2023 New York Laws › LAB - Labor › Article 31 - New York Professional Employer Act › 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.