NAPEO Succeeds in Illinois Unemployment Insurance Effort

NAPEO and its Midwest Chapter were recently successful in the passage of Illinois House Bill 3260 which allows PEO's to be the employer of all worksite employees including officers and owners if certain conditions are met. Following is a summary of the new law. The act uses the term "employee leasing company", so that term is used in this summary.

The law defines an "employee leasing company" as a company that contracts with a client to supply or assume responsibility for personnel management of workers performing services at the client. Temporary employees are excluded from the definition.

The employee leasing company is the employer of record of all worksite employees if it:

1. pays the worksite employees from its own accounts; and
2. exclusively, OR IN CONJUNCTION WITH THE CLIENT, retains the right to direct and control the workers in the performance of services; and
3. exclusively, OR IN CONJUNCTION WITH THE CLIENT, retains the right to hire and terminate the individual; and
4. reports each client to IDES.

If the above conditions are met , the "employee leasing company" will be the employer of record with no further inquiry if the client's unemployment rate is at or below the new employer rate in Illinois. If the client rate is above the new employer rate, IDES will compare the client rate with the PEO rate. If the client rate is more than 1.5 points higher than the PEO rate (and above the new employer rate) the client will be the employer of record until the rate is within the 1.5 point differential or at or below the new employer rate.