Committee Hears House Bill 250 to Regulate PEOs; Workers'‑comp Coverage Is Central Concern

Representative Darlene Taylor opened discussion of House Bill 250 (LC520711S), saying the measure would establish a regulatory framework for professional employer organizations, or PEOs, that provide payroll, benefits and human resources services to small and mid‑sized employers.

Taylor said the bill is based on a model act from the National Association of Professional Employer Organizations and would create "a level, field and a competitive field" and increase transparency for small employers and the state. "What they do is provide human resources services to small and mid sized employers and businesses," she told the committee, noting PEOs can handle payroll tax remittance, 401(k)s, health and workers'‑compensation administration and other benefits.

Why it matters: supporters argued PEOs let small employers compete with larger firms and improve employee retention; opponents warned the bill could create gaps in workers'‑compensation coverage if contracts or enrollment practices leave employees off PEO rosters. Taylor cited industry figures during her presentation — "more than 3,150 Georgia businesses employing more than 8,000 people" work with PEOs, and nationally PEOs serve about 200,000 businesses and 4,500,000 employees — saying standardized rules would protect consumers and reduce "fly by night" operators.

Key provisions described at the hearing included a requirement that contracts between client employers and PEOs specify which party is responsible for particular obligations and oversight of PEO activities by the insurance commissioner's office. Taylor said those specifications are spelled out in the draft, and that the bill "does not codify a carve out" for workers' compensation but instead sets standards modeled on the national association.

Concerns from insurers and advocates: insurance and workers'‑comp stakeholders raised repeated concerns that contractual or administrative practices could allow some employees to be left uninsured. Mike Iverson of the Independent Insurance Agents Association stressed the history and purpose of statutory workers' compensation and warned of practical gaps, saying, "When I buy workers' compensation, whoever I hire ... they're automatically covered as a statutory employee even though they're not a W‑2." John Walraven, a lobbyist representing the National Association of PEOs, pointed committee members to specific draft language that he said shows the bill requires contracts to "specify the party responsible" for coverage and describes acceptable approaches to procuring workers'‑comp insurance.

Bobby Potter, who has defended workers'‑comp claims for decades, and Doug Rohan of the Georgia Injured Workers Advocates urged caution. Potter flagged three categories of concern: (1) the potential for gaps when employees are not reported promptly or at all to a PEO, (2) allowing some PEOs to administer claims without standard licensure or oversight, and (3) permitting PEOs to self‑insure outside the existing Georgia Self Insurance Trust Fund rules. Rohan presented a case packet (the transcript identifies a lower‑court Administrative Law Judge decision he called the Nichols case) and argued that the draft language could allow employers to "pick and choose which employees to cover," a result he said would hollow out the workers'‑comp system if left unamended.

State counsel and process: Ali Rod of the Office of Legislative Counsel told the committee his read was that mandatory workers'‑comp requirements remain in Georgia law (Title 34, Chapter 9) and that he did not see how the bill as written would eliminate the statutory obligation for employers to provide coverage. Committee members asked numerous technical questions about the interaction between federal thresholds (for example, FMLA/ACA triggers tied to employee counts), enrollment timing and how audits would operate in practice.

Outcome and next steps: the committee did not take a formal vote on HB 250. After extended testimony and questions, the chair recessed the agenda item and encouraged the bill sponsor and stakeholders to meet to work on concerns. The record shows the chair asked Representative Taylor to meet with lobbyists and advocates and to return later with possible revisions; no motion to advance or table the bill passed during the hearing.

Quotes in context

Representative Darlene Taylor: "This proposed legislation is based on the National Association of Professional Employer Organizations. It's a model act."

John Walraven (PEO industry lobbyist): "In line 402, you'll see that the agreement between the employer and the PEO shall specify the party responsible."

Mike Iverson (Independent Insurance Agents Association): "When I buy workers' compensation, whoever I hire ... they're automatically covered as a statutory employee even though they're not a W‑2."

Ending: Committee members and outside witnesses asked the bill author to work with insurers, the State Board of Workers' Compensation stakeholders and injured‑worker advocates to resolve draft language the witnesses said could create unintended gaps. The committee recessed the bill hearing for further stakeholder discussions; no committee motion or vote on House Bill 250 was recorded in the transcript.