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NC passes amendments to PEO Act

September 15, 2009
 
Amendments to the North Carolina Professional Employer Organization Act (SB 1029) were signed into law by Gov. Bev Perdue at the end of the session. The bill, which was unanimously passed by both the House and the Senate, updates provisions of the 2004 North Carolina Professional Employer Organization Act. There are 143 PEOs licensed in the North Carolina.

The bill aims to provide more security for small businesses that outsource human resource management, employee benefits, payroll and workers' compensation to a PEO.

"Passage of the bill strengthens financial requirements for PEO operations," said Milan P. Yager, EVP of the National Association of Professional Employers (NAPEO), the industry's trade association. "The law definitely adds a new layer of safeguards and oversight to protect small business owners and their employers in a PEO arrangement.

"Even more importantly, the law clarifies that tax credits and other economic incentives remain with business owners sharing their employer responsibilities with a PEO," Yager added.

The bill was sponsored by Senators Stan Bingham, David Hoyle, and Fletcher Hartsell and led through the House by Representative Bruce Goforth, who introduced companion legislation House Bill 1023 (H 1023). The Department of Insurance was also involved in drafting provisions for the delivery of employee benefit and health plans. Businesses using PEO services now have the option to sponsor their own benefit plans. Depending on the PEO, clients get to choose from a range of health and benefit plans underwritten by major insurance companies. Sometimes options may also include self-funded health plans sponsored by PEOs. The law increases regulation and oversight of these self-funded plans.