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Committee clarifies separation reporting: bill shifts reporting liability from PEOs to client companies
Summary
Senate Bill 3773, approved by the Senate Labor Committee, would make client companies — not Professional Employer Organizations (PEOs) — responsible for reporting employee separations to the Department of Labor, responding to industry concerns about immediate reporting timelines.
The Senate Labor Committee voted Dec. 5 to advance S3773, a bill that would place the legal responsibility for reporting employee separations to the Department of Labor and Workforce Development on the client company rather than on Professional Employer Organizations (PEOs).
Industry representatives told the committee the current statute and proposed department rules creating an "immediate and simultaneous" reporting obligation are operationally difficult for PEOs because client companies commonly notify PEOs only at payroll or at periodic reporting intervals. "The necessary information regarding the employee's separation resides with the client company and may not or cannot be transferred immediately or simultaneously to the PEO," said Alex Milligan of the National Association of Professional Employer Organizations.
PEO executives Jim Bell III and Tim Graham described practical limits: client payroll cycles and delayed internal reporting frequently mean PEOs do not have the information within the short window required by current regulation. They asked the committee to clarify that any liability for failure to report should reside with the client company.
Committee members discussed the policy's intent and the need for clear statutory language. After testimony from industry and a period of questions, the committee moved and carried the bill.
The measure now proceeds to the Senate floor for further consideration.
