Nebraska Becomes the 35th State to Codify the $68 Billion PEO Industry

News provided by

National Association of Professional Employer Organizations (NAPEO)

Mar 11, 2010, 05:11 ET

ALEXANDRIA, Va., March 11 /PRNewswire-USNewswire/ -- Nebraska State Sen. Abbie Cornett (Bellevue) carried an important bill, LB 579 better known as the 2010 Professional Employer Organization Registration Act, through the Unicameral today to help Nebraska's small businesses operate more efficiently, reduce certain employer liabilities and provide professional human resources services to employees.

"Unlike 34 other states, professional employer organizations (PEOs) were without clear rules in Nebraska until now," said Cornett. "The new law provides a regulatory framework and sets minimum standards for PEOs providing a cost effective option for small business owners and their workforce who would not otherwise have access to benefits such as health insurance and retirement savings plans."

Through a shared employment relationship, a PEO provides economies scale on costs associated with the responsibilities of employment such as employee benefits, safety management, workers' compensation, payroll tax compliance, unemployment claims and human resources services. PEOs help small- and medium-sized businesses provide retirement benefits, attract and retain employees, relieve the administrative burdens of employment practices and compliance with federal and state labor regulations and provide access to technology they would not otherwise have access to.

Passage of the bill provides a layer of safeguards and oversight giving confidence to small business owners and their employers using a PEO arrangement. It requires PEOs to a register and file annual audited financial statements with the Department of Labor. According to estimates, there are more than 30 PEOs serving several hundred businesses across the state.

"Small businesses are the backbone of the Nebraska economy," said Mike Mapes, president of The Alliance Group, an Omaha-based PEO. "PEOs are one of the few truly innovative methods that small business owners can use to simultaneously protect their investment and improve their operational efficiency. Nebraska law now officially recognizes what business owners have known for over 25 years: PEOs are a very valuable resource for small business owners."

Mapes explains that workplace compliance has become increasingly complex and confusing to business owners who struggle to manage their time and resources to comply with new mandates. "The economies of scale provided by a PEO can help shield a small business from these ever-changing rules and regulations, freeing up the business owner's time and of the employees so they can focus their time on productive, profitable activities."

The National Association of Professional Employer Organizations (NAPEO) says the concept of regulating PEOs is not a new one. The provisions contained in this bill are based on model legislation. "Over the past 25 years, these standards and requirements have been tested and refined to strike the balance of the need for responsible regulation," said Milan Yager, president and CEO of the NAPEO. NAPEO is the trade organization representing the $68 billion industry, which has experienced double digit growth for the past five years.

About NAPEO

As the recognized Voice of the PEO Industry,® NAPEO represents nearly 400 professional employer organizations (PEOs). The PEO industry has matured to $68 billion with double digit growth annually since 2004. As NAPEO enters its 25th year, the potential market remains promising with high client retention rates, a projected increase in revenues for 2009, and the current untapped market now serving 300,000 business owners and 2 to 3 million workers. PEOs allow clients to "reduce costs and free up time to devote to revenue generating activities, improvements that can be instrumental to gaining competitive advantage," according to research by the Society of Human Resource Management Foundation. To learn more about how PEOs contribute to small businesses' success, visit the NAPEO Web site at www.napeo.org.

SOURCE National Association of Professional Employer Organizations (NAPEO)