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NAPEO supports the proactive use of the NAPEO Model Act for several fundamental reasons: 

  • It provides statutory certainty and a firm foundation of law for the PEO industry.
  • From small start-ups to large PEOs, it creates a level, competitive playing field and diminishes the ability of fly-by-night operations to distort the market or harm legitimate PEOs.
  • It resolves the most common legal issues that can arise in a co-employment context.
  • It promotes a common set of terms and provisions to make operations from state to state as seamless as possible.

Design and Function

The Model PEO Bill is a comprehensive piece of legislation. As such, the terminology and structure is common and consistent throughout. As long as the definitional section is also used, individual sections can be taken from it to address single statutory issues, such as workers' compensation and unemployment insurance.

The Model PEO Bill is divided into 12 sections:

    1. Purpose — Provides the statutory basis for legislative action.

    2. Definitions — Establishes consistent terminology for the industry.

    3. Rights and Duties Unaffected by the Act — Makes clear what the Act does NOT do.  
    4-6. Registration, Fees & Financial Capacity — Establishes essential requirements to do business. 

    7. General Requirements and Provisions — Defines the PEO role and responsibilities. 

    8. Benefits — Establishes the authorities of both the client and PEO for welfare benefit plans. 

    9. Workers' Compensation — Requires the responsibility be specifically allocated and assures exclusive remedy protections for both the client and PEO. 

    10. Unemployment — Allows the PEO to report all worksite employees for unemployment compensation insurance. 

    11-12. Effective Date and Severability — Assures that the failure of one section cannot invalidate the entire Bill and sets the start date for the law.

View the PEO Model Act