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ENGROSSED SENATE
BILL NO. 196 By: Rader of the Senate
and
Boatman of the House
[ Oklahoma Professional E mployer Organization
Recognition and Regi stration Act - registration and
tax requirements - financial statements and payment
of payroll taxes - effective date ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 40 O.S. 2011, Section 600.2, is
amended to read as follows:
Section 600.2. 1. “Client” means any person who e nters into a
coemployment relationship as a c oemployer with a professional
employer organization (PEO);
2. “Coemployer” means either a PEO or a client;
3. “Coemployment relationship ” means:
a. as between coemployers, a relationship whereby the
rights, duties and obligations of an employer which
arise out of an employment relationship have been
allocated between coemployers pursuant to a
professional employer agreement and the Oklahoma
Professional Employer Organization Recognition and
Registration Act, an d which is intended to be an
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ongoing relationship, rather than a temporary or
project specific project-specific relationship, and
b. as between each PEO and a covered employee as to which
a professional employer agreement applies, an
employment relationship wh ereby:
(1) such PEO is entitled to enforce those rights, and
obligated to perform those duties and
obligations, allocated to such PEO by the
professional employer agreement and the Oklahoma
Professional Employer Organization Recognition
and Registration Act, and
(2) such covered employee is entitled to enforce
against such PEO those duties and obligations
allocated to the PEO by the professional employer
agreement and the Oklahoma Professional Employer
Organization Recognition and Registration Act;
c. as between each client and a covered employee to which
a professional employer agreement applies and
employment relationship whereby:
(1) such client is entitled to enforce those rights,
and obligated to provide a nd perform those
employer obligations allocated to such client by
the professional employer agreement and the
Oklahoma Professional Employer Organization
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Recognition and Registration Act and whereby such
client is responsible for any employer right or
obligation not otherwise allocated by the
professional employer agreement of the Oklahoma
Professional Employer Organization Recognition
and Registration Act, and
(2) such covered employee is entitled to enforce
against such client those duties and obligations
allocated to the client by the professional
employer agreement and the Oklahoma Professional
Employer Organization Recognition and
Registration Act and any other duties and
obligations of an employer not otherwise
allocated by the professional employer ag reement
or the Oklahoma Professional Employer
Organization Recognition and Registration Act;
4. “Commissioner” means the Insurance Commissioner of the State
of Oklahoma;
5. “Covered Employee” means an individual having a coemployment
relationship with a PEO and a client who have entered into a
professional employer agreement with respect to such person, and
shall include the client ’s officers, directors, shareholders,
partners and managers to the extent such persons act as operational
managers or perform services for the client;
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6. “Department” means the Department of Insurance of the State
of Oklahoma;
7. “Person” means any individual, partnership, corporation,
limited liability company, association, or any other form of legally
recognized entity;
8. “Professional employer agreement ” means a written contract
by and between a client and a PEO under which the PEO and the client
agree to establish a coemployment relationship and which satisfies
the requirements of subsection C of Section 7 of this act 600.7 of
this title;
9. “Professional Employer Orga nization” or PEO means any person
engaged in the business of providing professional employer services.
A person engaged in the business of providing professional employer
services shall be subject to registration under the Okla homa
Professional Employer O rganization Recognition and Registration Act
regardless of its use of the term “professional employer
organization”, “PEO”, “staff leasing company ”, “registered staff
leasing company”, “employee leasing company ”, or any other name;
10. “Professional employer services” means the service of
entering into coemployment relationships under the Oklahoma
Professional Employer Organization Recognition and Registration Act,
in which, except in isolated instances, all or a majority of the
employees providing service s to a client or to a division or work
unit of client are covered employees;
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11. “Qualified attorney” means an attorney licensed to practice
in the jurisdiction in which such attorney is located who is
competent based on the attorney’s education, training and experience
in matters requiring a statement, registration or certification for
a Professional Employer Organization (PEO) involving federal and
State of Oklahoma income tax withholding payment requirements,
payment of employer-sponsored health insurance premiums, payment of
State of Oklahoma unemployment and workers’ compensation insurance
premiums, payment of financial contributions to employee retirement
plans and review or preparation of financial statements prepared in
accordance with generally acc epted accounting principles;
12. “Registrant” means a PEO registered under the Oklahoma
Professional Employer Organization Recognition and Registration Act;
and
12. 13. “Temporary help services” means a service whereby a
person hires workers and assigns them to a person for a temporary
time period or nonpermanent basis to support or supplement the other
person’s workforce in special work situations such as, but not
limited to, employee absences, temporary skill shortages, seasonal
workloads, and special assignments and projects. Temporary help
services shall not be deemed professional employer services.
