Professional Employer Organizations PEO have helped thousands of small and mid-sized businesses obtain better employee benefits for their employees and access competitively priced workers compensation insurance. Like many companies, construction contractors have discovered that as their business grows, the administrative aspects require more and more time.
The office of General Counsel issued the following informal opinion on October 24,representing the position of the New York State Insurance Department. The client desires to provide health benefits to the individuals that it "leases".
The inquirer wants to know whether the provision of such a benefit to individuals who are "leased" to New York employers would violate the New York Insurance Law. It is assumed that the following extract from Alcott Staff Leasing v.
Div 2d 54 atN. The client transfer all or most of its employees to the leasing firm and the leasing firm hires these workers.
These same employees are then leased back to the client.
Employee leasing firms offer small businesses a way to cut benefit costs and relieve themselves of many administrative burdens. A policy issued to an employer which employer shall be deemed the policyholder, insuring with or without evidence of insurability satisfactory to the insurer, employees of such employer, and insuring, except as hereinafter provided, all of such employees or all of any class or classes thereof determined by conditions pertaining to the employment or a combination of such conditions and conditions pertaining to the family status of the employee, for insurance coverage on each person insured based upon some plan which will preclude individual selection.
If all or part of the premium is to be derived from funds contributed by the insured employees, then such policy must insure not less than fifty percent of such eligible employees or, if less, fifty or more of such employees. No insurer, subsidiary of an insurer, or controlled person of a holding company may provide stop loss, catastrophic or reinsurance coverage to small groups which, if they purchased insurance, would be subject to this section.
Accordingly, the number of employees "leased" to a particular employer would not be relevant. Were the client to self-fund health benefits for its employees, it would usually be considered to be doing an insurance business and have to be licensed.
Based upon the information you submitted, the benefits provided by the client would constitute an "employee benefit plan", as that term is defined in ERISA, 29 U.
Generally, ERISA is considered to "supersede any and all State laws insofar as they may now relate to any employee benefit plan", 29 U. Congress has established, however, special rules for MEWAs. A MEWA is defined as: Notwithstanding any other provision of this section-- i in the case of an employee welfare benefit plan which is a multiple employer welfare arrangement and is fully insured or which is a multiple employer welfare arrangement subject to an exemption under subparagraph Bany law of any State which regulates insurance may apply to such arrangement to the extent that such law provides-- I standards, requiring the maintenance of specified levels of reserves and specified levels of contributions, which any such plan, or any trust established under such a plan, must meet in order to be considered under such law able to pay benefits in full when due, and II provisions to enforce such standards, and ii in the case of any other employee welfare benefit plan which is a multiple employer welfare arrangement, in addition to this title, any law of any State which regulates insurance may apply to the extent not inconsistent with the preceding sections of this title.
The Secretary may, under regulations which may be prescribed by the Secretary, exempt from subparagraph A iiindividually or by class, multiple employer welfare arrangements which are not fully insured. Any such exemption may be granted with respect to any arrangement or class of arrangements only if such arrangement or each arrangement which is a member of such class meets the requirements of section 3 1 and section 4 necessary to be considered an employee welfare benefit plan to which this title applies.
For purposes of this paragraph, a multiple employer welfare arrangement shall be considered fully insured only if the terms of the arrangement provide for benefits the amount of all of which the Secretary determines are guaranteed under a contract, or policy of insurance, issued by an insurance company, insurance service, or insurance organization, qualified to conduct business in a State.
Department of Financial Services.Employee leasing can offer many employers a variety of benefits, including a reduction in net expenses. However, it is not a strategy without some risk. Employers should carefully choose a leasing company with a favorable track record that offers the services it desires.
Save on employee benefits and taxes – When an employee leasing company handles your employees, you are only required to pay a fixed monthly salary for every staff member. You can add some performance incentives to motivate the staff, but it is the duty of the leasing company to provide the employees with health insurance, paid or sick leave.
|How Employee Leasing Works||One way that companies take the load off employee recruitment and management is to hire leased employees. Taking additional staff on board, minus the extra payroll and administrative load, can prove beneficial.|
|Restaurants PEO & Employee Leasing Solutions||There are advantages to use of leased workers, such as:|
Employee leasing or contract staffing has been around since the mids. payroll and benefits may be mishandled or the company could go under.
This would leave the client to face the leasing firm’s obligations, including payroll taxes owed. You should also look into the insurance they can provide with major considerations to possible. There are many reasons to use a broker to help you navigate through all the complicated aspects of the employee leasing (PEO) industry.
Many of those reasons are the very same reasons you use an agent to purchase insurance. Hiring an employee is a huge commitment for any company. Whether an employer is looking to fill a part-time or full-time position, there are quite a few time and monetary investments to make.
The PEO takes responsibility for timely and accurate payroll delivery and the provision of such employee benefits as health insurance, retirement programs, even stand-alone dental and vision plans.