§ 31A-40-202 — Professional employer agreement -- Specific responsibilities.

(1) Except as specifically provided in this chapter, a coemployment relationship between a client and a professional employer organization, and between each coemployer and a covered employee, is governed by a professional employer agreement.
(2) (2)(a) As used in this Subsection (2), unless a professional employer organization expressly agrees to assume liability for the payment in a professional employer agreement, the term "compensation to a covered employee" does not include an obligation between a client and a covered employee for a payment beyond or in addition to the covered employee's salary, draw, or regular rate of pay, such as:
(2)(a)(i) a bonus;
(2)(a)(ii) a commission;
(2)(a)(iii) severance pay;
(2)(a)(iv) deferred compensation;
(2)(a)(v) profit sharing; or
(2)(a)(vi) pay for vacation, sick, or other paid time off.
(2)(b) A professional employer agreement shall include the following:
(2)(b)(i) the allocation of a right or obligation consistent with Section 31A-40-201;
(2)(b)(ii) a requirement that the professional employer organization shall:

(2)(b)(ii)(A) pay compensation to a covered employee; and
(2)(b)(ii)(B) withhold, collect, report, and remit one or more of the following:
(2)(b)(ii)(B)(I) a payroll-related tax; and
(2)(b)(ii)(B)(II) an unemployment insurance contribution; and
(2)(b)(ii)(C) to the extent that the professional employer organization assumes responsibility in the professional employer agreement, make payments for an employee benefit of a covered employee;
(2)(b)(iii) that the professional employer organization has a right to hire, discipline, or terminate a covered employee to the extent necessary to fulfill the professional employer organization's obligations under the professional employer agreement and this chapter;
(2)(b)(iv) that the client has a right to hire, discipline, and terminate a covered employee; and
(2)(b)(v) the responsibility of the client or professional employer organization related to obtaining workers' compensation coverage for a covered employee in a manner consistent with Section 31A-40-209.
(3) A professional employer organization shall provide written notice to a covered employee of the general nature of the coemployment relationship between and among the professional employer organization, the client, and the covered employee.
(4) (4)(a) Except to the extent otherwise expressly provided by the professional employer agreement:
(4)(a)(i) a client is solely responsible for the quality, adequacy, or safety of a good or service produced or sold in the client's business;
(4)(a)(ii) a client is solely responsible for directing, supervising, training, and controlling the work of a covered employee with respect to:

(4)(a)(ii)(A) a business activity of the client;
(4)(a)(ii)(B) the discharge of a fiduciary responsibility of the client; or
(4)(a)(ii)(C) compliance with a licensure, registration, or certification requirement applicable to the client or to the covered employee;
(4)(a)(iii) a client is solely responsible for an act, error, or omission of a covered employee with regard to a circumstance described in Subsection (4)(a)(ii);
(4)(a)(iv) a client is not liable for an act, error, or omission of:

(4)(a)(iv)(A) a professional employer organization; or
(4)(a)(iv)(B) a covered employee, if the covered employee is acting under the express direction and control of the professional employer organization; and
(4)(a)(v) a professional employer organization is not liable for an act, error, or omission of:

(4)(a)(v)(A) a client; or
(4)(a)(v)(B) a covered employee, if the covered employee is acting under the express direction and control of the client.
(4)(b) This Subsection (4) may not be interpreted to limit a contractual liability or obligation specifically provided in a professional employer agreement.
(4)(c) (4)(c)(i) Unless the conditions of Subsection (4)(c)(ii) are met, 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 one or more of the following carried by the professional employer organization:

(4)(c)(i)(A) general liability insurance;
(4)(c)(i)(B) a fidelity bond;
(4)(c)(i)(C) a surety bond;
(4)(c)(i)(D) an employer liability that is not covered by workers' compensation; or
(4)(c)(i)(E) liquor liability insurance.
(4)(c)(ii) A covered employee is considered an employee of the professional employer organization for a purpose described in Subsection (4)(c)(i) if the covered employee is included by specific reference for that purpose in:

(4)(c)(ii)(A) the professional employer agreement; and
(4)(c)(ii)(B) a prearranged employment contract, insurance contract, or bond.

Legislative History

Enacted by Chapter 318, 2008 General Session