CHAPTER 1
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CHAPTER 1
( SB 10 )
AN ACT relating to registration of professional employer organizations and declaring an emergency.
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
Section 1. KRS 336.236 is amended to read as follows:
(1) A person engaged in providing professional employer services pursuant to a co-employment relationship in
which all or a majority of the employees of a client are covered employees shall be registered under KRS
336.230 to 336.250 no later than July 15, 2024. After July 15, 2024, a person who is not registered under
KRS 336.230 to 336.250 shall not offer or provide professional employer services in this Commonwealth and
shall not use the names professional employer organization, PEO, staff leasing company, employee leasing
company, administrative employer, or any other name or title representing professional employer services.
(2) Each applicant for registration under KRS 336.230 to 336.250 shall provide the Department of Workers'
Claims with the following:
(a) The name or names under which the professional employer organization conducts business;
(b) The address of the principal place of business of the professional employer organization and the address
of each office it maintains in this Commonwealth;
(c) The professional employer organization's taxpayer identification number or federal and state employer
identification number;
(d) A list, by jurisdiction, of each name under which the professional employer organization has operated in
the preceding five (5) years, including any alternative names, names of predecessors, and, if known,
successor business entities;
(e) A statement of ownership, which shall include the name and evidence of the business experience of any
person that, individually or acting in concert with one (1) or more other persons, owns or controls,
directly or indirectly, twenty-five percent (25%) or more of the equity interest in the professional
employer organization; and
(f) 1. A financial statement setting forth the financial condition of the professional employer
organization or professional employer organization group.
2. At the time of the initial application for a new registration, the applicant shall submit the most
recent audit of the applicant, which shall not be older than thirteen (13) months. Thereafter, a
professional employer organization or professional employer organization group shall file a
succeeding audit on an annual basis within one hundred eighty (180) days after the end of the
fiscal year.
3. An applicant may apply for an extension with the Department of Workers' Claims, but any
extension request shall be accompanied by a letter from the auditors stating the reasons for the
delay and the anticipated date for completion of the audit.
4. 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 the accountant is located, and shall be without qualification as to the going
concern status of the professional employer organization.
5. A professional employer organization group may submit combined or consolidated audited
financial statements to meet the requirements of this paragraph.
6. A professional employer organization that has not had sufficient operating history to have
audited financial statements based on at least twelve (12) months of operating history shall meet
the requirements in KRS 336.240 and present financial statements reviewed by a certified public
accountant.
(3) Each professional employer organization operating within this Commonwealth as of July 14, 2022, shall
complete its initial registration no later than July 15, 2024[one hundred eighty (180) days after July 14, 2022].
The initial registration shall be valid until[ one hundred eighty (180) days from] the end of the professional
employer organization's first fiscal year that is more than one (1) fiscal year after July 15, 2024[July 14, 2022]. ACTS OF THE GENERAL ASSEMBLY 2
(4) Each professional employer organization not operating within this Commonwealth as of July 14, 2022, shall
complete its initial registration prior to initiating operations within this Commonwealth. If a professional
employer organization not operating within this Commonwealth becomes aware that an existing client that is
not based in this Commonwealth had employees and operations in this Commonwealth, the professional
employer organization shall either decline to provide professional employer services for those employees or
notify the Department of Workers' Claims within five (5) business days of its knowledge of this fact and file a
limited registration application or file a full business registration if there are more than fifty (50) covered
employees. The Department of Workers' Claims may issue an interim operating permit for the period the
registration applications are pending if the professional employer organization is currently registered or
licensed by another state and the Department of Workers' Claims determines it to be in the best interests of the
potential covered employees.
(5) Within one hundred eighty (180) days after the end of the fiscal year, a registrant shall renew its registration by
notifying the Department of Workers' Claims of any changes in the information provided in the registrant's
most recent registration or renewal. A registrant's existing registration shall remain in effect during the
pendency of a renewal application.
(6) Professional employer organizations in a professional employer organization group may satisfy the reporting
and financial requirements of KRS 336.230 to 336.250 on a combined or consolidated basis provided that each
member of the professional employer organization group guarantees the financial capacity obligations under
KRS 336.230 to 336.250 of each other member of the professional employer organization group. In the case of
a professional employer organization group that submits a combined or consolidated audited financial
statement that includes entities that are not professional employer organizations or that are not in the
professional employer organization group, the controlling entity of the professional employer organization
group under the consolidated or combined statement shall guarantee the obligations of the professional
employer organizations in the professional employer organization group.
(7) (a) A professional employer organization is eligible for a limited registration under KRS 336.230 to
336.250 if the professional employer organization:
1. Submits a properly executed request for limited registration on a form provided by the
Department of Workers' Claims;
2. Is domiciled outside this Commonwealth and is licensed or registered as a professional employer
organization in another state;
3. Does not maintain an office in this Commonwealth or directly solicit clients located or domiciled
within this Commonwealth; or
4. Does not have more than fifty (50) covered employees domiciled or employed in this
Commonwealth on any given day.
(b) A limited registration is valid for one (1) year and may be renewed.
(c) A professional employer organization seeking limited registration under this subsection shall provide
the Department of Workers' Claims with information and documentation necessary to show that the
professional employer organization qualifies for a limited registration.
(d) KRS 336.240 does not apply to applicants for limited registration.
