1. (1) As used in this section:

   1. (a) "Agent" means an individual or organization authorized to act on behalf of an employer.
   2. (b) "Client" or "client company" means a person or entity that enters into a professional employer agreement with a PEO.
   3. (c) "Co-employment relationship" means a relationship that is intended to be ongoing rather than temporary or project specific and in which the employer's rights, obligations, and responsibilities are allocated pursuant to the professional employer agreement or Title 31A, Chapter 40, Professional Employer Organization Licensing Act.
   4. (d) "Professional employer agreement" means a written contract by and between a client and a PEO that provides for the co-employment of a covered employee as defined in Section 31A-40-102.
   5. (e) "Professional employer organization" or "PEO" means an organization engaged in the business of providing professional employer services. A PEO may commonly be described as an "employee leasing company" and "employee staffing company."
   6. (f) "Professional employer services" means the service of entering into a co-employment relationship under which a majority of the employees who provide a service to a client, or division or work unit of a client, are considered employees as defined in Title 31A, Chapter 40, Professional Employer Organization Licensing Act.
   7. (g) "Covered employee" means an individual who is co-employed pursuant to a professional employer agreement subject to Section 31A-40-203.
2. (2) Before the employer is considered to be a PEO, it must comply with the requirements of Title 31A, Chapter 40, Professional Employer Organization Licensing Act. In the absence of such compliance, the Department may hold each "client company" to be the employing unit.

3. (3) A PEO that fails to qualify as an employer under Title 31A, Chapter 40, Professional Employer Organization Licensing Act, and as an employing unit under Subsection 35A-4-202(1), is considered to be the agent of the client company.

   1. (a) The client's workers are not the employees of the agent. The client company remains the employer of its workers under the Act.
   2. (b) A client company employee not covered by a professional employment agreement remains the employee of the client company.
4. (4) Individuals and services exempt under the Act, based on the nature of service or due to a specific exemption, continue to be exempt if the individual is an employee of a PEO or the services are performed by an employee of a PEO. The exemptions for domestic and agricultural services contained in Section 35A-4-205 are considered for the PEO's clients in the aggregate, and not on an individual client basis.
5. (5) A PEO cannot elect reimbursable coverage even if the client company could independently qualify as a reimbursable employer.

6. (6) Reporting Requirements.

   1. (a) Any entity conducting business as a PEO must register with the Department and complete each form and report required by the Department.
   2. (b) Failure to file reports or pay contributions timely will result in the Department treating the client as a new employer without experience rating, unless the client is otherwise eligible for experience rating, beginning on the day the PEO failure occurred, as outlined in Section 31A-40-210.

   3. (c) Within 30 days of the effective date of a contract with a client, a PEO must submit to the Department the following information:

      1. (i) the effective date of the contract;
      2. (ii) the client's name and address;
      3. (iii) the client's Federal Employer Identification Number (FEIN) if registered with the IRS;
      4. (iv) the client's Employer's Utah Registration Number, if previously registered with this Department; and
      5. (v) the client's principal business activity.

   4. (d) Within 30 days of the termination of a contract with a client, a PEO must submit to the Department the following information:

      1. (i) the effective date of contract termination;
      2. (ii) the client's name and address;
      3. (iii) the client's FEIN if registered with the IRS;
      4. (iv) and the client's Employer's Utah Registration Number, if previously registered with this Department.
7. (7) The Department may directly contact a PEO or its clients to conduct investigations, audits, and otherwise obtain information necessary for the administration of the Act, as permitted by Section 35A-4-312.
8. (8) The rules pertaining to "payrolling" in Section R994-202-104 do not apply to a PEO that is in compliance with Title 31A, Chapter 40, Professional Employer Organization Licensing Act.

KEY: unemployment compensation, employment

Date of Last Change: October 28, 2022

Notice of Continuation: March 22, 2023

Authorizing, and Implemented or Interpreted Law: 35A-4-202(1)