Professional Employer Organizations (PEO) and Leased Employees
Disability and Paid Family Leave is required for employees that are leased by their employer. A PEO assumes a dual employer relationship with their client. The client generally recruits and hires its employees and contracts with the leasing firm to handle the payroll, taxes and benefit packages for its employees. The PEO 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 purchase its own disability and Paid Family Leave policy to cover its leased employees and any direct employees or
- The PEO may obtain a disability and Paid Family Leave insurance policy in the name of the client which would cover the leased employees only. The coverage must then be filed electronically by the insurance carrier using the Federal Employer Identification Number (FEIN #) of the client. The coverage should not be filed using the PEO's FEIN #, name or address.
NOTICE TO EMPLOYERS - Employers are responsible for covering "ALL" of their employees. If the PEO Is providing coverage for the leased employees the employer may have to obtain a separate DB/PFL policy to cover employees that are employed directly by the employer.
The Professional Employer Organization (PEO)
Disability and Paid Family Leave benefits coverage is required for individuals performing the administrative services of the PEO. Leased employees used by the clients of the PEO are NOT considered employees of the PEO for disability and Paid Family Leave benefits.