Regulation

Each state in the U.S. has differing regulations for workers' compensation insurance and state unemployment insurance, so PEOs are typically regulated at the state level.

In 2004, President George W. Bush signed into law the SUTA Dumping Protection Act of 2004, which requires that all 50 states enact anti-SUTA-dumping legislation by 2007. Most states have now done so; however, federal law does not prohibit companies from using a PEO to obtain more favorable SUTA rates.

The staff leasing industry itself has also taken steps to address abuses. It formed its first trade association, the National Staff Leasing Association (NSLA), in 1985. The association changed its name to the National Association of Professional Employer Organizations [NAPEO] in 1994 to reflect the term in current usage.

An independent accreditation body, Employer Services Assurance Corporation [ESAC], was formed in 1995. Its purpose is to assure clients of PEO solvency via surety bonds, and to certify PEO compliance with "ethical, financial, and operational standards". Currently there are fewer than 45 ESAC-accredited PEOs.

More information about regulatory bodies can be found in the FAQs section


Useful Links

Industry Facts, NAPEO
National Association of Professional Employer Organizations
Employer Services Assurance Corporation
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