NAPEO: National Association of Professional Employer Organizations


Government Affairs
What We Advocate

What We Advocate

NAPEO — The Voice of the PEO Industry®, embraces a commitment to furthering and protecting the interests of its PEO members. At the Federal level, this means clarifying and codifying the rights of a PEO for employment taxes and benefit plan sponsorship purposes. At the state level, NAPEO pursues statutory recognition of the PEO as the employer of record for workers' compensation, unemployment insurance, and benefits sponsorship.

NAPEO's Government Affairs Initiative has long been recognized for a successful record of achievements benefiting member PEO firms. These successes are the result of the dedication of significant financial resources, the presentation of an effective message, the use of dedicated volunteers, and the work of a team of full time government affairs professionals. Working to protect and further the interest of PEOs of all sizes, NAPEO's legal and government affairs staff monitor bills, research legal issues, meet with regulators, and alert the membership of important and timely issues. These efforts are supported by more than a dozen professional lobbyists who represent NAPEO member interests in Washington, DC and state capitals nationwide.

NAPEO's proactive and aggressive government affairs activities are frequently cited as the Association's single most important service delivering statutory recognition and legal certainty to the industry while protecting it from overreaching regulations or laws.

Statutory Recognition
The single greatest impediment to the growth of the PEO industry is uncertainty concerning the rights or status of PEOs under the law. As NAPEO has successfully codified the rights of PEOs under state law, consumer acceptance has grown and markets have expanded. Furthermore, statutory certainty has provided a more stable marketplace and allowed PEOs to gain operational efficiencies and uniformity of business practices. PEOs cannot individually clarify and codify the legal rights of their PEO business under federal and state laws. It takes a strong, unified and dedicated national association to do that. NAPEO's federal legislation will eliminate uncertainties under the Internal Revenue Code regarding a PEO's ability to exercise employer rights for payroll taxes and employee benefit plan sponsorship. Solving the industry's federal tax and benefit plan challenges delivers real value for PEOs of all sizes. Additionally, NAPEO is working with local volunteers in state capitals nationwide to achieve statutory recognition for PEOs and to protect their authorities with regard to workers' compensation, unemployment insurance and group health sponsorship.

Expanding Markets
NAPEO's Government Affairs Initiative has also opened new markets for member PEOs as federal and state laws and programs are amended to recognize PEOs and co-employment. NAPEO efforts have led to:

  • SBA regulations to assure that small businesses can use PEO services;
  • A separate industrial classification for the PEO industry;
  • Clarification that PEO clients can sponsor H-1B workers;
  • IRS guidance assuring qualified status of PEO 401(k) multiple employer plans;
  • Medicare guidance that doctors can utilize PEO services for their staff;
  • Specific guidance for the I-9 procedure in PEO arrangements;
  • Accounting guidance from FASB for employee stock option programs in PEO arrangements;
  • Clarification that SBA Minority Program businesses can use PEOs;
  • And guidance from state and federal programs that PEO services are permissible.

All of these NAPEO efforts have preserved or expanded PEO business opportunities and have provided increased visibility to the PEO industry.

Operational Efficiencies
NAPEO's federal legislation returns real financial value to PEOs by streamlining the administration of a PEO 401(k) plan while permitting different employer contributions for each client worksite. The law will also create new revenue opportunities by give PEOs credit for wages paid by a new client toward the FICA and FUTA tax wage base of worksite employees.

At the state level, NAPEO has enacted some form of statutory recognition in over half the states, has defeated or modified tax provisions that would have unfairly impacted PEOs, and has successfully worked to preserve PEO authorities in the area of workers' compensation, unemployment programs and benefits. NAPEO is delivering bottom line results to individual member PEO companies by limiting costly government regulation, and streamlining regulatory operations.

Millennium Project
Since 1999, NAPEO has allocated nearly $1 million of membership dues to its Millennium Project which funds specific state legislative initiatives. This has been a proactive effort to change state laws to promote and protect the PEO industry. These projects are directly focused toward establishing a more uniform and positive environment for PEOs nationwide.

Delivering Results
Whether eliminating a costly state sales tax on PEO services, codifying the right PEOs and their clients have to the exclusive remedy protection of workers' compensation, or establishing the right of PEOs to provide employer benefits, NAPEO's Government Affairs Initiative is delivering results that positively influence a PEO's bottom line. Join the association that has a proactive agenda, effective communications, dedicated professionals and the financial strength to deliver success for your company.

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State-by-State Expansion of Legal & Operational Certainty

PEO or Employee Leasing-specific registration or licensing requirement was enacted.

State law recognition generally as an employer without a registration or licensing requirement.

Pending licensing or registration legislation.

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