which is not covered by
workers' compensation, or liquor liability insurance carried by the
professional employer organization unless the worksite employees are
included by specific reference in the professional employer agreement
and applicable prearranged employment contract, insurance contract or
bond.

7. The sale of professional employer services in conformance with the
provisions of this article shall not constitute the sale of insurance
for purposes of the insurance law. However, no professional employer
organization shall function or hold itself out as an insurer, insurance
broker or insurance agent unless appropriately licensed by this state.

8. Worksite employees whose services are subject to sales tax shall be
deemed the employees of the client for purposes of collecting and
levying sales tax on the services performed by the worksite employee.