Nebraska amends professional employer organization co-employment regulations

Legislature Bill 293, introduced on March 4, 2025, by the Nebraska State Legislature, aims to redefine the parameters of co-employment relationships in the state. This bill seeks to clarify the roles and responsibilities of professional employer organizations (PEOs) and their clients, ensuring that a majority of employees and payroll are covered under the PEO's umbrella.

At the heart of the bill is a provision that prohibits co-employment arrangements where less than half of the client’s employees or payroll are classified as covered employees. This change is designed to protect workers and ensure that PEOs are adequately involved in the employment relationship, thereby enhancing accountability and compliance with labor laws.

Debate surrounding LB293 has been robust, with proponents arguing that it will strengthen worker protections and clarify employer obligations. Critics, however, express concerns that the bill may impose unnecessary restrictions on small businesses that rely on PEOs for flexibility and cost-effectiveness. Amendments have been proposed to address these concerns, but the core provisions remain a point of contention.

The implications of this bill are significant. If passed, it could reshape the landscape of employment practices in Nebraska, particularly for small and medium-sized enterprises that utilize PEO services. Experts suggest that while the bill aims to bolster employee rights, it may also lead to increased operational costs for businesses, potentially impacting hiring practices and economic growth.

As the legislative session progresses, stakeholders are closely monitoring the bill's trajectory, with potential outcomes ranging from a complete overhaul of co-employment standards to a compromise that balances worker protections with business flexibility. The Nebraska State Legislature is set to continue discussions, with a vote anticipated in the coming weeks.