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Gov. Ritter Signs Bill to Regulate Professional Employer Organizations in Colorado

Saturday September 13, 2008

The bill, which was overwhelmingly supported by the small business community and professional employer organizations (PEOs), modernizes 1997 statutes for the 200 PEOs registered in Colorado. The new law will provide more security to the thousands of Colorado small businesses who outsource human resource management, employee benefits, payroll and workers’ compensation to a PEO.

“PEOs provide a cost effective option for small business owners and their workforce who would not otherwise have access to benefits such as health insurance and retirement savings plans,” said Scanlan. “This legislation protects small owners and allows them the time to concentrate on what they do best: build their business.”

A small business will contract with a PEO to help manage increasingly complex employee related matters such as health benefits, safety management, workers’ compensation claims, payroll, payroll tax compliance, unemployment insurance claims and provide expertise in human resources management. However, unlike other states, PEOs were largely unregulated in Colorado until now.

“While Colorado recognizes PEOs, the current law did not require them to secure a license from the state, file audited financial statements each year or maintain a minimum of working capital,” said Arthur L. Geiger, president and CEO of Avitus Group. Geiger, a PEO operating in CO who helped coordinate industry support of the new law, explained that these requirements are important in protecting businesses and their employees from misleading representations.

In a PEO arrangement, employer responsibilities are shared between the PEO and the small business owner. PEOs use their own tax ID to submit payroll records and file taxes, offer benefits, and secure workers’ compensation insurance. They also assume liability for the client’s employment practices, employee handbooks and compliance with all federal and state labor regulations.

“On behalf of the of the professional employer organization industry and the thousands of Colorado businesses using a PEO, we want to thank Gov. Ritter, Rep. Scanlan and the Colorado legislative champions for moving this vital piece of legislation forward,” said Milan P. Yager, executive vice president of the National Association of Professional Employers (NAPEO). “This legislation creates a responsible regulatory framework for unemployment insurance reporting and shields small businesses against unnecessary compensation litigation.”

The bill was the result of a review process undertaken by the industry’s national trade association, National Association of Professional Employer Organizations (NAPEO), including its members, PEOs that are non-members, the Colorado Department of Labor and Employment (CDLE), and other business organizations.

About NAPEO

NAPEO, the National Association of Professional Employer Organizations, is the recognized “Voice of the PEO Industry(R).” NAPEO is the largest trade association for professional employer organizations nationwide. NAPEO has nearly 400 PEO members operating in all 50 states, representing approximately 90 percent of the revenues of the $63 billion industry. PEOs enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers’ compensation allowing clients to focus on their core competencies to maintain and grow their bottom line. To learn more about the PEO industry and how PEOs contribute to small businesses’ success, visit the NAPEO Web site: www.napeo.org.

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