SECTION 2. AMENDATORY 40 O.S. 2011, Section 600.4, as
amended by Section 1, Chapter 238, O.S.L. 2012 (40 O.S. Supp. 2020,
Section 600.4), is amended to read as follows:
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Section 600.4. A. Registration required. Except as otherwise
provided in the Oklahoma Professional Employer Organization
Recognition and Registration Act, no person shall, unle ss the person
is registered as a PEO or PEO Group under the Oklahoma Professional
Employer Organization Recognition and Registration Act, provide,
advertise, or otherwise hold itself out as providing professional
employer services in this state.
B. Registration information.
1. Each PEO or PEO Group required to be registered under the
Oklahoma Professional Employer Organization Recognition and
Registration Act shall provide the Insurance Commissioner with
information required by the Commissioner on forms p rescribed by the
Commissioner. Pursuant to paragraph 2 of this subsection, a PEO or
PEO Group may use a qualified assurance organization as approved by
the Commissioner to provide services related to the registration of
the PEO or PEO Group. A PEO or PEO Group may authorize an assuranc e
organization to act on behalf of the PEO or PEO Group in complying
with the registration requirements set forth in the Oklahoma
Professional Employer Organization Recognition and Registration Act ,
including, but not limite d to, electronic filings of info rmation and
payment of registration fees. At a minimum, PEOs, PEO Groups or an
approved assurance organization acting on behalf of the PEO or PEO
Group, shall provide the following information:
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a. the name or names under wh ich the PEO or PEO Group
conducts business,
b. the address of the principal place of business of the
PEO or PEO Group and the address of each office it
maintains in this state,
c. the PEO’s or PEO Group’s taxpayer or employer
identification number,
d. a list by jurisdiction of each name under which the
PEO or PEO Group 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 inclu de 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, twenty-five percent (25%) or more of the
equity interests of the PEO or PEO Group,
f. a statement of managem ent, which shall include the
name and evidence of the business experience of any
person who serves as president, chief executive
officer, or otherwise has the authority to act as
senior executive officer of the PEO or PEO Gr oup, and
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g. a financial statemen t setting forth the financial
condition of the PEO or PEO Group, as of a date not
earlier than one hundred eighty (180) days prior to
the date submitted to the Commissioner, prepared in
accordance with generally accepted acc ounting
principles, and certified by a qualified attorney or
audited or reviewed by an independent certified public
accountant licensed to practice in the jurisdiction in
which such accountant is located. A PEO Group m ay
submit combined or consolidated au dited or reviewed
financial statements to meet the requirements of this
section.
2. The financial statement required by subparagraph g of
paragraph 1 of this subsection may be dated as o f a date that is not
earlier than three hundred sixty -five (365) days before the date on
which the application is submitted in the event the PEO or PEO Group
provides the following:
a. evidence that is acceptable to the Commissioner that
it is licensed or registered in good standing in
another state with equal or greater re quirements than
the requirements of the Oklahoma Professional Employer
Organization Recognition and Registration Act,
b. quarterly financial statements of management for each
calendar quarter as of the most recent audit that
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demonstrate continuing financia l operations acceptable
to the Commissioner, and
c. the certification of a qualified attorney or an
independent Certified Public Accountant that as of the
end of the most recent calendar quarter, the PEO or
PEO Group has paid al l of its state and federal
payroll taxes, health and workers’ compensation
premiums, and contributions to employee retirement
plans in a timely and appropriate manner.
