HB 717 — Amend NC Professional Employer Organization Act.

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2025 H 21 HOUSE BILL 717 Committee Substitute Favorable 4/17/25 Short Title:

Representatives Humphrey, Setzer, and Balkcom (Primary Sponsors).

For a complete list of sponsors, refer to the North Carolina General Assembly web site.

Insurance, if favorable, Finance, if favorable, Rules, Calendar, and Operations of the House April 3, 2025 A BILL TO BE ENTITLED AN ACT ENACTING CHANGES TO THE NORTH CAROLINA PROFESSIONAL EMPLOYER ORGANIZATION ACT, AS RECOMMENDED BY THE DEPARTMENT OF INSURANCE.

Notwithstanding the definition of *H717-v-1* General Assembly Of North Carolina Session 2025 "person" in this Article, whenever two or more entities combine to seek issuance of a single license under this Article, the requirements for group licensure under this subsection shall be met *H717-v-2* General Assembly Of North Carolina Session 2025 before issuance of a license and any license issued will be a professional employer organization group license issued pursuant to this subsection." SECTION 3.

The audited GAAP financial statement shall be prepared in accordance with generally accepted accounting principles and audited by an independent certified public accountant licensed to practice in the jurisdiction in which such accountant is located and shall be without Page 2 House Bill 717-First Edition General Assembly Of North Carolina Session 2025 qualification as to the going concern status of the PEO.

Persons applying for a professional employer organization group license may submit combined or consolidated Page 2 House Bill 717-Second Edition General Assembly Of North Carolina Session 2025 audited financial statements to meet the requirements of this section, except that a PEO provided that the combined or consolidated audited financial statement include a combining or consolidating balance sheet and statement of operations of each proposed member as supplemental information to the combined or consolidated audited financial statement.

In the event that an applicant has secured a professional employer organization license in another state in which the professional employer organization's controlling persons have completed a criminal background investigation within 12 months of this application, a certified House Bill 717-First Edition Page 3 General Assembly Of North Carolina Session 2025 copy of the report from the appropriate authority of that state may satisfy the requirement of this subsection.

This subsection also applies to a change in a the officers, directors, and other House Bill 717-Second Edition Page 3 General Assembly Of North Carolina Session 2025 controllingpartypersons ofaprofessional employerorganization.

If the applicant disagrees with the outcome of the review and seeks a hearing, under Article 3A of Chapter 150B of the General Statutes, on the outcome of the review, the applicant shall make a written demand upon the Page 4 House Bill 717-First Edition General Assembly Of North Carolina Session 2025 Commissioner for the hearing within 30 days after notice of the outcome of the review is given under G.S.

Page 4 House Bill 717-Second Edition General Assembly Of North Carolina Session 2025 (i) Removal, demotion, or discharge of a an officer, director, or other controlling person in response to an order of the Commissioner of the alleged unsuitability of that person is an affirmative defense to anyclaim bythat individual based on the removal, demotion, or discharge.

Subsections (a1), (c1), and (c2) of G.S.

58-89A-65 are repealed.

SECTION 7.

58-89A-60(b).An audited financialstatement ofthelicenseeor,ifallowedofthelicensee or,ifallowed bytheCommissioner, an audited financial statement of the licensee's parent.

If any of the obligations listed in this subdivision are in dispute with a client and the disputed amount is material when considered in the context of the licensee's most recent audited financial statement, then the licensee shall disclose the nature of the dispute causing the obligations to be unpaid and the amount of money in controversy.attestation in the form required by subdivision (4) of subsection (d) of this section." SECTION 7.8.

House Bill 717-First Edition Page 5 General Assembly Of North Carolina Session 2025 (1) Does not maintain a physical professional employer organization office located in this State;

House Bill 717-Second Edition Page 5 General Assembly Of North Carolina Session 2025 (2)(3) Does not employ salespersons who reside or direct their sales activities in this State;

…." SECTION 8.9.

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