2014 Indiana Code TITLE 27. INSURANCE ARTICLE 16. PROFESSIONAL EMPLOYER ORGANIZATIONS CHAPTER 7. GENERAL REQUIREMENTS AND PROVISIONS
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IC 27-16-7
Chapter 7. General Requirements and Provisions
IC 27-16-7-1
Requirements of co-employment relationships
Sec. 1. Except as provided in a professional employer agreement,
the following apply to a co-employment relationship:
(1) The client:
(A) may exercise and enforce all rights; and
(B) is obligated to perform all duties and responsibilities;
that otherwise apply to an employer in an employment
relationship, that are allocated to the client by the professional
employer agreement and this article, and that are not specifically
allocated to the PEO by the professional employer agreement
and this article.
(2) The PEO:
(A) may exercise and enforce only the rights; and
(B) is obligated to perform only the duties and
responsibilities;
that are required of the PEO or specifically allocated to the PEO
by this article and the professional employer agreement.
(3) Unless otherwise expressly agreed by the PEO and the client
in the professional employer agreement, the client retains the
exclusive right to direct and control the covered employees as
necessary to:
(A) conduct the client's business;
(B) discharge the client's fiduciary responsibilities; or
(C) comply with licensure requirements that apply to the
client or the covered employees.
As added by P.L.245-2005, SEC.7.
IC 27-16-7-2
Professional employer agreement contents
Sec. 2. (a) Except as provided in this article, the co-employment
relationship between a client and a PEO, and between a co-employer
and a covered employee, is governed by the professional employer
agreement.
(b) A professional employer agreement must specify the
following:
(1) The allocation of rights, duties, and responsibilities
described in section 1 of this chapter.
(2) Except as provided in subsection (c), that the PEO is
responsible for:
(A) payment of wages to covered employees;
(B) withholding, collection, reporting, and remittance of
payroll related and unemployment taxes; and
(C) to the extent the PEO has assumed responsibility in the
professional employer agreement, making payments for
employee benefits for covered employees.
(3) The allocation, to either the client or the PEO, of the
responsibility to obtain worker's compensation coverage for
covered employees from a worker's compensation insurer that
is authorized under this title to conduct the business of insurance
in Indiana.
(4) If the professional employer agreement allocates the
responsibility under subdivision (3) to the PEO, a requirement
that the PEO maintain and provide to the client, at the client's
request at the termination of the professional employer
agreement, records regarding loss experience related to the
worker's compensation insurance coverage.
(c) A PEO is not responsible for an obligation between a client
and a covered employee for payments in addition to the covered
employee's salary, draw, or regular rate of pay, including bonuses,
commissions, severance pay, deferred compensation, profit sharing,
or vacation, sick, or other paid time off, unless the PEO has expressly
agreed to assume liability for the payments in the professional
employer agreement.
As added by P.L.245-2005, SEC.7.
IC 27-16-7-3
Notice to affected employees
Sec. 3. A PEO shall provide written notice to each covered
employee who is affected by a professional employer agreement
entered into by the PEO concerning the general nature of the
co-employment relationship between and among the PEO, the client,
and the covered employee.
As added by P.L.245-2005, SEC.7.
IC 27-16-7-4
Responsibilities of clients, PEOs, and covered employees
Sec. 4. (a) Except as expressly provided by the professional
employer agreement:
(1) a client:
(A) is solely responsible for:
(i) the quality, adequacy, or safety of goods or services
produced or sold in the client's business;
(ii) directing, supervising, training, and controlling the
work of a covered employee with respect to the business
activities of the client; and
(iii) the acts, errors, or omissions of a covered employee
with respect to activities described in item (ii); and
(B) is not liable for the acts, errors, or omissions of:
(i) the PEO; or
(ii) a covered employee of the client and a PEO when the
covered employee is acting under the express direction and
control of the PEO.
(2) A PEO is not liable for the acts, errors, or omissions of a
client or a covered employee of the client when the covered
employee is acting under the express direction and control of the
client.
(3) A covered employee is not, solely as the result of being a
covered employee of a PEO, an employee of the PEO for
purposes of:
(A) general liability insurance;
(B) fidelity bonds;
(C) surety bonds;
(D) employer's liability that is not covered by worker's
compensation; or
(E) liquor liability insurance;
carried by the PEO unless the covered employee is specified as
an employee of the PEO by specific reference in the
professional employer agreement and any applicable
prearranged employment contract, insurance contract, or bond.
(b) This section does not limit:
(1) a contractual liability or obligation specified in a
professional employer agreement; or
(2) the liabilities and obligations of a PEO or client as specified
in this article.
As added by P.L.245-2005, SEC.7.
IC 27-16-7-5
PEO not engaged in business of insurance
Sec. 5. A PEO that offers, markets, sells, administers, or provides
professional employer services under a professional employer
agreement as provided in this article is not:
(1) engaged in the business of insurance; or
(2) acting as an administrator (as defined in IC 27-1-25-1).
As added by P.L.245-2005, SEC.7.
IC 27-16-7-6
Basis of fees or taxes on PEOs
Sec. 6. (a) A business license fee or another fee that is based upon
gross receipts must, in the case of a PEO, be based upon the
administrative fee of the PEO.
(b) A tax assessed on a per capita or per employee basis must be
assessed against a:
(1) client for covered employees; and
(2) PEO for the PEO's employees who are not covered
employees.
(c) In the case of tax imposed or calculated upon the basis of total
payroll, a PEO is eligible to apply a small business allowance or
exemption available to the client for covered employees for the
purpose of computing the tax.
As added by P.L.245-2005, SEC.7.
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