(8) The Department of Workers' Claims shall maintain a list of professional employer organizations registered
pursuant to KRS 336.230 to 336.250 that is readily available to the public by electronic or other means.
(9) The Department of Workers' Claims shall to the extent practical permit by administrative regulation the
acceptance of electronic filings, including applications, documents, reports, and other filings required under
KRS 336.230 to 336.250. The Department of Workers' Claims may provide for the acceptance of electronic
filings and other assurance by an independent and qualified assurance organization approved by the secretary
that provides satisfactory assurance of compliance acceptable to the Department of Workers' Claims consistent
with or in lieu of the requirements of this section and KRS 336.240, and other requirements of KRS 336.230 to
336.250 The secretary shall permit a professional employer organization to authorize an approved assurance
organization to act on behalf of the professional employer organization in complying with the registration
requirements of KRS 336.230 to 336.250, including electronic filings of information and payment of
registration fees. Use of an approved assurance organization shall be optional for a registrant. Nothing in this
subsection shall limit or change the Department of Workers' Claims' authority to register or terminate CHAPTER 1
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registration of a professional employer organization or to investigate or enforce any provision of KRS 336.230
to 336.250.
(10) All records, reports, and other information obtained from a professional employer organization under KRS
336.230 to 336.250, except to the extent necessary for the proper administration of KRS 336.230 to 336.250
by the Department of Workers' Claims, shall be confidential and shall not be published or open to public
inspection other than to public employees in the performance of their public duties.
(11) The Department of Workers' Claims may promulgate administrative regulations and prescribe forms necessary
to promote the efficient administration of this section.
Section 2. KRS 336.248 is amended to read as follows:
For the purposes of KRS Chapter 341:
(1) Except as provided in subsection (2) of this section, covered employees of a registered professional employer
organization shall be considered employees of the professional employer organization, which shall be
responsible for the payment of contributions, penalties, and interest on wages paid by the professional
employer organization to its covered employees during the term of the applicable professional employer
agreement;
(2) Beginning on the effective date of this Act and continuing through December 31, 2024, the professional
employer organization shall report and pay all required contributions to the unemployment insurance fund
using the state employer identification number and contribution rate of the client. After January 1, 2025,
the professional employer organization shall report and pay all required contributions to the unemployment
insurance fund using the state employer identification number and the contribution rate of the professional
employer organization; and
(3) Upon the termination of a contract between a professional employer organization and a client or the failure of
a professional employer organization to submit reports or make tax payments as required by KRS 336.230 to
336.250, the client shall be treated as a new employer without a previous experience record unless that client is
otherwise eligible for an experience rating.
Section 3. KRS 336.250 is amended to read as follows:
(1) A person shall not knowingly:
(a) After July 15, 2024, offer or provide professional employer services or use the names professional
employer organization, PEO, staff leasing, employee leasing, administrative employer, or other title
representing professional employer services without first becoming registered under KRS 336.230 to
336.250; or
(b) Provide false or fraudulent information to the Department of Workers' Claims in conjunction with any
registration, renewal, or in any report required under KRS 336.230 to 336.250.
(2) Action may be taken by the Department of Workers' Claims against:
(a) Any person for violation of subsection (1) of this section;
(b) A professional employer organization or the controlling person of a professional employer organization
upon the conviction of a professional employer organization or the controlling person of a professional
employer organization of a crime that relates to the operation of the professional employer organization
or the ability of the registrant or the controlling person of the registrant to operate the professional
employer organization;
(c) A professional employer organization or the controlling person of a professional employer organization
for knowingly making a material misrepresentation to the Department of Workers' Claims or any other
state agency; or
(d) A professional employer organization or the controlling person of a professional employer organization
for a willful violation of KRS 336.230 to 336.250 or any order or administrative regulation issued by
the Department of Workers' Claims under KRS 336.230 to 336.250.
(3) Upon finding that a professional employer organization or the controlling person of a professional employer
organization has violated any provision of KRS 336.230 to 336.250, the Department of Workers' Claims may:
(a) Deny an application for a registration; ACTS OF THE GENERAL ASSEMBLY 4
(b) Revoke, restrict, or refuse a registration;
(c) Impose a civil penalty not to exceed one thousand dollars ($1,000) for each violation;
(d) Place a registration on probation and subject to conditions specified by the Department of Workers'
Claims; or
(e) Issue a cease and desist order.
Section 4. The amendments to KRS 336.230 to 336.250 in this Act, including to Section 1 of this Act,
shall not impact or change any other provision or requirement established in 2022 Ky. Acts ch. 50 that was not
specifically amended in this Act.
Section 5. For the period beginning July 14, 2022, and continuing until the effective date of this Act, the
Education and Labor Cabinet shall not require reporting or payment of required contributions to the unemployment
insurance fund using the state employer identification number and contribution rate of the professional employer
organization or take enforcement action against the professional employer organization pursuant to KRS 336.250
regarding professional employer organization contributions related to KRS 336.248(2).
Section 6. Whereas the proper treatment of all professional employer organizations in the Commonwealth
by the Department of Worker' Claims is of critical importance, an emergency is declared to exist, and this Act takes
effect upon its passage and approval by the Governor or upon its otherwise becoming a law.
Signed by Governor January 6, 2023.