IC 6-8.1-18-4: Payroll service provider; permitted to retain income generated on client funds

Sec. 4. Notwithstanding section 3(b)(2) of this chapter, a payroll service provider shall be permitted to retain any income generated on client funds while held in a payroll service provider's legal possession pending remittance to authorized payees if the client agreement expressly permits it and the payroll service provider:

(1) complies with the National Automated Clearing House Association rules;

(2) maintains bank and custodial accounts for client funds that are segregated from any operating funds of the payroll service provider; and

(3) either:

(A) is a publicly held company (subject to Securities and Exchange Commission reporting, public company accounting standards, and audit requirements);

(B) is subject to federal or Indiana financial regulatory oversight related to the handling of client funds;

(C) is subject to review by partner financial institutions at least annually; or

(D) conducts annual SOC 1 or SOC 2 reports of security and integrity controls.