For Immediate Release: July 11, 2013

Goodwin Asks Legislators to Protect N.C. Businesses

Commissioner of Insurance opposes changes to professional employer organizations law

RALEIGH -- Insurance Commissioner Wayne Goodwin is urging state lawmakers to oppose changes to the law governing professional employer organizations, or PEOs. The provisions related to PEOs were added to Senate Bill 112, "Amend Environmental Laws" on July 10.

A PEO is a company that may be hired by a business to manage human resource functions of the business, such as health benefits and payroll. North Carolina has experienced instances in which a PEO mismanaged the money of its client businesses and employees, which led to the N.C. General Assembly first passing a PEO licensing law in 2004.

The current law requires that a PEO show proof to the North Carolina Department of Insurance that it is not in a hazardous financial condition and that it is sufficiently bonded to financially protect the businesses and employees it serves in the case of insolvency.

The proposed law changes would weaken or remove these important consumer protections for the North Carolina employees and businesses that use PEOs.

"When we license professional employer organizations, we need to know that they are in a strong financial position. The safeguards we have in place protect the financial well-being of business owners and employees in North Carolina," said Goodwin. "I ask that our lawmakers oppose the proposed changes to the PEO laws, so that our hard-working North Carolina businesses are not left vulnerable."

Additionally, the proposal raises concerns about the state's ability to audit PEOs, as it removes a requirement that all audits performed be funded by the PEO itself and not the state.