HB 186 Summary

• Establishes financial capacity requirements for professional employer organizations (PEOs), including mandatory positive working capital and bonding/letter of credit provisions for those with working capital deficits.

• Clarifies that client employers retain sufficient direction and control over shared employees to conduct their business, ensure quality/safety, discharge fiduciary responsibilities, and comply with regulatory requirements, while limiting PEO liability for acts occurring under client employer direction.

• Creates new definitions including "professional employer organization reporting entity" for commonly controlled PEOs and specifies that independent contractors cannot be coemployed as shared employees.

• Provides tax treatment rules stating shared employees are considered client employer employees for tax credits, economic incentives, and employment-based benefits, with specific provisions for sales tax and per capita tax assessments.

• Adds reporting requirements for PEOs to the tax commissioner and director of job and family services, including client employer information and quarterly updates, and establishes unemployment compensation rules recognizing PEOs as employer of record with client-specific subaccounts.