Within three years after Genesis HR Solutions began operations in 1991, we began an initiative to call for the licensing of Professional Employer Organizations (PEOs) in Massachusetts. At the time, PEOs had barely registered a blip on the business radar screen in Massachusetts. Still, given the regulatory and legislative uncertainty surrounding the PEO offering, we felt it was time to make some noise. And unfortunately back then, making noise was all we accomplished. The PEO industry was in its infancy in Massachusetts, and frankly, the much of the rest of the country was slow to buy in as well.
Florida passed the first law in 1991 to codify the PEO industry and produce standards. In 1994, New Hampshire became the second. As the years progressed, many states stood up and took notice of this novel, yet important revolution for the small business service model. In the years that followed, Massachusetts legislators were generally tepid when it came to addressing the needs of the small business community.
Massachusetts now ranks 8th in the nation in terms of workers employed in a PEO relationship, but legislative industry recognition has yet to be realized. There are other states in similar situations – three to be exact: Pennsylvania, Georgia and Idaho. And there are seven other states who are considering regulation and legislation, but have yet to enact. That leaves 39 states who have passed PEO registration or licensing requirements. For those of you keeping score, that adds up to 37 states in the last 20 years. And for all that time, Massachusetts legislators have done some hand wringing but little else. Today that story could be changing.
In December, President Obama signed the Small Business Efficiency Act which will establish for PEOs who opt, the ability to qualify as Certified Professional Employer Organizations (CPEOs). In this capacity, a CPEO will operate under the similar standards that Genesis has operated since 1996 as a member of the Employer Services Assurance Corporation. But with this legislation, small business owners will now have the compliance assurances that while once vague will be made clearer now. On a state level, it is time for Massachusetts to consider doing what 39 states have already done. And it looks like they are about to start.
Recently, the Massachusetts General Court introduced bills similar to the NAPEO Model Act in the House (House Draft 3409) by Representative Joseph Wagner (D- Chicopee) and in the Senate (Senate Draft 1505) by Senator Michael Rodrigues (D-Westport). Over the next several months the small business community should expect more news on these important developments in the Massachusetts legislature. Stay tuned!
For more information on this topic, please reach out to Genesis HR Solutions at AskUs@genesishrsolutions.com or 800-367-8367.
Genesis HR Solutions is the premier PEO provider for Massachusetts based businesses.
