Current through Register Vol. 43, No. 02, November 27, 2024
(1) Registration of
Professional Employer Organizations in Alabama is authorized by Alabama Act No.
2006-229. The following rules and regulations are adopted pursuant to the
authority contained therein.
(2)
Definitions as used herein:
(a) Professional
Employer Organization - a person or entity engaged in the business of providing
professional employer services through one or more professional employer
organization arrangements. A person or entity providing professional employer
services shall be deemed a professional employer organization regardless of its
identification of itself or its services under one or more of the following
terms - PEO, staff leasing company, registered staff leasing company, employee
leasing company, or any other name.
(b) Director - the Director of the Department
of Industrial Relations or the Director's official designee.
(c) Division - The Department of Industrial
Relations, Workers' Compensation Division, Montgomery, Alabama 36131, phone
number (334) 242-2868.
(d) Act -
Alabama Professional Employer Organization Registration Act.
(e) Security Amount - the monetary security
amount determined by the Director of the Department of Industrial Relations to
constitute adequate security to insure the payment of any and all Alabama
workers' compensation claims or unemployment taxes which a registered
professional employer organization may be reasonably expected to
incur.
(f) Certificate - A
certificate of registration issued by the Alabama Department of Industrial
Relations to a person or entity operating and registered as a professional
employer organization.
(g)
Registrant - A person or entity registered as a professional employer
organization under the Alabama Professional Employer Organization Registration
Act, or renewing a registration under the act.
(h) Client - A person or entity that enters
into a professional employer agreement with a professional employer
organization, including a worksite employer.
(i) Controlling Person - An officer or
director of a corporation operating as a professional employer organization, a
shareholder holding 25 percent or more of the voting stock or a corporation
operating as a professional employer organization, a partner of a partnership
operating as a professional employer organization, an individual who possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of a company operating as a professional employer
organization through the ownership of voting securities, by contract or
otherwise, and who is actively involved in the day-to-day management of the
company.
(3)
Registration. Every professional employer organization seeking authority to
operate as a PEO in Alabama shall register with the Department of Industrial
Relations prior to commencement of operations within this state. The
registration form shall be made on a form prescribed and approved by the
Director, and shall include as attachments the following:
(a) A financial statement setting forth the
financial condition of the professional employer organization as of a date not
earlier than 180 days prior to the date submitted to the department and audited
or reviewed by an independent certified public accountant licensed to practice
in the jurisdiction in which such accountant is located, prepared in accordance
with generally accepted accounting principles. If the audited or reviewed
financial statements are dated more than 180 days prior to the date of
registration, the Director may require interim certified financial statements
or other interim reports as deemed reasonably appropriate. Any new PEO in
business for less than one year may request a waiver of the audit or review
procedures for financial statements. The Director shall have complete
discretion whether to allow or disallow the waiver. In no event shall a
registrant be allowed to request such a waiver after its first year of
existence;
(b) A complete and
current listing of all client employers located in Alabama or who have worksite
employees that work in Alabama or are residents of Alabama;
(c) Proof of workers' compensation insurance
for each covered employee in Alabama from a carrier properly licensed by the
Alabama Department of Insurance, from a self-insured group fund properly
approved by the Alabama Department of Industrial Relations, or by individual
self-insurance authority granted by the Alabama Department of Industrial
Relations;
(d) A list, by
jurisdiction, of each name under which the registrant has operated in the
preceding five (5) years; and
(e)
An organizational chart of the registrant if part of a group/multiple
professional employer organization majority owned by the same parent, entity or
persons.
(f) The Director may
request any other documents, forms, materials and information as are reasonably
necessary to ascertain whether individuals affiliated with the registrant are
qualified to serve as controlling persons.
(g) Such other supporting documents as may be
deemed reasonably necessary by the act and the Director.
(4) Limited Registration. Every professional
employer organization seeking authority to operate as a PEO in Alabama under a
limited registration shall register with the Department of Industrial Relations
prior to commencement of operations within this state. The limited registration
form shall be made on a form prescribed and approved by the Director, verifying
the professional employer organization:
(a)
is domiciled outside the State of Alabama and registered or licensed as a
professional employer organization in another state with substantially the same
or similar requirements of those in Alabama;
(b) does not maintain an office in this state
or solicit clients located or domiciled in Alabama; and
(c) does not have more than fifty (50)
covered employees employed or domiciled in Alabama on any given day.
