Professional Employer Organizations (PEO) and Leased Employees
Workers' compensation coverage is required for employees that are leased by their employer. An employee is generally leased when the employer recruits and hires its employees and contracts with the leasing firm (PEO) to handle the payroll, taxes and benefit packages. Leasing firms (PEOs) must be licensed by the New York State Department of Labor. For more information regarding the leasing firm (PEO) and employer relationship see Article 31 section 922 of the Labor Law.
Currently, clients of PEOs may be covered by either of the following methods:
- Each client of a leasing firm may purchase its own workers' compensation insurance policy to cover its leased employees, or
- The PEO may obtain a workers' compensation insurance policy in the name of the client which would cover the leased employees only.
Both of the methods listed above require that proof of coverage be electronically submitted by the insurance carrier using the client legal entity name and FEIN. Individuals performing the administrative services of the PEO are counted as employees of the PEO.
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 policy to cover employees that are employed directly by the employer.