                                 CODE OF VIRGINIA

REQUIREMENTS FOR REGISTRATION AS PROFESSIONAL EMPLOYER ORGANIZATION; ANNUAL
ASSESSMENT (§ 65.2-803.1)

A. Any business entity desiring to engage in the business of providing
professional employer services shall register with the Commission before any
such services may be provided. The Commission may require any business entity
having a controlling ownership interest in or sharing common ownership with a
professional employer organization providing professional employer services in
the Commonwealth to guarantee, in a form prescribed by the Commission,
performance of all obligations pursuant to this title, including the payment of
workers&#8217; compensation benefits.

B. Each registered professional employer organization shall notify the
Commission and the Bureau of Insurance of the State Corporation Commission
within 30 calendar days of all new or terminated, in whole or in part, client
companies. Upon registration and annually thereafter, each registered
professional employer organization shall notify the Commission and the Bureau of
Insurance of the State Corporation Commission of all client companies. Such
notice shall be confidential and shall not be disclosed to the public, provided
that the Commission may respond to inquiries as to whether a client company has
workers&#8217; compensation coverage; however, nothing herein shall be
interpreted to prohibit or limit the production of documents containing such
information from the professional employer organization pursuant to an otherwise
lawful subpoena issued by a court of competent jurisdiction. Each such
notification shall indicate, by client company, if the professional employer
organization will provide voluntary market workers&#8217; compensation insurance
and whether the client company will obtain separate workers&#8217; compensation
insurance. The Commission may require such other information as it deems
necessary for the administration of this section.

C. All agreements for professional employer services shall be in writing and
shall provide a description of the respective rights and obligations of the
professional employer organization and the client company. The professional
employer organization shall provide a written summary of such rights and
obligations to each coemployee, including information concerning filing for
workers&#8217; compensation and unemployment benefits. No agreement for
professional employer services shall alter or affect the terms and conditions of
any collective bargaining agreement between the client company and its employees
without the consent of the parties to such collective bargaining agreement.

D. A professional employer organization that is registered with the Commission
and operating in compliance with the requirements of this section shall be
deemed to be an employer of its coemployees and may assume responsibilities as
an employer of its coemployees for the term of its agreement with a client
company. A professional employer organization may secure and provide all
required voluntary market workers&#8217; compensation insurance for its
coemployees under a master workers&#8217; compensation insurance policy in the
name of the professional employer organization.

E. A professional employer organization shall notify in writing the client
company and coemployees of its intent to terminate any agreement for
professional employer services with a client company at the time of or prior to
termination. Such notice shall advise the client company of its obligation to
secure workers&#8217; compensation coverage. The professional employer
organization shall provide a copy of such notice to the Commission and the
insurer at the time notice is given to the client company. Workers&#8217;
compensation insurance coverage shall continue until termination or for fifteen
calendar days after receipt of notice of termination by both the Commission and
the client company, whichever is later. This section shall not alter the notice
obligations of an insurer seeking to cancel workers&#8217; compensation coverage
pursuant to subsection B of &#xA7; 65.2-804. If a professional employer
organization has received notice that its workers&#8217; compensation insurance
policy will be cancelled or nonrenewed, the professional employer organization
shall notify the client companies within seven calendar days after receipt of
the notice. Failure of the professional employer organization to provide such
notice to the client companies subrogates the Commission, upon payment of a
claim from the Uninsured Employer&#8217;s Fund to any coemployee of a client
company that did not receive notice, to any right to recover damages which the
injured coemployee or his personal representative may have against the
professional employer organization.

F. This section shall not exempt a client company from any other license
requirements imposed under federal, state, or local law, and a coemployee shall
be recognized as an employee of the client company for all purposes. For
purposes of licensing requirements, a professional employer organization shall
not be deemed to be engaged in the occupation, trade or profession of the client
company solely through the provision of professional employer services to that
client company.

G. Where a professional employer organization or a staffing service has obtained
workers&#8217; compensation insurance to secure its obligations under this title
with respect to compensation on account of injury or death by accident, the
rights and remedies available to the employee or coemployee under this title
shall be exclusive as to both the client company and the professional employer
organization or staffing service in accordance with this title.

H. A professional employer organization that fails to comply with the provisions
of this title or with the regulations of the Commission shall be subject to the
requirements of Chapter 9 (&#xA7; 65.2-900 et seq.) of this title. The
Commission is authorized to revoke or suspend any registration hereunder if the
professional employer organization fails to comply with the provisions of this
title or with the regulations of the Commission. If a registration is revoked as
herein provided, the Commission may allow the professional employer organization
to reregister upon application therefor if, when and after the conditions upon
which revocation was based have been corrected and the professional employer
organization has complied with all provisions of this title and applicable
regulations. Whenever a registration is revoked or suspended the Commission may
request the Office of the Attorney General to petition the circuit court of the
jurisdiction in which the professional employer organization is located for an
injunction to cause such professional employer organization to cease providing
professional employer services. Suspension of a registration shall in all cases
be for an indefinite time and the suspension may be lifted and rights under the
registration fully or partially restored at such time as the Commission
determines that the rights of the registrant appear to so require and the
interests of the public will not be jeopardized by resumption of operation.

I. Notwithstanding any provision of this title to the contrary, each registered
professional employer organization shall be assessed annually by the Commission,
in addition to any other assessments provided in this title, an assessment in an
amount not to exceed the sums necessary for the registration and supervision of
all professional employer organizations. The assessment shall be apportioned and
assessed and paid in proportion to the aggregate of the annual payroll of all
coemployees shared by or assigned or allocated to the professional employer
organization.

J. The Bureau of Insurance of the State Corporation Commission may request and
shall receive information filed with the Commission by a professional employer
organization. Such information shall be confidential and shall be used solely
for informational purposes by the Bureau of Insurance and its staff.

K. No person shall sell, solicit, or negotiate, as those terms are defined in
&#xA7; 38.2-1800, contracts of insurance for or on behalf of a professional
employer organization unless such person is licensed for that class of insurance
as an insurance agent, as defined in &#xA7; 38.2-1800.

L. The Commission may promulgate regulations as it deems necessary for the
administration of this section.

HISTORY: 2000, cc. 624, 718; 2001, c. 706; 2002, c. 469; 2005, c. 158.