Employer Services Assurance Corporation

FACTS FOR STATE REGULATORSPEOs & STATE REGULATION

ABOUT ESAC

BENEFITS OF ESAC’S SERVICES TO STATE AGENCIES

• PEOs provide valuable services to small businesses - the backbone ofevery state’s economy. Because of this, the PEO industry has grown toserve over 150,000 businesses and 2.7 million worksite employees.

• The service arrangement between the PEO and its clients has presentedchallenges for regulators whose systems are designed for traditional singleemployer arrangements. The National Association of ProfessionalEmployment Organizations has helped states develop a structure forregistration and licensing of PEOs that accommodates the PEO co-employment service arrangement.

• Most states have limited resources with which to regulate PEOs, yetensuring financial responsibility of PEOs is just as important as it is forbanks and insurance companies.

• Few states operating alone have the capacity to effectively regulate PEOswith multi-state, multi-entity operations. Currently, ESAC is the onlyindependent source of comprehensive multi-state, multi-entity PEOcompliance information available to state regulators.

• ESAC is an independent, non-profit corporation established in 1995 to provide accreditation and financial assurance services for the PEO industry.

• ESAC is managed by an experienced board, including 11 attorneys, 2 CPAs and 7 former state and federal regulators, based on comprehensive ethical, financial and operational standards and time-tested compliance verification procedures.

• ESAC has provided accreditation & financial assurance services for over 21 years without a single accredited PEO default.

• ESAC currently accredits over 230 PEO operating entities serving over 55,000 clients and over 1.4 million employees.

• ESAC’s revenue is derived from annual fees paid by participating PEOs allowing ESAC to provide its support services free of charge to regulatory agencies.

• ESAC’s secure Electronic Multi-state Application & Compliance system (eMAC) automates PEO regulatory filings and compliance monitoring online.

• ESAC’s services in no way limit a state’s authority to regulate PEOs and are now used by 20 state agencies.

• State agencies retain full authority to regulate PEOs but gain more frequentupdates of key information, additional financial assurance, and an extralayer of independent compliance verification – all at no cost to the state.

• Existing state users confirm that ESAC’s compliance verification and eMACdata sharing services reduce staff data entry and compliance review time,as well as significantly reduce the time, errors, and money associated withtraditional paper-based application and compliance reporting by PEOswithout affecting the agency’s ability to enforce its statutes and regulations.

• ESAC provides financial assurance via surety bonds, not otherwise availableto PEO regulators. Financial assurance is provided by over $16 million insurety bonds consisting of underlying bonds for each accredited PEO, plusa $15M excess bond providing umbrella coverage. Bonds are held in trustby a national bank for the benefit of PEO clients, employees, insurers andtaxing authorities.

• An accredited PEO’s compliance is monitored on an ongoing multi-statebasis by ESAC’s CPA firm, law firm, surety underwriter, and staff anddirectors, which include experienced former state and federal regulators.ESAC provides an early warning system designed to identify developingPEO problems before they occur and immediately notifies participatinggovernment agencies of a PEO’s failure to meet regulatory requirements.

• ESAC customizes its services to meet each state’s unique requirements.

FOR MORE INFORMATION

Jay Morgan, General Counsel Employer Services Assurance Corporation 650 South Shackleford Road, Suite 327, Little Rock, AR 72211 501.219.2045 | jmorgan@esacmail.org http://www.accessesac.org/regulators

The following eight state departments of insurance have approved ESAC as an assurance organization and have benefited from using our services, most particularly our secure “Electronic Multi‐state Application & Compliance” (eMAC) system for automating PEO regulatory filings & compliance:

ARKANSAS

Bill Lacy, Deputy Commissioner, Arkansas Insurance Department bill.lacy@arkansas.gov 501-371-2801 Becky Harrington, Compliance Officer becky.harrington@arkansas.gov 501-371-2804

INDIANA

Annette Gunter, Counsel, Financial Services Division agunter@idoi.in.gov 317-232-2428 Meghann Warner mewarner@idoi.in.gov (317) 232-1994

