Connecticut PEO Legislation Requires Licensing

September 30, 2008 ( - Legislation signed into law by Connecticut Governor Jodi Rell includes a licensing program that provides employer status to the professional employer organizations (PEOs) delivering human resource management, employee benefits, payroll and workers' compensation to thousands of small business owners in Connecticut.

A National Association of Professional Employer Organizations (NAPEO) press release says Connecticut has always recognized PEOs, but the existing law did not require them to secure a license from the state, file audited financial statements every year, or maintain a minimum of working capital. Under the new law, PEOs must be licensed by the Department of Labor before March 1, 2009.

“For companies using or considering a PEO, PEOs today represent more resourcefulness than ever before,” said Speaker of the Connecticut House Jim Amann, in the press release. “Potential customers and their advisers should understand how the industry has changed and what new standards of criteria should be used when considering a PEO. PEOs register by providing required information to the Department of Labor, including reviewed financial statements accompanied by a letter from an independent CPA attesting that the PEO has satisfied minimum net worth requirements. The law also has certain bonding and reporting requirements verifying the PEO’s timely payment of all federal and state payroll taxes.”

NAPEO says the PEO industry has matured to a $63 billion industry serving an estimated 300,000 small to mid-sized businesses and two million to three million workers.

In March, the West Virginia Sensate passed similar legislation requiring PEO’s to be licensed by July 30, 2009 (See WV Senate Passes PEO Regulation Legislation ).