{"data":{"id":"us-ok/okla.-stat.-tit.-40-40-600.7","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 40, § 40-600.7","heading":"Contract requirements – Rights and duties of employer,","body":"employee, and client – Notice – Workers’ compensation – Benefit\n\nplans – Liability – Sales tax.\n\nA. Contractual relationship. Except as specifically provided\n\nin the Oklahoma Professional Employer Organization Recognition and\n\nRegistration Act, the coemployment relationship between the client\n\nand the PEO, and between each coemployer and each covered employee,\n\nshall be governed by the professional employer agreement. Nothing\n\ncontained in any professional employer agreement or the Oklahoma\n\nProfessional Employer Organization Recognition and Registration Act\n\nshall be deemed to:\n\n1. Diminish, abolish or remove rights of covered employees as\n\nto clients or obligations of such client as to a covered employee,\n\nexisting prior to the effective date of a professional employer\n\nagreement;\n\n2. Terminate an employment relationship existing prior to the\n\neffective date of a professional employer agreement; or\n\n3. Create any new or additional enforcement right of a covered\n\nemployee against a PEO not specifically allocated to such PEO in the\n\nprofessional employer agreement or the Oklahoma Professional\n\nEmployer Organization Recognition and Registration Act.\n\nB. Allocation of rights, duties and obligations. Except as\n\nspecifically provided in the Oklahoma Professional Employer\n\nOrganization Recognition and Registration Act or in the professional\n\nemployer agreement, in each coemployment relationship:\n\n1. The client shall be entitled to exercise all rights, and\n\nshall be obligated to perform all duties and responsibilities,\n\notherwise applicable to an employer in an employment relationship;\n\nand\n\n2. The PEO shall be entitled to exercise only those rights, and\n\nobligated to perform only those duties and responsibilities,\n\nspecifically required by the Oklahoma Professional Employer\n\nOrganization Recognition and Registration Act or set forth in the\n\nprofessional employer agreement. The rights, duties, and\n\nobligations of the PEO as coemployer with respect to any covered\n\nemployee shall be limited to those arising pursuant to the\n\nprofessional employer agreement and the Oklahoma Professional\n\nEmployer Organization Recognition and Registration Act during the\n\nterm of coemployment by the PEO of such covered employee.\n\nC. Professional employer agreement requirements. Each\n\nprofessional employer agreement shall include, at a minimum, the\n\nfollowing:\n\n1. The PEO shall reserve a right of direction and control over\n\nthe covered employees; provided, that the client may retain the\n\nright to exercise such direction and control over covered employees\n\nas is necessary to conduct the client’s business, to discharge any\n\nfiduciary responsibility which it may have, or to comply with any\n\napplicable licensure requirements;\n\n2. The PEO shall have responsibility to pay wages and salaries\n\nto covered employees; to withhold, collect, report, and remit\n\npayroll-related and unemployment taxes; and, to the extent the PEO\n\nhas assumed responsibility in the professional employer agreement,\n\nto make payments for employee benefits for covered employees;\n\n3. Both the PEO and the client shall retain authority to hire,\n\nterminate, and discipline the covered employees; and\n\n4. The responsibility to obtain workers’ compensation coverage\n\nfor covered employees, from a carrier licensed to do business in\n\nthis state and otherwise in compliance with all applicable\n\nrequirements, shall be specifically allocated to either the client\n\nor the PEO. If such responsibility is allocated to the PEO under\n\nany such agreement, such agreement shall require that the PEO\n\nmaintain and provide to the client, at the termination of the\n\nagreement if requested by the client, records regarding the premium\n\nand loss experience related to workers’ compensation insurance\n\nprovided to covered employees pursuant to such agreement.\n\nD. Notice to covered employees. With respect to each\n\nprofessional employer agreement entered into by a PEO, such PEO\nshall require that the PEO\n\nmaintain and provide to the client, at the termination of the\n\nagreement if requested by the client, records regarding the premium\n\nand loss experience related to workers’ compensation insurance\n\nprovided to covered employees pursuant to such agreement.