Yes.  The entire PSL bushing ID should have contact with the shaft and the hub should engage the full length of the PSL sleeve OD for full transmittable torque and the best concentricity.  In the case of the PSL-K series, the engagement on the OD of the bushing sleeve is the full length, up to the flange of the bushing.  Additionally, the hub should have a sufficient thickness to properly mount to the PSL.  Shaft tolerance and the hub bore tolerance are also important for proper operation and torque transmission.  See the Posi-Lok catalog in the “Downloads” section of our web-site for details on proper hub sizing and dimensional/tolerance specifications for your particular size PSL.