KANSAS

Heather Droge, Director, P & C Division hdroge@ksinsurance.org (785) 296-7839 Regina Wilson, Policy Examiner RWilson@ksinsurance.org (785) 296-7836

LOUISIANA __________________________________________________________________________________________ Barry Ward, Deputy Commissioner bward@ldi.la.gov (225) 219-5941 Lorie Gasior, Director Licensing lgasior@ldi.la.gov (225) 219-7784

OKLAHOMA

Tyler Laughlin, Deputy Commissioner Tyler.Laughlin@oid.ok.gov (405) 521-6654

Melanie Paxton, Financial Specialist Melanie.paxton@oid.ok.gov (405) 521-6649

TENNESSEE

Mark Jaquish, Director Financial Affairs, TN Dept of Commerce & Insurance mark.jaquish@tn.gov (615) 741-1670 Michael Landers, Lead Licensing Analyst michael.landers@tn.gov (615) 741-7346

UTAH

Brett Barratt, Deputy Commissioner, Utah Insurance Department bbarratt@utah.gov 801-538-3822 Suzette Davies Green-Wright, Director - Market Conduct Division, Utah Insurance Department sgreenwright@utah.gov

801-538-9674 Eric Showgren, Manager Company Licensing and Administration, Utah Insurance Department eshowgren@utah.gov (801) 537-9174

WEST VIRGINIA

Andrew Pauley, General Counsel Andrew.R.Pauley@wv.gov (304) 558-6279 Ext 1402 Rebecca “Becky” Adams, Insurance Financial Specialist, Offices of the Insurance Commissioner (304) 558-6279 ext. 1141 rebecca.adams@wvinsurance.gov

The following five state labor departments have approved ESAC as an assurance organization and have benefited from using our services, most particularly our secure “Electronic Multi-‐‐state Application & Compliance” (eMAC) system for automating PEO regulatory filings & compliance:

COLORADO

Phil Spesshardt, Operations Branch Chief Phil.Spesshardt@state.co.us Lindsey Behringer, UI Employer Services – Liability Supervisor Lindsey.behringer@state.co.us (303) 318-9100 (x83061) Angela Metoyer, Employer Services Manager angela.metoyer@state.co.us

(303) 318-9331 Jeff Fitzgerald, Director, Unemployment Insurance Division jeff.fitzgerald@state.co.us 303-318-9008

CONNECTICUT

Heidi Lane, Principal Attorney, Office of Program Policy, Department of Labor heidi.lane@ct.gov 860-263-6765 Holly Carter Holly.carter@ct.gov 860-263-6549

NEBRASKA

Jan E. Baker, Labor Law Program Manager Jan.Baker@nebraska.gov (402) 471-3712 John H. Albin, Commissioner, Nebraska Dept of Labor John.Albin@nebraska.gov (402) 471-3405

NEW HAMPSHIRE

Edwin Sisson, Assistant Director Workers’ Compensation Division Edwin.Sisson@dol.nh.gov (603) 271-6172 Debbie Field Debbie.Field@dol.nh.gov (603) 271-2563 Rudolph Ogden, Attorney Rudolph.Ogden@dol.nh.gov (603) 271-8496

VERMONT

Dirk Anderson, General Counsel, Vermont Department of Labor dirk.anderson@state.vt.us 802-828-4391 Cameron Wood, Director of UI and Wages Cameron.Wood@vermont.gov 802-828-4242 Lisa Wiley, Employer Services Lisa.Wiley@state.vt.us 802-828-4251

One of the largest state licensing agencies in the country, the Texas Department of Licensing and Regulation (TDLR), has approved ESAC as an assurance organization and has benefited from using our services, most particularly our secure “Electronic Multi-‐‐state Application & Compliance” (eMAC) system for automating PEO regulatory filings & compliance.

