Professional Employer Organizations

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Updated Texas Labor Code - HB 3150 (84R)

Changes to the Professional Employer Organization law - House Bill 3150 passed by the 84th Texas Legislature, amended Labor Code, Chapter 91, relating to the calculation of taxable wages paid by a professional employer organization for purposes of the Texas Unemployment Compensation Act. House Bill 3150 and the changes to Chapter 91 became effective September 1, 2015. TDLR encourages all persons interested in the Professional Employer Organization program to review the updated Labor Code, Chapter 91.

Amendments to Administrative Rules - SB 1286 (83R)

TDLR amended the Professional Employer Organization (PEO) administrative rules on November 21, 2013, to implement changes in the PEO law created by Senate Bill 1286, authored by Senator Tommy Williams and enacted in 2013 by the 83rd Texas Legislature. The amended PEO rules took effect January 1, 2014.

Because the statute regulating PEO’s (formerly known as Staff Leasing Services) was more than 15 years old, the language no longer accurately reflected current business models. S.B. 1286 modernized the statute to bring business terms and language in line with the state of the industry. S.B. 1286 also clarified health benefit plan and worker’s compensation insurance options for PEO’s and their clients.

The amendments to the law include:

  • replacing the outdated term “staff leasing services company” with “professional employer organization”;
  • replacing related terms, such as “assigned employee” with “covered employee”;
  • adding new terms “coemployer” and “coemployer relationship”;
  • authorizing a client company to purchase workers’ compensation insurance for covered employees;
  • authorizing a professional employer organization to offer a self-funded health insurance plan, provided the plan is approved by the Texas Department of Insurance;
  • clarifying new notice requirements in S.B. 1286 relating to providing notice to covered employees of the coemployment relationship between a PEO and a client;
  • clarifying that a PEO is responsible for providing to TDLR which party in the coemployment relationship (if any) carries workers’ compensation insurance;
  • adding definitions that clarify some new terms used in S.B. 1286, and define ‘offer to perform’ consistent with other programs regulated by TDLR;

Contact & Email Updates

For more information about the TDLR PEO program,contact TDLR at cs.peo@tdlr.texas.gov or 800-803-9202. Also, you can sign up to receive TDLR Email Updates to be notified about any further changes or updates to the PEO program.