Professional Employer Arrangements
Definition
A professional employer arrangement is an arrangement between a business, called the client, and a "Professional Employer Organization" or "PEO," whereby the client leases some or all of its workforce from the PEO. Typically, the leased workers were employees of the client prior to the arrangement. At the beginning of the arrangement, the client transfers its workers to the PEO and then leases them back from the PEO. In the past, professional employer arrangements were known by other terms such as "employee leasing" and "staff leasing."
Professional employer arrangements should not be confused with temporary help arrangements. Under a professional employer arrangement, a client leases workers from a PEO for the long term. In a temporary help arrangement, a temp agency provides workers to a business on a short-term basis, such as the duration of a special project or to meet a seasonal need for additional workers.
Section 4(j)(2.1) of the Pa UC Law specifies that the
client in a professional employer arrangement is considered to be the UC employer of leased workers, rather than the PEO. This provision does not include temporary help agency arrangements. Wages must be reported on the
client's UC tax account, and contributions on those wages must be paid at the
client's tax rate.
PEO Reporting Requirements
Section 315(a)(4) of the Law requires PEOs to file quarterly reports with the department. A PEO may include all its professional employer arrangements on one report. A report for a calendar quarter is due by the last day of the month following the end of the quarter. This provision applies to calendar quarters beginning on or after July 1, 2005.
If you have not registered your PEO in the Unemployment Compensation Management System (UCMS), you will need to access UCMS at
www.uctax.pa.gov. Once you have created a User ID & Password you will be able to log into your PEO account and maintain your client listing.
For information concerning PEO arrangements please contact Employer Tax Services at 1-866-403-6163 weekdays from 7:30 a.m. to 4:00 p.m. Eastern Time.