3. For purposes of the Oklahoma Professional Employer
Organization Recognition and Regi stration Act, “assurance
organization” means an independent entity approved by the
Commissioner to certify the qualifications of a P EO or PEO Group for
registration under this section and Section 600.6 of this title and
any related requirements and procedu res. To be considered for
approval as an independent and qualified assurance organization, the
assurance organization shall submit a written request for approval
to the Commissioner. The written request shall include, but not be
limited to, the following :
a. evidence that the assur ance organization is
independent and has an established national program
for the accreditation and finan cial assurance of PEOs
and PEO Groups based on requirements similar to the
requirements of the Oklahoma Professional Employe r
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Organization Recognition a nd Registration Act, and any
rules promulgated for the implementation of the
Oklahoma Professional Emplo yer Organization
Recognition and Registration Act,
b. evidence that the assurance organizati on has
documented qualifications , standards, procedures , and
financial assurance acce ptable to the Commissioner and
is licensed or otherwise approved by one or more
states to certify the qualifications of PEOs or PEO
Groups,
c. an agreement to provide info rmation, compliance
monitoring services, and a level of financial
assurance as deemed acceptable by the Commissioner,
d. an agreement to provide the Commissioner wi th an
application that has been executed by each PEO or PEO
Group requesting alternative reg istration under this
section and Section 600.6 of this title and related
requirements and procedures in a form approved by the
Commissioner. The application shall:
(1) authorize the assurance organization to share
with the Commissioner any application and
compliance reporting informatio n required under
the Oklahoma Professional Employer O rganization
Recognition and Registration Act that has been
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provided to the assu rance organization by the PEO
or PEO Group,
(2) authorize the Commissioner to accept informa tion
shared by the assurance org anization for
registration or renewal of registration of the
PEO or PEO Group as if the information was
provided directly to the Com missioner by the PEO
or PEO Group,
(3) provide the certification of the PEO or PEO Group
that the information provided by th e assurance
organization to the Commissioner is true and
complete and that the PEO or PEO Group is in full
and complete compliance w ith all requirements of
the Oklahoma Professional Employer Organization
Recognition and Regi stration Act, and
(4) provide the certification of the assur ance
organization that th e PEO or PEO Group is in
compliance with the standards and procedures of
the assurance organization which are similar to
the requirements of the Oklahoma Professional
Employer Organization Recognition an d
Registration Act and is qu alified for
registration or renewal of registration under the
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Oklahoma Professional Employer Organizatio n
Recognition and Registration Act,
e. an agreement to provide written notice to the
Commissioner within two (2) business da ys of
determination by the a ssurance organization of the
failure of a PEO or PEO Group to meet the
qualifications for registration u nder the Oklahoma
Professional Employer Organization Recognition and
Registration Act or det ermination by the assurance
organization of the failure of t he PEO or PEO Group to
meet the qualifications for accreditation or
certification by the assurance organ ization, and
f. an agreement to share with the Commissioner in a
timely manner the informati on and supporting
documentation provided to the assurance or ganization
by the PEO or PEO Group similar to the information and
documentation required for registratio n or renewal of
registration under the Oklahoma Professional Employer
Organization Recogniti on and Registration Act.
C. Initial registration.
1. Each PEO or PEO Group operatin g within this state as of
November 1, 2002, shall complete its initial registra tion not later
than one hundred eighty (180) days after the end of the PEO ’s or PEO
Group’s first fiscal year ending after N ovember 1, 2002.
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2. Each PEO or PEO Group not operat ing within this state as of
November 1, 2002, shall complete its initial regist ration prior to
commencement of operations within this state. A registration is
valid for a term of one (1) year.
D. Renewal. 1. A registration expi res one (1) year followin g
the registration unless it is renewed pursuant to this subsection.
Before expiration of the registration, a registrant may renew the
registration for an additional one -year term if the registrant:
a. remains in good standing and otherwise is entitled to
be registered pursuant to the Oklahoma Professional
Employer Organization Reco gnition and Registration
Act,
b. files with the Commissioner a renewal application on a
form prescribed by the Commissioner, and
c. pays to the Commissi oner a renewal fee as pro vided for
in Section 600.5 of this title.
2. A registration shall be considere d late thirty (30) days
after the renewal date. Any registration received more than thirty
(30) days after the renewal date shall be accompanied by a l ate
registration fee of F ive Hundred Dollars ($500.00).
