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New Law Affects Employee Leasing Organizations

JDSupra (01/16/2012) Wright, Dickinson

A new Michigan law dramatically affecting employee leasing took effect on Jan. 1. Employee leasing firms must be licensed by Michigan’s Department of Licensing and Regulatory Affairs by Sept. 1. Several exemptions to the licensing requirements are available: a provider of temporary help services does not need to obtain a license; certain independent contractor arrangements are exempt from the licensure requirements; and an entity whose principal business activity is not entering into professional employer agreements and does not hold itself out as an employee leasing firm does not need to obtain a license.

The following terms must be included in any employee leasing firm-client agreement executed after Sept. 1: the responsibility of the PEO and the client to pay wages, to withhold taxes, including unemployment taxes, and to make employee benefit payments for covered employees; the responsibility of the employee leasing firm and the client to hire, discipline, and terminate employees; and the responsibility of the employee leasing firm and the client to comply with Michigan’s Workers’ Disability Compensation Act.