HOUSE BILL No. 2092
AN ACT concerning labor and employment; relating to professional employer
organizations; providing that registrations of such organizations with the secretary of
state shall expire on October 15 following issuance; providing an exception
therefrom for registrations issued on or after January 1, 2025, that shall expire on
October 15, 2026; making the time for filing annual audits by such organizations
coincide with the time of renewing of registrations; limiting the means of providing
surety by a professional employer organization with insufficient working capital to
the provision of a bond and eliminating the market value measure of the sufficiency
of such bond; amending K.S.A. 2024 Supp. 44-1704 and 44-1706 and repealing the
existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 2024 Supp. 44-1704 is hereby amended to read
as follows: 44-1704. (a) A person engaged in the business of providing
professional employer services pursuant to co-employment
relationships in which all or a majority of the employees of a client are
covered employees shall be registered pursuant to this section.
(b) A person who is not registered pursuant to this section shall
not offer or provide professional employer services in this state, and
shall not use the names PEO, professional employer organization, staff
leasing company, employee leasing company, administrative employer
or any other name or title representing professional employer services.
(c) Each applicant for registration shall submit an application to
the secretary in such form and manner as prescribed by the secretary.
The application shall contain the following information:
(1) The name or names under which the professional employer
organization conducts business;
(2) the address of the principal place of business of the
professional employer organization, and the address of each office the
professional employer organization maintains in this state;
(3) the professional employer organization's taxpayer or employer
identification number;
(4) a list, by jurisdiction, of each name under which the
professional employer organization has operated in the preceding five
years, including any alternative names, names of predecessors and, if
known, successor business entities;
(5) a statement of ownership that shall include the name and
evidence of the business experience of any person that, individually, or
acting in concert with one or more other persons, owns or controls,
directly or indirectly, 15% or more of the equity interest of the
professional employer organization;
(6) a statement of management that shall include the name and
evidence of the business experience of any individual who serves as
president, chief executive officer or otherwise has the authority to act
as senior executive officer of the professional employer organization;
and
(7) a financial statement setting forth the financial condition of the
professional employer organization or professional employer group that
shall comply with the provisions of subsection (h).
(d) Each professional employer organization not operating within
this state as of the effective date of this act shall complete its initial
registration prior to initiating operations within this state. If a
professional employer organization not registered in this state becomes
aware that an existing client, not based in this state, has employees and
operations in this state, the professional employer organization shall
either decline to provide professional employer services for those
employees, or notify the secretary within five business days of the
professional employer organization's knowledge of this fact and file a
limited registration application pursuant to subsection (g), or a full
registration if there are more than 50 covered employees employed by
such client. The secretary may issue an interim operating permit for the
period of time the application is pending if the professional employer
organization is currently registered or licensed by another state and the
secretary determines it is in the best interests of the potential covered
employees. HOUSE BILL No. 2092—page 2
(e) A registrant's application registration shall automatically
expire 120 days after the end of the registrant's fiscal year. Within 120
days after the end of a registrant's fiscal year, such on October 15
following the issuance of such registration, except that any such
registration issued on or after January 1, 2025, shall expire on October
15, 2026. A registrant shall renew its registration by notifying the
secretary of any changes in the information provided in such
registrant's most recent registration or renewal. A registrant's existing
registration shall remain in effect for the period of time the renewal
application is pending.
(f) Professional employer organizations in a professional employer
group may satisfy any reporting and financial requirements of this
section on a combined or consolidated basis, provided that each
member of the professional employer group guarantees the financial
capacity obligations required by K.S.A. 44-1706, and amendments
thereto, of each other member of the professional employer group. In
the case of a professional employer group that submits a combined or
consolidated audited financial statement, including entities that are not
professional employer organizations or that are not in the professional
employer group, the controlling entity of the professional employer
group under the consolidated or combined statement must guarantee the
obligations of the professional employer organizations in the
professional employer group.
(g) (1) A professional employer organization is eligible for a
limited registration if such professional employer organization:
(A) Submits a written request for limited registration in such form
and manner as prescribed by the secretary;
(B) is domiciled outside this state and is licensed or registered as a
professional employer organization in another state;
(C) does not maintain an office in this state or directly solicit
clients located or domiciled within this state; and
(D) does not have more than 50 covered employees employed or
domiciled in this state on any given day.
