2016 Arkansas Code
Title 23 - Public Utilities and Regulated Industries
Subtitle 3 - Insurance
Chapter 92 - Multiple Employer Trusts and Self-Insured Plans
Subchapter 4 - -- Arkansas Professional Employer Organization Recognition and Licensing Act
§ 23-92-402. Definitions

As used in this subchapter:

(1) "Client" means any person who enters into a coemployment relationship as a coemployer with a professional employer organization;

(2) "Coemployer" means a professional employer organization or a client of a professional employer organization;

(3) "Coemployment relationship" means:

(A) As between coemployers, a relationship in which the rights, duties, and obligations of an employer that arise out of an employment relationship have been allocated between coemployers under a professional employer agreement and this subchapter and which is intended to be an ongoing relationship rather than a temporary or project-specific relationship;

(B) As between each professional employer organization and a covered employee to which a professional employer agreement applies, an employment relationship in which:

(i) The professional employer organization is entitled to enforce the rights and is obligated to perform the duties and obligations allocated to the organization by the professional employer agreement and this subchapter; and

(ii) A covered employee is entitled to enforce against the professional employer organization the duties and obligations allocated to the organization by the professional employer agreement and this subchapter; and

(C) As between each client and a covered employee to which a professional employer agreement applies, an employment relationship in which each client:

(i) Is entitled to enforce the rights allocated to the client by the professional employer agreement and this subchapter;

(ii) Is obligated to provide and perform the employer obligations allocated to the client by the professional employer agreement and this subchapter; and

(iii) Is responsible for any employer right or obligation not otherwise allocated by the professional employer agreement or this subchapter;

(4) "Commissioner" means the Insurance Commissioner;

(5) "Controlling person" means:

(A) Any natural person who directly or indirectly possesses the power to direct or cause the direction of the management or policies of any professional employer organization, including:

(i) Direct or indirect control of ten percent (10%) or more of an ownership interest bearing the right to participate in policy making for the professional employer organization; or

(ii) The general power to endorse any negotiable instrument payable to or on behalf of the professional employer organization or to cause the direction of the management or policies of any professional employee organization; and

(B) Any natural person employed, appointed, or authorized by a professional employer organization to enter into a contractual relationship with a client company on behalf of the professional employer organization;

(6) (A) "Covered employee" means an individual having a coemployment relationship with a professional employer organization and a client who has entered into a professional employer agreement with respect to the employee.

(B) "Covered employee" includes the client's officers, directors, shareholders, partners, and managers to the extent that those persons act as operational managers or perform services for the client;

(7) "Department" means the State Insurance Department;

(8) "Employer service assurance organization" means an organization licensed under § 23-92-415;

(9) "Licensee" means a professional employer organization licensed under this subchapter;

(10) "Person" means any individual, partnership, corporation, limited liability company, association, or any legally recognized entity, however formed;

(11) "Professional employer agreement" means a written contract by and between a client and a professional employer organization under which the professional employer organization and the client agree to establish a coemployment relationship and which satisfies the requirements of § 23-92-409(c);

(12) "Professional employer organization" means any person engaged in the business of providing professional employer services;

(13) (A) "Professional employer organization group" means two (2) or more affiliated professional employer organizations.

(B) Two (2) or more professional employer organizations are affiliated if they have common owners having ownership interests in them of greater than fifty percent (50%);

(14) "Professional employer organization service organization affidavit" means an attestation or certification of a professional employer organization service organization and any additional information that conforms to the requirements in the rules and regulations as promulgated by the commissioner;

(15) (A) "Professional employer services" means the service of entering into a coemployment relationship under this subchapter in which at least a majority of the employees providing services to a client or to a division or work unit of a client are covered employees and in which:

(i) The arrangement is intended to be, or is, ongoing rather than temporary in nature; and

(ii) Employer responsibilities, including the right of direction and control of the employees, are shared by the professional employer organization and the recipient.

(B) "Professional employer services" does not include services performed by temporary employees or by persons determined to be independent contractors with respect to the recipient;

(16) (A) "Temporary help services" means services consisting of a person:

(i) Recruiting and hiring its own employees;

(ii) Finding other organizations that need the services of those employees;

(iii) Assigning those employees to perform work at or for the other organizations to support or supplement the other organizations' workforces or to provide assistance in special work situations, such as, but not limited to, employee absences, skill shortages, seasonal workloads, or to perform special assignments or projects; and

(iv) Customarily attempting to reassign the employees to other organizations when they finish each assignment.

(B) "Temporary help services" shall not be deemed professional employer services; and

(17) (A) "Transacting insurance" includes any of the following actions by a professional employer organization or its representatives:

(i) Soliciting prospective clients based solely or primarily on representation of insurance cost advantages;

(ii) Advising a prospective client regarding insurance coverage; or

(iii) Offering for sale or selling a policy of insurance to a client or employee.

(B) "Transacting insurance" does not include any of the following actions by a professional employer organization or its representatives:

(i) Soliciting prospective clients to enter into professional employee agreements;

(ii) Collecting information from a prospective client related to payroll, employee benefits, employment policies, workplace safety, and other employer responsibilities and operational experience;

(iii) Evaluating collected information to ascertain the professional employer organization's risk and cost associated with serving a prospective client's workforce;

(iv) Informing a prospective client of the terms and conditions under which the professional employer organization will enter into a professional employer agreement; or

(v) Performing employer responsibilities as required by this subchapter.