(1)

1. (a) An individual is a covered employee of a professional employer organization if the individual is coemployed pursuant to a professional employer agreement subject to this chapter.

2. (b) An individual who is a covered employee under a professional employer agreement is a covered employer, whether or not the professional employer organization provides the notice required by Subsection 31A-40-202(3), the earlier of the day on which:

   1. (i) the employee is first compensated by the professional employer organization; or
   2. (ii) the client notifies the professional employer organization of a new hire.

(2) An individual who is an officer, director, shareholder, partner, or manager of a client is a covered employee:

1. (a) to the extent that the client and the professional employer organization expressly agree in the professional employer agreement that the individual is a covered employee;
2. (b) if the conditions of Subsection (1) are met; and
3. (c) if the individual acts as an operational manager or performs day-to-day an operational service for the client.