E. Group registration. Any two or more PEOs he ld under common
control of any other person or persons acting in concert may be
registered as a PEO Group. A PEO Group may satisfy any reporting
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and financial requirements of t his registration law on a
consolidated basis.
F. Electronic filing and complia nce. A PEO, PEO Group or an
approved independent and qualified assurance organization as
provided for in subsection B of th is section may electronicall y
submit filings in confo rmance with Sections 15-101 through 15-121 of
Title 12A of the Oklahoma Statute s. Electronically submitted
filings include, but are not limited to, applications, document s,
reports, and other filings re quired under the Oklahoma Un iform
Electronic Transactions Act.
G. De minimis exemption.
1. A PEO is exempt from the registration r equirements payable
under the Oklahoma Professional Employer Organization Recognition
and Registration Act if such PEO:
a. submits a properly executed r equest for exemption on a
form provided by the Department,
b. is domiciled outside this state and is lic ensed or
registered as a professional employer organization in
another state that has the sa me or greater
requirements as the Oklahoma Professional Empl oyer
Organization Recogni tion and Registration Act,
c. does not maintain an office in this state or soli cit
in any manner clients located or domiciled within this
state, and
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d. does not have more than twenty-five covered employe es
employed or domiciled in this state.
2. An exemption of a professional employer organization from
the registration requirements under the Oklahoma Professional
Employer Organization Recognition and Registration Act shall be
valid for one (1) year, subj ect to renewal.
H. List. The Commissioner shall mai ntain a list of
professional employer organizations registered or exempted unde r the
Oklahoma Professional Employer Organization Recognition and
Registration Act and a lis t of approved assurance organiza tions.
I. Forms. The Commi ssioner may prescribe for ms necessary to
promote the efficient administration of this section.
J. The Commissioner is authorized to promulgate reasonable
rules necessary for the administration an d implementation of this
section.
K. The Commissioner may r eject an application for registration,
renewal of registration, or for an exemption from registration if
the Commissioner finds that:
1. The application is not fully completed or properly execute d;
2. Documents required to sup plement the application are not
included in the appli cation packet or are inadequate;
3. The registration fee is not submitted with the application;
4. The applicant or any person named in the application
misrepresents material in the application;
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5. The applicant, or any of its o fficers, is determined by the
Commissioner to lack good moral character, business integrity, or
financial responsibility; or
6. The controlling person has violated a provision of the
Oklahoma Professional Employer Organization Recognition and
Registration Act.
SECTION 3. AMENDATORY 40 O.S. 2011, Section 600.6, is
amended to read as follows:
Section 600.6. A. Net worth and bonding. Each PEO shall
maintain either:
1. A minimum net worth of Fifty Thousand Dollars ($50,000.00),
as reflected in the financial statements submitted to the
Commissioner with the initial registration and each annual renewal;
or
2. A bond or securities with a minimum market value of Fifty
Thousand Dollars ($50,000.00), held by a depository designated by
the Commissioner, securing p ayment by the PEO of all taxes, wages,
benefits or other entitlement due to or with respect to a covered
employee, if the PEO does not make such payments when due. Any bo nd
or securities deposited under this subsection shall not b e included
for the purpose of calculation of the minimum net worth required by
this subsection.
B. Payroll tax payments. A PEO shall submit to the
Commissioner, within ninety (90) days after the end of each calendar
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quarter, a statement by a qualified attorney or an independent
certified public accountant that all applicable state payroll taxes
for covered employees located in this state have been paid o n a
timely basis for that quarter.
C. Record confidentiality. All records, reports and other
information obtained from a PEO under the Oklahoma Professional
Employer Organization Recognition and Registration Act, except to
the extent necessary for the pr oper administration of the Oklahoma
Professional Employer Organization Recognition and Registration Act
by the Department, shall be confi dential and shall not be published
or open to public inspection other than to public employees in the
performance of their public duties.
SECTION 4. This act shall become effective November 1, 2021.
Passed the Senate the 11th day of March, 2021.
Presiding Officer of the Senate
Passed the House of Representatives the ____ day of __________,
2021.
Presiding Officer of the House
of Representatives