Leased Employees: Professional Employer Organization
Disability Benefits Coverage Requirements for Clients of Leasing Firms
Leased employees are the employees of the company that is paying to lease them and that company must have a disability benefits policy in its name. A leasing firm (Professional Employer Organization - PEOPEO) assumes a dual employer relationship with their client employers. The employer generally recruits and hires its employees and contracts with the leasing firm to handle the payroll, taxes and benefit packages for its employees. Leasing firms (PEOs) must be licensed by the New York State Department of Labor.
Currently, clients of PEOs may be covered by either of the following methods:
- Each client of a leasing firm may procure its own disability benefits insurance policy to cover its leased employees (as well as any non-leased employees), or
- The leasing firm can procure a separate disability benefits insurance policy to cover the leased employees of each of its client firms. Such a policy would identify the insured as: ABC Leasing Company Inc. L/C/F XYX Machine Shop Inc. This policy only covers the leased employees of the client firm. If the client firm hires any non-leased employees, the client firm must purchase a separate disability policy covering the non-leased employees. Since the employer will have two or more separate disability policies covering its employees, class specific policy documentation must be manually filed to the Plans Acceptance Unit of the Workers' Compensation Board. Please contact the Disability Benefits Plans Acceptance Unit at 518-402-6279 for more information.
Disability Benefits Coverage Requirements for the Leasing Firm
Regarding coverage requirements for the leasing firm (PEO) itself, individuals performing the administrative services of the PEO are counted as employees of the PEO. However, leased employees used by the clients of the PEO are NOT counted as employees of the PEO.
Using the above employee definitions for PEOs, regular instate and out-of-state coverage requirements for legal entities apply.