\n\nD. Notice to covered employees. With respect to each\n\nprofessional employer agreement entered into by a PEO, such PEO\n\nshall provide written notice to each covered employee affected by\n\nsuch agreement of the general nature of the coemployment\n\nrelationship between and among the PEO, the client, and such covered\n\nemployee.\n\nE. Workers’ compensation. Both client and the PEO shall be\n\nconsidered the employer for the purpose of coverage under the\n\nWorkers’ Compensation Act and both the PEO and its client shall be\n\nentitled to protection of the exclusive remedy provision of the\n\nWorkers’ Compensation Act irrespective of which coemployer obtains\n\nsuch workers’ compensation coverage.\n\nF. Benefit plans.\n\n1. A client and a PEO shall each be deemed an employer for\n\npurposes of sponsoring retirement and welfare benefit plans for its\n\ncovered employees.\n\n2. A welfare benefit plan offered to the covered employees of a\n\nsingle PEO shall not be considered a multiple employer welfare\n\narrangement, or MEWA, as provided for in Section 633 of Title 36 of\n\nthe Oklahoma Statutes, and shall be exempt from the licensing\n\nrequirements contained in Section 634 of Title 36 of the Oklahoma\n\nStatutes.\n\n3. For purposes of the Small Employer Health Reform Act, a PEO\n\nshall be considered the employer of all of its covered employees and\n\nall covered employees of one or more clients participating in a\n\nhealth benefit plan sponsored by a single PEO shall be considered\n\nemployees of the PEO.\n\n4. If a PEO offers to its covered employees any health benefit\n\nplan which is not fully insured by an authorized insurer, the plan\n\nshall:\n\na. utilize a third-party administrator licensed to do\n\nbusiness in this state,\n\nb. hold all plan assets, including participant\n\ncontributions, in a trust account, and\n\nc. provide sound reserves for such plan as determined\n\nusing generally accepted actuarial standards.\n\nG. Limitations on liability. Except to the extent otherwise\n\nprovided in a professional employer agreement:\n\n1. A PEO shall not be liable for the acts, errors, or omissions\n\nof a client, or of any covered employee when such covered employee\n\nis acting under the direction and control of a client;\n\n2. A client shall not be liable for the acts, errors, or\n\nomissions of a PEO, or of any covered employee of the client and a\n\nPEO when such covered employee is acting under the direction and\n\ncontrol of the PEO;\n\n3. Nothing in this subsection shall serve to limit any\n\ncontractual liability or obligation specifically provided in a\n\nprofessional employer agreement, nor shall this subsection in any\n\nway limit the liabilities and obligations of any PEO or client as\n\ndefined elsewhere in the Oklahoma Professional Employer Organization\n\nRecognition and Registration Act; and\n\n4. A covered employee is not, solely as the result of being a\n\ncovered employee of a PEO, an employee of the PEO for purposes of\n\ngeneral liability, insurance, fidelity bonds, surety bonds,\n\nemployer’s liability which is not covered by workers’ compensation,\n\nor liquor liability insurance carried by the PEO unless the covered\n\nemployees are included by specific reference in the professional\n\nemployer agreement and applicable prearranged employment contract,\n\ninsurance contract, or bond.\n\nH. Services not insurance. The sale of professional employer\n\nservices provided by PEOs registered under the Oklahoma Professional\n\nEmployer Organization Recognition and Registration Act shall not\n\nconstitute the sale of insurance for purposes of Oklahoma Insurance\n\nLaw.\n\nI. Sales taxes. Covered employees whose services are subject\n\nto sales tax shall be deemed the employees of the client for\nnd.\n\nH. Services not insurance. The sale of professional employer\n\nservices provided by PEOs registered under the Oklahoma Professional\n\nEmployer Organization Recognition and Registration Act shall not\n\nconstitute the sale of insurance for purposes of Oklahoma Insurance\n\nLaw.\n\nI. Sales taxes. Covered employees whose services are subject\n\nto sales tax shall be deemed the employees of the client for\n\npurposes of collecting and levying sales tax on the services\n\nperformed by the covered employee.","path":["OK Code","Title 40"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os40.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"93b979143c879746cbc5bfe488951a853f21c5f1a05e4ffedf004393990867de","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-40-40-600.6","next":"us-ok/okla.-stat.-tit.-40-40-600.8"},"notice":"GroundRules: Original legal text. Not legal advice."}