New Licensing Statues for Professional Employer Organizations in Texas
HB2249 amendments to Texas state licensing statues for professional employer organizations (PEO) was signed into law by Govenor Rick Perry. The new amendments offer additional security to thousands of Texas small businesses who outsource human resource management, employee benefits, payroll and workers’ compensation to a PEO.
The bill, with overwhelming support from the small business community and (PEOs), modernizes statutes for the 287 PEOs licensed in the second largest market for the industry.
Provisions of the new law clarifying that tax credits and other economic incentives remain with business owners sharing their employer responsibilities with a PEO, become effective on September 1, 2009. PEOs have until the end of 2011 to comply with enhanced financial statement requirements. Texas law will be more in sync with PEO requirements in many other states. PEOs are reportedly flourishing nationwide as a $68 billion industry with double digit growth for the past five years.
Small businesses 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. (workersxzcompxzkit).
PEOs use their own tax ID to submit payroll records and file taxes, offer benefits, and secure workers’ compensation coverage. They also work with clients in managing employment practices, employee handbooks and compliance with federal and state labor regulations.
Under the law,Texas PEOs will reportedly benefit from an increased ease of compliance through the use of electronic filings of licensing documents, and the voluntary use of financial assurance organizations.
Author: Robert Elliott, J.D.
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