(5) Consolidated Registration.
Every professional employer organization seeking to file a consolidated
registration form for multiple PEO's majority owned by the same parent, entity
or persons may do so on a form prescribed and approved by the Director.
(a) A subsidiary corporation may submit with
is registration the consolidated financial statement of its parent corporation
in lieu of its own along with a Parental Guarantee.
(b) Multiple professional employer
organizations may only file reports and meet financial requirements on a
consolidated basis if each company that is a part of the multiple employer
organization group provides a guarantee for the obligations of each other
member of the group.
(c) Such a
guarantee may be in the form of an indemnification agreement or a resolution of
the board of directors of the parent company authorizing the guarantee of
workers' compensation and unemployment tax liabilities of a subsidiary PEO in
the consolidated registration.
(d)
Each professional employer organization involved in the consolidated
registration must pay a separate registration fee.
(6) A registration fee, in the amount as
specified below, shall accompany each registration form and shall be made
payable to "DIR/PEO Fund" - Professional Employer Organization Registration
Administrative Trust Fund. All registration fees are non-refundable, and any
registration received without the appropriate fee cannot be considered and will
be returned.
(a) $1,000.00 initial
registration fee for each individual PEO.
(b) $500.00 renewal fee for each individual
PEO.
(c) For initial consolidated
registrations involving multiple PEO's, include $1,000.00 for the parent
organization and $1,000.00 for each member of the group.
(d) For renewal consolidated registrations
involving multiple PEO's, include $500.00 for the parent organization and
$500.00 for each member of the group.
(e) $500.00 initial fee for each limited
registration.
(f) $250.00 renewal
fee for each limited registration.
(7) Financial Qualification Standards. A
registrant must furnish satisfactory proof of sufficient financial resources to
pay all workers' compensation claims and unemployment taxes for which it may
become liable.
(a) A registrant must have and
maintain, at all times, a net worth of not less than $100,000.00, as shown on
the submitted audited or reviewed financial statements.
(b) The Director may accept net worth based
upon audited financial statements in whole or in part for the financial
requirements.
(c) The Director may
accept additional securities acceptable to the Director in whole or in part for
the financial requirements.
(d) In
the event a Professional Employee Organization does not meet the $100,000 net
worth requirement as demonstrated by audited financials, the Director may
require a registrant to post a security amount in the form of a cash deposit
with the Alabama State Treasury, or other security subject to the approval of
the Director, to secure the payment of all unemployment taxes and workers'
compensation claims payment due to or with respect to covered
employees.
(e) The Director may
require that any security or asset used to secure the payments of unemployment
taxes and workers' compensation claims shall be maintained by a financial
institution located in the State of Alabama.
(8) Certificate of Registration. The Director
may issue a Certificate of Registration to each professional employer
organization that has successfully registered with the Department, and that has
controlling persons who are qualified to serve in said capacity. The
certificate shall remain valid for a period of one year from the date of
registration. Registrations cannot be accepted or approved retroactively.
(a) A certificate of registration shall be
valid only to that entity to which it is issued. No professional employer
organization has the authority to extend use of its registration certificate to
any other person, firm or corporation, and the unauthorized extension of said
use shall constitute good cause for refusal to renew the certificate.
(b) The Director may refuse to register or
renew the registration of any professional employer organization that has
violated or is in danger of violating the terms of these administrative rules
or the act.
(9) Notice -
Any notice required to be given by these rules and regulations to the Director
shall be deemed proper if made in writing, addressed to Director, Department of
Industrial Relations, Workers' Compensation Division, Montgomery, Alabama
36131. Any notice required by these rules and regulations to be given to a
registered professional employer organization shall be deemed properly given if
in writing and addressed to the employer at the address shown on either the
registration form or the last annual report.
Author: Workers' Compensation
Division
Statutory Authority: Alabama Act No.
2006-229.