Professional employer act bond cost
The New York Department of Labor mandates all professional employer organizations within the state to execute a surety bond. The requirement for this bond is $75,000. These bonds remain valid for 1 year from the date of issuance before they must be renewed.
Before you can receive a premium, you must undergo an underwriting process. This involves a review of your credit report and financial history. Not sure if you qualify? Surety Bonds employs a bad credit bonding program to help customers get bonded!
Why this bond
This bond keeps the principal (professional employer organization) liable for breaches upon the New York Professional Employer Act of 2003. PEO’s are expected to fully comply with the rules and regulations of the law established by this act. General requirements and provisions of this act include:
- Written agreement between client and and employer organization stating responsibilities
- Employer organization is responsible for withholding payroll taxes and employee benefits of worksite employers
- Employer organization is considered employer for sponsoring welfare benefit plans for its workforce employees
- Employer organization is responsible for reporting and paying all contributions to the Unemployment Compensation Fund
- And more
For a comprehensive list of the provisions and penalties for professional employer organizations, read through the New York Professional Employer Act in the “Additional information” section.
In the case of a valid claim, the surety is liable for all damages up to the amount of the bond (in this case, $75,000). The principal is still expected to compensate the surety the equivalent amount of money, required by the indemnification agreement.
Professional employer act bond details
Professional employer organizations are required to post surety bonds by the New York Department of Labor. The bond amount is $75,000. These bonds are valid for 1 year from the date of issuance. If the surety wishes to terminate the bond, it must provide the Department of Labor with a 30-day notice of cancellation. The surety remains liable for all actionable claims filed against the bond during this time.
Become a professional employer organization
Professional employer organizations must register with the Department of Labor within 180 days after the end of its fiscal year. The following must be included in the registration application:
- Registration fee ($1,000)
- Name and address(es) of PEO
- PEO taxpayer or employee identification number
- List of all entities with 5% or greater ownership interest (private) or 50% ownership interest (public)
After 1 year, professional employer organizations have to renew their registration with the department, which costs $500.
A copy of the registration/renewal form for professional employer organizations is provided in the “Additional information” section.
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