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PEO Registration Bill Signed by Governor Napolitano
PEO Registration Bill Signed by the Governor
(Phoenix, AZ) Arizona has become the latest state to codify the rights of Professional Employer Organizations (PEO) by
passing Senate Bill 1472. The new statute, signed into law by Governor Napolitano, was sponsored by Senator Barbara Leff and
provides PEOs operating in Arizona with legal certainty and resolves the most common legal issues arising from a PEO
arrangement. PEOs provide off-site human resource administration for thousands of Arizona businesses.
The law also helps protect Arizona businesses that contract with PEOs for outsourcing of human resource administration. PEOS
will register with the Secretary of State and will have to meet operational requirements defined in the new law. The statute
establishes a minimum financial requirement of $100,000 for PEOs operating in the state consisting of net worth, a bond,
irrevocable letter of credit, or securities. PEOs currently operating in Arizona must meet the requirements of the act by
March 1, 2006. All other PEOs must meet the requirements of the statute prior to commencing operations.
The new law also amends Arizona law to provide PEOs clear legal certainty for payment of state employment and unemployment
tax liabilities. Earlier, Arizona law was amended related to PEO sponsorship of workers compensation insurance and the
provisions of exclusive remedy to both PEO and client.
With the enactment of the legislation, Arizona becomes the 25th state to give statutory recognition to PEOs. A number of
other states are expected to enact similar laws in the coming weeks.
Michael Green of Fennemore Craig, Don Hughes of Low and Childers ushered the bill through the legislative process. They were
assisted by PEO industry representative Joe Beers, Executive Vice President of Diversified Human Resources, Arizona’s largest
PEO. Mr. Beers is a member of the Government Affairs Committee of the National PEO Association and a Past President of the
Arizona Association. He can be reached at 480.941.5588.
Diversified Human Resources, Inc. (DHR) is an outsource provider of Human Resource Administration for small and medium
sized businesses. With offices in Phoenix and Tucson, DHR handles payroll, workers’ compensation and benefits for client
companies. For additional information contact Roy Regalado, Vice President of Marketing at (480) 941-5588, email
rregalado@dhr.net or visit the website at www.dhr.net
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