TEXAS

Brian Francis, Executive Director, Texas Department of Licensing and Regulation bfrancis@tdlr.texas.gov 512-463-3170 Laura M. Hernandez, Licensing Manager laura.hernandez@tdlr.texas.gov (512) 463-6599 Della Lindquist, Assistant General Counsel Della@license.state.tx.us (512) 463-7356

The largest concentration of PEOs in the United States is found in the state of Florida and PEOs are licensed by the FL Department of Business and Professional Regulation (DBPR) and the FL Board of Employee Leasing Companies (BELC). DBPR and BELC recently thought enough of ESAC and its financial assurance and compliance verification programs to carve ESAC-accredited PEOs out of DBPR/BELC’s fairly comprehensive annual & quarterly reporting requirements. The following regulators in FL are knowledgeable about ESAC, eMAC and were instrumental in approving the reporting exception for ESAC-accredited PEOs: FLORIDA

Richard "Rick" Morrison Executive Director Richard.Morrison@myfloridalicense.com Office: (850) 717-1410 Cell: (850) 591-4193 Jerry Wilson DBPR’s Director-Division of Regulation Jerry.Wilson@myfloridalicense.com 1940 North Monroe Street Tallahassee, Florida 32399-0784 Phone: 850-717-1493 Cell: 850-443-8857

These remaining ESAC-approving state agencies have a bit less experience with ESAC and/or eMAC:

LOUISIANA (dual registration – Insurance Dept and Workforce Commission

John Ricky Masaracchia, Chief of Tax, Louisiana Workforce Commission

Debbie LeBoeuf, ORS Technical Specialist dleboeuf@lwc.la.gov (225) 342-2942

OHIO

Todd Gropper, Underwriting Supervisor, PEO Unit, Bureau of Workers’ Compensation Todd.G.1@bwc.state.oh.us 614-752-4178 Randy Vincent, Underwriting Consultant, PEO Unit Randall.V.1@bwc.state.oh.us 614-728-0946

MONTANA

Brett Wall, PEO Compliance Specialist, Montana Department of Labor and Industry brwall@mt.gov (406) 444-0776

RHODE ISLAND

David Sullivan, Tax Administrator, Dept of Revenue dsullivan@tax.ri.gov Jacques Moreau, Chief, Compliance & Collections, Division of Taxation Jacques.moreau@tax.ri.gov (401) 574-8884

WISCONSIN

Janell R. Fibikar, Examiner Wisconsin Department of Financial Services janell.fibikar@wisconsin.gov (608) 266-8891 Laura Jirsa Dille, Examiner Laura.JirsaDille@dfi.wisconsin.gov (608) 264-7865 David Duecker, Supervisor 608-264-7801 David.Duecker@wi.gov

Accredited PEO Entities Licensed in Oregon

(as of 4/17/2017) Total Number of Licensed PEOs: 183 Total Number of Licensed Accredited PEOs: 60 Percentage of Licensed Accredited PEOs to Total: 33%

Accord Human Resources, Inc. COAdvantage Resources 50, Inc.

Adams Keegan, Inc. CoAdantage Resources 51, Inc.

Adams Keegan-GA, LLC Extensis, Inc.

Administaff Companies, Inc. G&A Outsourcing, Inc.

ADP TotalSource Co XXI, Inc. Genesis HR Solutions, Inc.

ADP TotalSource Co XXII, Inc. Helm HR, LLC

ADP TotalSource CO XXIII, Inc. Insperity PEO Services, LP ADP TotalSource DE IV, Inc. Landrum Professional Employer Services, Inc.

ADP TotalSource FL XI, Inc. Lever 1, LLC ADP Total Source FL XIX, Inc. Nextep Business Solutions, Inc.

ADP TotalSource FL XVI, Inc. Nextep Business Solutions IV, Inc.

ADP Total Source FL SVII, Inc. Oasis DEG, Inc. ADP TotalSource Fl XVIII, Inc. Oasis Outsourcing Admin II, Inc.

