§ 43-55-06 — General requirements

1. Except as specifically provided in this chapter or in a professional employer
agreement, in each coemployment relationship:
a. The client is entitled to exercise all rights and is obligated to perform all duties
and responsibilities otherwise applicable to an employer in an employment
relationship.
b. The professional employer organization is entitled to exercise only those rights
and obligated to perform only those duties and responsibilities specifically
required by this chapter or set forth in the professional employer agreement. The
rights, duties, and obligations of the professional employer organization as
coemployer with respect to any covered employee are limited to those arising
under the professional employer agreement and this chapter during the term of
coemployment by the professional employer organization of the covered
employee.
c. The client retains the exclusive right to direct and control any covered employee
as is necessary to conduct the client's business, to discharge any of the client's
fiduciary responsibilities, or to comply with any licensure requirements applicable
to the client or to a covered employee.
2. Except as specifically provided in this chapter, a coemployment relationship between
the client and the professional employer organization, and between each coemployer
and each covered employee, must be governed by the professional employer
agreement. Each professional employer agreement must include:
a. The allocation of rights, duties, and obligations.
b. (1) A statement that provides that:
(a) The professional employer organization shall pay wages to any
covered employee and shall withhold, collect, report, and remit
payroll-related and unemployment taxes on wages paid to the covered
employee by the professional employer organization;
(b) The client shall accurately report all wages of a covered employee to
the professional employer organization; and
(c) The professional employer organization shall make payments for
employee benefits for covered employees to the extent the
professional employer organization has assumed responsibility in the
professional employer agreement.
(2) As used in this subdivision, the term "wages" means all remuneration for
services to the professional employer organization and the client, regardless
of source, including a commission or bonus and the cash value of any
remuneration in a medium other than cash. Any gratuity customarily
received by an individual in the course of the individual's service from any
source other than the client or the professional employer organization must
be treated as wages received from the individual's coemployers.
c. A statement providing that the professional employer organization has the right to
hire, discipline, and terminate a covered employee as may be necessary to fulfill
the professional employer organization's responsibilities under this chapter and
the professional employer agreement and that the client has the right to hire,
discipline, and terminate a covered employee.
d. A statement addressing the responsibility to obtain workers' compensation
coverage.
3. Under each professional employer agreement entered by a professional employer
organization, the professional employer organization shall provide written notice to

each covered employee affected by the agreement of the general nature of the
coemployment relationship.
4. Except to the extent otherwise expressly provided by a professional employer
agreement:
a. A client is solely responsible for the quality, adequacy, or safety of the goods or
services produced or sold in the client's business.
b. A client is solely responsible for directing, supervising, training, and controlling the
work of a covered employee with respect to the business activities of the client
and solely responsible for any act, error, or omission of a covered employee
relating to those activities.
c. A client is not liable for any act, error, or omission of a professional employer
organization or of any covered employee of the client and a professional
employer organization if the covered employee is acting under the express
direction and control of the professional employer organization.
d. A professional employer organization is not liable for any act, error, or omission of
a client or of any covered employee of the client if the covered employee is acting
under the express direction and control of the client.
e. This subsection does not limit any contractual liability or obligation specifically
provided in the written professional employer agreement.
f. A covered employee is not, solely as the result of being a covered employee of a
professional employer organization, an employee of the professional employer
organization for purposes of general liability insurance, fidelity bond, surety bond,
employer's liability not covered by workers' compensation, or liquor liability
insurance carried by the professional employer organization unless the covered
employee is included by specific reference in the professional employer
agreement and applicable prearranged employment contract, insurance contract,
or bond.
5. A professional employer organization is not engaged in the sale of insurance or in
acting as a third-party administrator by offering, marketing, selling, administering, or
providing professional employer services which include services and employee benefit
plans for a covered employee.
6. Nothing in this chapter or in a professional employer agreement may be construed to
affect the provisions of section 52-04-24 or 65-01-08.