Is change on the horizon for companies partnering with PEOs in Massachusetts?

Recently, I was rummaging through my office in a half-hearted attempt to do a little cleaning when I stumbled across an article I wrote for the Boston Business Journal in 1995. The article cited the need for regulation of the relatively new professional employer organization (PEO) industry. At the time, only two states, Florida and New Hampshire, had laws addressing the need for PEO service model to be codified. Our efforts in Massachusetts failed that year, as is often the case when a bill is presented for consideration the first time.

Could 2017 be the year for PEO Legislation?

Fast forward to 2017. Today, 40 states have laws and regulations that address the not-so-new PEO industry—and Massachusetts is not one of them. However, that could change in the current legislative session.

Last year, House Bill 4350, “An Act relative to the recognition and registration of professional employer organizations operating in the Commonwealth of Massachusetts,” passed the House and stalled in the Senate. This year, the bill has been resubmitted as House Bill 3159, and hearings are expected to begin soon.

In 1995, about 5,000 workers in Massachusetts were in a PEO relationship. Today’s that number is estimated at about 30,000. The time is right for legislators to do what nearly every other state has already done: Acknowledge that the PEO industry is here to stay and that now is the time to protect workers and employers who have adopted this important business relationship.

Next week, industry representatives from the National Association of Professional Employer Organizations (NAPEO) will meet with members of the Labor and Workforce Committee in advance of the hearings. Here’s hoping that this legislative session will end the journey that began 22 years ago.

Workers Compensation Rules For PEOs

In other news, the Massachusetts Division of Insurance proposed amendments to Workers’ Compensation rules for PEOs. The proposed language would allow client service agreements to be either written or verbal. Given the complexity and importance of a PEO client relationship, we think it’s important to note that this change would promote ambiguity, which is never a good thing for parties to a contract. As New England leadership chair for NAPEO, I submitted this this comment letter to oppose the change. I am not sure what prompted this amendment in the first place or the logic that inspired it.

Yes, these are interesting and exciting times for workers, employers, and the PEOs who partner with them in the Commonwealth. Watch for more information in the space as developments unfold in the next few months.

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