ADP TotalSource FL XXIX, Inc. Paychex Business Solutions, LLC

ADP TotalSource I, Inc. Paychex PEO I, LLLC

ADP TotalSource II, Inc. Paychex PEO II, LLC

ADP TotalSource III, Inc. Paychex PEO III, LLC

ADP TotalSource, Inc. Paychex PEO IV, LLC

ADP TotalSource MI VI, LLC Paychex PEO V, LLC ADP TotalSource MI VII, LLC PBS of America, LLC

ADP TotalSource MI XXX, Inc. PBS of Central Florida, LLC

ADP TotalSource NH XXVII S2 HR Solutions 1D, LLC

AK Employer Services, LLC Sequoia One PEO, LLC Alcott HR Group, LLC Staff one of Oklahoma, LLC

AlphaStaff Systems V, Inc. Strategic Staffing Services, Inc.

Ambrose Employer Group, LLC Summit Services, Inc. Aureon HR I, Inc. Tandem Professional Employer Services, Inc.

Aureon HR II, Inc. TriNet HR Corporation

Avitus, Inc. TriNet HR V, Inc.

CoAdvantage Resources IV, Inc. Trinet HR XI, Inc.

Oregon Assurance Organization Proposal

I. Background: A growing number of state agencies responsible for the licensing and registration of

worker leasing companies (also known as “professional employer organizations” or “PEOs” in many

states) are approving the Employer Services Assurance Corporation (www.ESACorp.org) to provide

services, at no cost to the agency, to facilitate more efficient electronic application and reporting and

provide the responsible regulators with an early warning system based on multi-entity and multi-state

compliance monitoring and an additional level of financial assurance not otherwise available to the

state. ESAC is a non-profit organization founded in 1995 that is managed by an experienced board of

former regulators, attorneys and CPAs, providing accreditation and financial assurance for PEOs

serving over 55,000 clients and over 1.4 million employees.

II. Purpose of Proposed Addition to Oregon Administrative Rules: To adopt an Assurance

Organization, Electronic Filing and Compliance Rule to authorize the use of an independent and

qualified assurance organization (like ESAC) that has been approved by the Director of the Department

of Consumer and Business Services to assist in meeting the requirements of the Oregon Revised

Statutes (ORS) 656.850 et seq. and Oregon Administrative Rules (OAR) 436-050-0400 through 436-

050-0480, including (a) more efficient electronic filing of licensing documentation in conformance with

the Oregon Uniform Electronic Transactions Act (ORS 84.001 to 84.063), (b) additional PEO

compliance information, (c) certification and (d) financial assurance for the benefit and protection of

Oregon small business/client companies and employees served by PEOs qualified to use the services

of an approved assurance organization.

III. Proposed Rule: Assurance Organizations, Electronic Filing and Compliance (OAR 436-050-0490)

1. The purpose of this section is to allow for the approval and conduct of assurance organizations

under which qualified worker leasing companies may elect to use the services of an approved

assurance organization as an alternative means of satisfying requirements for licensure

contained in Oregon’s statutes (ORS 656.850 et seq.) and rules (OAR 436-050-0400 through

436-050-0480); and to provide for the acceptance of electronic application and compliance

filings in conformance with the Oregon Uniform Electronic Transactions Act (ORS 84.001 to

84.063).

2. A qualified worker leasing company may authorize an assurance organization approved by the

Director to act on its behalf in complying with the licensing and compliance reporting

requirements within Oregon’s statutes (ORS 656.850 et seq.) and rules (OAR 436-050-0400

through 436-050-0480). That delegation may include providing satisfactory assurance of

compliance in a manner acceptable to the Director consistent with or in lieu of the requirements

of worker leasing companies under Oregon’s statutes (ORS 656.850 et seq.) and rules (OAR

436-050-0400 through 436-050-0480), including electronic filing of information, payment of

licensing fees and certifying the qualifications of a worker leasing company for initial licensing

and renewal.

3. Use of such an approved assurance organization shall be optional and not mandatory, and

nothing herein shall limit or change the Director’s authority to license, suspend or revoke the

license, assess civil penalties, or to investigate or enforce any provision of the applicable

Oregon statutes or rules regarding worker leasing companies.

Statutory Authority: ORS 656.726; ORS 656.850; ORS 656.855; ORS 84.063.

Proposed by: Employer Services Assurance Corporation

Jay Morgan, General Counsel

www.AccessESAC.org / 501.219.2045