HB 394 — AN ACT relating to professional employer organizations.

UNOFFICIALCHAPTER COPY88 231 RSCHAPTER 88 ( HB 394/GA394 ) AN ACT relating to professional employer organizations.

(1) A person engaged in providing professional employer services pursuant to a co-co-employment employment relationship in which all or a majority of the employees of a client are covered employees shall be registered under KRS 336.230 to 336.250 no later than July 15, 2024.

(e) A statement of ownership, which shall include the name and evidence of the business experience of any person that, individually or acting in concert with one (1) or more other persons, owns or controls, directly or indirectly, twenty-twenty-five Page 1 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA five percent (25%) or more of the equity interest in the professional employer organization;

A professional employer organization that has not had sufficient operating history to have audited financial statements based on at least twelve (12) months of operating history shall meet the requirements in KRS 336.240 and present financial statements reviewed by a certified Page 2 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA public accountantaccountant. 7.

A7. professional employer organization shall meet the requirements of this paragraph if the financial statement submitted by the professional employer organization with its initial registration is without qualification as to the going concern status of the professional employer organization.

A professional employer organization shall meet the requirements of this paragraph if the financial statement submitted by the professional employer organization with its initial Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY registration is without qualification as to the going concern status of the professional employer organization.

The Department of Workers' Claims may issue an interim operating permit for the period the registration Page 3 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA applications are pending if the professional employer organization is currently registered or licensed by another state and the Department of Workers' Claims determines it to be in the best interests of the potential covered employees.

Is domiciled outside this Commonwealth and is licensed or registered as Page 4 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA a professional employer organization in another state;

CHAPTER 88 3 (8) The Department of Workers' Claims shall maintain a list of professional employer organizations registered pursuant to KRS 336.230 to 336.250 that is readily available to the public by electronic or other means.

Use of an approved assurance organization shall be Page 5 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA optional for a registrant.

Except as provided in KRS 336.236, each professional employer organization or Page 6 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA collectively each professional employer organization group shall either:

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (a) The professional employer organization shall file quarterly unemployment wage and tax reports to report the wages of all covered employees and pay all contributions, penalties, and interest on wages paid by the professional employer organization to its covered employees during the term of the applicable professional employer agreement under the reserve account of the professional employer organization;

or (b) The professional employer organization shall file quarterly unemployment wage and tax reports to report the wages of all covered employees and shall pay all contributions, penalties, and interest on wages paid by the Page 7 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA professional employer organization to its covered employees during the term of the applicable professional employer agreement under the reserve or reimbursing account of the client.

If taxable wages were reported by the client in a previous account within the calendar year that the professional employer organization and the client Page 8 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA enter into a professional employer agreement, the professional employer organization shall be given credit for the taxable wages reported by the client on each employee in the previous account;

(3) Any professional employer organization with an existing employer reserve Page 9 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA account with the Office of Unemployment Insurance as of the effective date of this Act shall comply with the provisions of this section no later than January 1, 2025;

CHAPTER 88 5 (5) After choosing one of the elections provided for under subsection (1) of this section, a professional employer organization shall be permitted to change its contribution election only once.

(a) Professional employer organization account, if the election of subsection (1)(a) of this section is chosen, or (b) Individual client accounts, if the election in subsection (1)(b) of this section is chosen;

or (b) Individual client accounts, if the election in subsection (1)(b) of this section is chosen;

and Page 10 of 11 HB039410.100 - 1291 - XXXX 3/7/2023 7:49 PM GA UNOFFICIAL COPY 23 RS HB 394/GA (3) ]Upon the termination of a contract between a professional employer organization and a client or the failure of a professional employer organization to submit reports or make tax payments as required by KRS 336.230 to 336.250, the client shall be treated as a new employer without a previous experience record unless that client is otherwise eligible for an experience rating.

PageSigned 11by ofGovernor 11March HB039410.10024, -2023. 1291 - XXXX 3/7/2023 7:49 PM GA

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