Committee Hears Bill Letting PEOs File One Unemployment Report for Multiple Clients

Senator Ron Roegner, sponsor of Senate Bill 263, told the Senate Financial Institutions, Insurance and Technology Committee that the bill would let professional employer organizations file a single unemployment wage-and-contribution report with the Ohio Department of Job and Family Services instead of filing separate reports for each client. "Quite simply, Senate Bill 263 would allow professional employer organizations to file unemployment wage and contribution reports with ODJFS on behalf of their clients in one filing rather than filing individual reports for each client," Roegner said during sponsor testimony.

The bill would amend Ohio Revised Code section 4141.24 to "provide clear authority for the PEO to file under one concurrent employer account, aligning with the intent of the Paymaster program," Roegner said. Will Hart, vice president of payroll tax and compliance for Group Management Services (GMS), testified as a proponent and described how GMS and other certified PEOs handle payroll, benefits and unemployment reporting on behalf of many small and mid-size employers. "The purpose of the Paymaster program is to allow PEOs to file a consolidated tax return, combining reports for co-employers instead of filing separate returns for each employer," Hart said.

Brad Barger, assistant director of the Ohio Department of Job and Family Services, testified the department supports the change because it would reduce administrative burden. "This is a common-sense reform that would allow professional employer organizations or PEOs to file unemployment wage and contribution reports with ODJFS on behalf of their clients in one filing rather than filing one-by-one for each client," Barger said, adding the rule change requested by PEOs cannot be implemented by rule alone and requires statutory change.

Committee members asked about effects on experience rates and employee benefits. Senator Morrill asked whether averaging multiple client rates under a common paymaster would make an employer's experience rate more or less favorable. Hart replied that the program combines experience into a single combined experience rate and that "this is not an employee tax. This is an employer tax." He added that employees' unemployment benefit amounts are determined by wages reported for that individual rather than the employer's tax rate.

Senators also asked for data and counts of PEOs operating in Ohio. Hart said he believed there are about 62 PEOs in Ohio but did not provide a precise breakdown between large and small PEOs. Several senators pressed whether consolidation would reduce data granularity; Hart said individual gross wages would still be reported for each employee each quarter even if submitted under a single account.

The committee concluded the first hearing on Senate Bill 263 after proponent testimony and questions; no vote was taken.