(2) A limited registration is valid for one year and may be renewed
thereafter.
(3) A professional employer organization requesting limited
registration under this subsection shall provide the secretary with such
information and documentation as required by the secretary to show
that the professional employer organization qualifies for a limited
registration.
(4) The provisions of K.S.A. 44-1706, and amendments thereto,
shall not apply to applicants for limited registration.
(h) At the time of initial registration, the applicant shall submit the
most recent audit of the applicant or such applicant's parent holding
company. The most recent audit shall not be older than 13 months.
Thereafter, a professional employer organization or professional
employer group shall file on an annual basis, within 120 days after the
end of the professional employer organization's or parent holding
company's fiscal year, a succeeding audit and, not older than 12
months, with such applicant's renewal registration application. An
applicant may apply to the secretary for an extension of time to submit
such audit, but any such request shall be accompanied by a letter from
the auditor stating the reasons for the delay and the anticipated audit
completion date. For the initial application, if the closing date of the
audited financial statements required by this section is older than three
months from the date of the application, the application also shall
include updated, unaudited financial statements for the most recent
quarter. The financial statement shall be prepared in accordance with
generally accepted accounting principles and audited by an independent
certified public accountant licensed to practice in the jurisdiction in
which such accountant is located and shall be without qualification as
to the going concern status of the professional employer organization. A
professional employer group may submit combined or consolidated
audited financial statements to meet the requirements of this section. A HOUSE BILL No. 2092—page 3
professional employer organization that has not had sufficient operating
history to have audited financial statements based upon at least 12
months of operating history shall meet the financial capacity
requirements of subsection (f) and present financial statements
reviewed by a certified public accountant.
(i) The secretary shall maintain a list of professional employer
organizations registered under this section, and such list shall be readily
available to the public by electronic or other means.
(j) The secretary, to the extent feasible, shall permit the acceptance
of electronic filings, including initial registration and renewal
applications, documents, reports and other filings required by the
secretary under this section. The secretary may provide for the
acceptance of electronic filings and registration information for initial
registration and renewal applications, reports and other assurance
documents by an independent and qualified assurance organization
approved by the secretary that provides satisfactory assurance of
compliance acceptable to the secretary consistent with, or in lieu of, the
requirements of this section and K.S.A. 44-1706, and amendments
thereto. The secretary shall permit a professional employer organization
to authorize such assurance organization approved by the secretary to
act on the professional employer organization's behalf, including
electronic filings and provisions of registration information for initial
registration and renewal applications and payment of registration fees
in complying with the registration requirements of subsections (c)
through (h). Use of such an approved assurance organization shall be
optional and not mandatory for a registrant. Nothing in this subsection
shall limit or change the secretary's authority to register or terminate
registration of a professional employer organization or to investigate or
enforce any provision of K.S.A. 44-1701 through 44-1711, and
amendments thereto.
Sec. 2. K.S.A. 2024 Supp. 44-1706 is hereby amended to read as
follows: 44-1706. Except as provided by K.S.A. 44-1704(g) and (j),
and amendments thereto, each professional employer organization, or
collectively each professional employer group shall either:
(a) Maintain positive working capital upon registration as
reflected in the financial statements submitted to the secretary with the
initial registration application and each renewal application; or
(b) for a professional employer organization or professional
employer group that does not have sufficient positive working capital
as required in subsection (a), submit a bond, irrevocable letter of credit
or securities with a minimum market value in an amount equal to the
sum of the amount that would be necessary for such professional
employer organization or professional employer group to comply with
subsection (a) plus $100,000 to the secretary at such time as the
professional employer organization or professional employer group
does not have sufficient working capital. Such bond shall be held by a
depository designated by the secretary securing payment by the
professional employer organization of all taxes, wages, benefits or
other entitlement due to or with respect to covered employees, if the
professional employer organization does not make such payments when
due. HOUSE BILL No. 2092—page 4
Sec. 3. K.S.A. 2024 Supp. 44-1704 and 44-1706 are hereby
repealed.
Sec. 4. This act shall take effect and be in force from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the
HOUSE, and passed that body
Speaker of the House.
Chief Clerk of the House.
Passed the SENATE ______________________________________________________________________________
President of the Senate.
Secretary of the Senate.
APPROVED __________________________________________________________________________________________________
Governor.