1. (a) "Professional employer organization" or "PEO" means a person engaged in the business of providing professional employer services.

2. (b) The term does not include the following:

   1. (1) An arrangement through which a person:

      1. (A) whose principal business activity is an activity other than entering into professional employer agreements; and

      2. (B) that does not hold the person out as a professional employer organization;

         shares employees with a commonly owned company within the meaning of Section 414(b) and 414(c) of the Internal Revenue Code of 1986, as amended.

   2. (2) An independent contractor arrangement through which a person:

      1. (A) assumes responsibility for a product produced or a service performed by the person or the person's agent; and
      2. (B) retains and exercises primary direction and control over the work performed by an individual whose services are supplied under the independent contractor arrangement.
   3. (3) The provision of temporary help services.

As added by P.L.245-2005, SEC.7.