N.Y. Labor Law § 922: General requirements and provisions

§ 922. General requirements and provisions. 1. A professional employer

organization shall meet the following standards:

(a) Have a written professional employer agreement between the client

and the professional employer organization setting forth the

responsibilities and duties of each party. The professional employer

agreement shall contain a description of the type of services to be

rendered by the professional employer organization and the respective

rights and obligations of the parties and the professional employer

agreement shall also provide that the professional employer

organization:

(i) reserves a right of direction and control over the worksite

employees. However, the client shall maintain such direction and control

over the worksite employees as is necessary to conduct the client's

business and without which the client would be unable to conduct its

business, discharge any fiduciary responsibility which it may have, or

comply with any applicable licensure;

(ii) assumes responsibility for the withholding and remittance of

payroll-related taxes and employee benefits for worksite employees and

for which the professional employer organization has contractually

assumed responsibility from its own accounts, as long as the

professional employer agreement between the client and professional

employer organization remains in force; and

(iii) retains authority to hire, terminate and discipline the worksite

employees.

(b) Provide written notice of the general nature of the relationship

between the professional employer organization and the client to the

worksite employees located at the client worksite.

2. A professional employer organization shall be considered an

employer for the purposes of withholding state income tax of the

worksite employees pursuant to section six hundred seventy-one of the

tax law.

3. As long as the professional employer organization's professional

employer agreement with a client remains in force, the professional

employer organization shall have a right to and shall assume the

following responsibilities:

(a) pay wages and collect, report and remit employment taxes of its

worksite employees from its own accounts;

(b) pay unemployment insurance as required by the unemployment

insurance law;

(c) secure and provide required workers' compensation coverage for its

worksite employees either in its own name or in its client's name.

4. Both the client and the professional employer organization shall be

considered the employer for the purpose of coverage under the workers'

compensation law and both the professional employer organization and its

client shall be entitled to protection of the exclusive remedy provision

of the workers' compensation law irrespective of which entity secures

and provides such workers' compensation coverage.

5. A registered professional employer organization shall be deemed for

purposes of state law an employer for purposes of sponsoring welfare

benefit plans for its worksite employees. Worksite employees

participating in that professional employer organization's fully insured

welfare benefit plan or plans shall be considered employees

participating in a single employer welfare benefit plan or plans. A

fully insured welfare benefit plan or plans offered by a registered

professional employer organization to its employees and/or worksite

employees shall not be considered for purposes of state law a multiple

employer welfare arrangement.

6. Subject to any contrary provisions contained in the written

professional employer agreement between the client and the professional

employer organization, the professional employer arrangement that exists

between a professional employer organization and its client or clients

shall be interpreted for the purposes of insurance and bonding as

follows:

(a) Nothing in this section shall serve to limit any contractual

liability, as may be expressly agreed upon, between the professional

employer organization and the client, nor shall this section in any way

limit the liabilities of any professional employer organization or

client as defined elsewhere in this article; and

(b) Worksite employees are not automatically deemed pursuant to this

section to be employees of the professional employer organization for

purposes of general liability, insurance, automobile insurance, fidelity

bonds, surety bonds, employer's liability which is not covered by

workers' compensation, or liquor liability insurance carried by the

professional employer organization unless the worksite employees are

included by specific reference in the professional employer agreement

and applicable prearranged employment contract, insurance contract or

bond.

7. The sale of professional employer services in conformance with the

provisions of this article shall not constitute the sale of insurance

for purposes of the insurance law. However, no professional employer

organization shall function or hold itself out as an insurer, insurance

broker or insurance agent unless appropriately licensed by this state.

8. Worksite employees whose services are subject to sales tax shall be

deemed the employees of the client for purposes of collecting and

levying sales tax on the services performed by the worksite employee.