Application Requirements for PEOs

(1) Any person providing professional employer services or soliciting clients, or advertising such services in the Commonwealth shall submit to the department a completed application for PEO registration, pay the required registration fee and provide all required information on a form prescribed by the director. (a) Applicants applying for an initial PEO Registration shall submit the following information with their initial application: 1. The name or names under which the PEO conducts business or will conduct business; 2. The address of the principal place of business of the PEO and the address of each office it maintains in the Commonwealth; 3. All mailing addresses of the PEO. Persons wishing to use a post office box for mailing or public information purposes must specify to the department the actual address where records will be kept and business will be conducted; 4. A statement of ownership, which shall include the name and evidence of the business experience of any person that, individually or acting in concert with one or more persons, owns or controls or will own or control if known or reasonably known at the time of registration, not less than 25% of the equity interest of the PEO; 5. The taxpayer or employer identification number of the PEO; 6. A list by jurisdiction of each name under which the PEO has operated in the preceding five years, including any alternative names, names of predecessors and successor business entities; 7. A statement of management, which shall include the name and evidence of business experience of any person who serves or will serve, if known or reasonably known at time of registration, as president, chief executive officer or otherwise has the authority to act as senior executive officer of the PEO; 8. A financial statement setting forth the financial condition of the PEO or PEO group, which shall include, for initial registrations, the most recent audit of the applicant and said audit shall not be more than 13 months old; 9. A list of clients, including the client name, physical address, telephone number and federal identification number for whom the PEO is providing professional employer services; and 10. Such other information as the director may reasonably require. (2) Positive Working Capital. Each PEO or collectively each PEO group shall maintain positive working capital necessary to meet its financial obligations to provide professional employer services, and shall submit a surety bond as set forth in 454 CMR 30.04(3). (3) Surety Bond. A surety bond in the amount of $250,000 payable to "The people of the Commonwealth" shall be submitted along with the initial application for registration and filed with the Department of Labor Standards, as the keeper of the bond. Said bond shall be maintained while the registration remains in effect or any obligations or liabilities of the registrant remain outstanding. Such bond shall be held by a depository designated by the department, securing payment by the PEO of all taxes, wages, benefits or other entitlement due to or with respect to covered employees, if the PEO does not make such payments when due. (a) PEOs in a PEO group may satisfy the financial requirements established pursuant to 454 CMR 30.04(3) on a combined or consolidated basis; provided however, that each member of the PEO group shall guarantee the financial capacity obligations pursuant to 30.04(1)(a)8. for each member of the PEO group. In the case of a PEO group that submits a combined or consolidated audited financial statement, including entities that are not PEOs or that are not in the PEO group, the controlling entity of the PEO group under the consolidated or combined statement shall guarantee the obligations of the PEOs in the PEO group. (b) A PEO that is part of an organizational structure in which it is majority owned or commonly controlled by an entity, parent or controlling person may submit a combined or consolidated audited financial statement provided the controlling entity under the consolidated or combined statement guarantees the obligations of the PEO. (c) As provided by M.G.L. c 149, § 196(i), the director may accept an assurance by an independent and qualified assurance organization approved by the director that provides satisfactory assurance of compliance acceptable to the director consistent with or in lieu of the requirements of M.G.L c. 149, § 196 and 454 CMR 30.03 and 30.04. The director shall permit a PEO to authorize such an approved assurance organization to act on the PEO's behalf in complying with the registration requirements pursuant to 454 CMR 30.04(3)(c), which may include financial assurance, electronic filings of information and payment of registration fees. Use of such an approved assurance organization shall be optional and not mandatory for a registrant. Nothing in 454 CMR 30.04(3)(c) shall limit or change the department's authority to register or terminate registration of a professional employer organization or to investigate or otherwise enforce 454 CMR 30.00. (d) A PEO or PEO group without positive working capital may provide a bond, irrevocable letter of credit or securities with a minimum market value equaling the deficiency plus $250,000. All such security shall be held by the department to secure payment by the PEO of all taxes, wages, benefits or other entitlement due to or with respect to covered employees, in the event that the PEO does not make such payments when due. (4) Copy of PEO Agreement. As the relationship between the client, PEO, and each covered employee, are governed by professional employer agreements, a copy of the registrant's standard comprehensive PEO agreement shall be submitted with the initial application for PEO registration. Each professional employer agreement shall include: (a) The allocation of rights, duties and obligations; (b) The extent that the PEO has assumed responsibility in the professional employer agreement to: 1. pay such wages to covered employees; 2. withhold, collect, report and remit payroll-related and unemployment taxes; and 3. make payments for employee benefits for covered employees. (c) A statement that the PEO shall have a right to hire and terminate a covered employee as may be necessary to fulfill the PEO's responsibilities pursuant to M.G.L. c 149, §§ 192 through 203 and the professional employer agreement, if so delegated to do so by the client; and (d) A statement that the client shall have a right to hire, discipline and terminate a covered employee. (5) Registration Fee. Applications for PEO registration must be accompanied by payment of the application fee made payable to the "Commonwealth of Massachusetts" in the annual amount of $500.00. Registration fees may be processed online through the Department of Labor Standards website at www.mass.gov/dols.