Wednesday, August 29, 2012

The PEO Conundrum – How Companies Should Prepare

A new Michigan law is creating quite a conundrum for employers and companies that lease employees. The Michigan Legislature enacted the new “Professional Employer Organization Regulatory Act” this year, which requires any company that leases employees to become licensed. The new law affects a wide variety of companies that use leased employees (employees that it does not directly employ) in their workplaces. The new law requires all companies that lease employees to be license by September 1, 2012.

Just as I was preparing our clients for the new licensing, the Office of Regulatory Reinvention issued a recommendation to governor Snyder to de-regulate employee leasing companies, essentially telling the Governor that the new law should be repealed. There is currently a bill pending (HB 5686 of 2012) asking the Legislature to do just that.

This leaves employee leasing companies and their clients in a difficult situation – should they apply for a license or wait to see if the law is repealed? Until the Legislature officially repeals the new law, I suggest that the safest choice is to make sure that an employee leasing company is subject to the new law, and if it is, to promptly apply for a license. Leasing companies that are subject to the new law can be fined or even convicted of a crime for failing to become licensed – a result that could be detrimental to your business.

The attorneys at Dickinson Wright work together as a team to prepare our clients for rapid changes in the law like this one, remembering that it’s always best to be prepared!