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Workers' Compensation Board

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Leased Employees: Professional Employer Organization


Workers' Compensation 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 workers' compensation policy in its name. Article 31 section 922 of the Labor Law defines the relationship between the PEO and the client employer. 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:

Workers' Compensation Coverage Requirements for the Leasing Firm

Regarding coverage requirements for the leasing firm 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.