Okla. Stat. tit. 40, § 40-600.7

employee, and client – Notice – Workers’ compensation – Benefit

plans – Liability – Sales tax.

A. Contractual relationship. Except as specifically provided

in the Oklahoma Professional Employer Organization Recognition and

Registration Act, the coemployment relationship between the client

and the PEO, and between each coemployer and each covered employee,

shall be governed by the professional employer agreement. Nothing

contained in any professional employer agreement or the Oklahoma

Professional Employer Organization Recognition and Registration Act

shall be deemed to:

1. Diminish, abolish or remove rights of covered employees as

to clients or obligations of such client as to a covered employee,

existing prior to the effective date of a professional employer

agreement;

2. Terminate an employment relationship existing prior to the

effective date of a professional employer agreement; or

3. Create any new or additional enforcement right of a covered

employee against a PEO not specifically allocated to such PEO in the

professional employer agreement or the Oklahoma Professional

Employer Organization Recognition and Registration Act.

B. Allocation of rights, duties and obligations. Except as

specifically provided in the Oklahoma Professional Employer

Organization Recognition and Registration Act or in the professional

employer agreement, in each coemployment relationship:

1. The client shall be entitled to exercise all rights, and

shall be obligated to perform all duties and responsibilities,

otherwise applicable to an employer in an employment relationship;

and

2. The PEO shall be entitled to exercise only those rights, and

obligated to perform only those duties and responsibilities,

specifically required by the Oklahoma Professional Employer

Organization Recognition and Registration Act or set forth in the

professional employer agreement. The rights, duties, and

obligations of the PEO as coemployer with respect to any covered

employee shall be limited to those arising pursuant to the

professional employer agreement and the Oklahoma Professional

Employer Organization Recognition and Registration Act during the

term of coemployment by the PEO of such covered employee.

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C. Professional employer agreement requirements. Each

professional employer agreement shall include, at a minimum, the

following:

1. The PEO shall reserve a right of direction and control over

the covered employees; provided, that the client may retain the

right to exercise such direction and control over covered employees

as is necessary to conduct the client’s business, to discharge any

fiduciary responsibility which it may have, or to comply with any

applicable licensure requirements;

2. The PEO shall have responsibility to pay wages and salaries

to covered employees; to withhold, collect, report, and remit

payroll-related and unemployment taxes; and, to the extent the PEO

has assumed responsibility in the professional employer agreement,

to make payments for employee benefits for covered employees;

3. Both the PEO and the client shall retain authority to hire,

terminate, and discipline the covered employees; and

4. The responsibility to obtain workers’ compensation coverage

for covered employees, from a carrier licensed to do business in

this state and otherwise in compliance with all applicable

requirements, shall be specifically allocated to either the client

or the PEO. If such responsibility is allocated to the PEO under

any such agreement, such agreement shall require that the PEO

maintain and provide to the client, at the termination of the

agreement if requested by the client, records regarding the premium

and loss experience related to workers’ compensation insurance

provided to covered employees pursuant to such agreement.

D. Notice to covered employees. With respect to each

professional employer agreement entered into by a PEO, such PEO
shall require that the PEO

maintain and provide to the client, at the termination of the

agreement if requested by the client, records regarding the premium

and loss experience related to workers’ compensation insurance

provided to covered employees pursuant to such agreement.

D. Notice to covered employees. With respect to each

professional employer agreement entered into by a PEO, such PEO

shall provide written notice to each covered employee affected by

such agreement of the general nature of the coemployment

relationship between and among the PEO, the client, and such covered

employee.

E. Workers’ compensation. Both client and the PEO shall be

considered the employer for the purpose of coverage under the

Workers’ Compensation Act and both the PEO and its client shall be

entitled to protection of the exclusive remedy provision of the

Workers’ Compensation Act irrespective of which coemployer obtains

such workers’ compensation coverage.

F. Benefit plans.

1. A client and a PEO shall each be deemed an employer for

purposes of sponsoring retirement and welfare benefit plans for its

covered employees.

2. A welfare benefit plan offered to the covered employees of a

single PEO shall not be considered a multiple employer welfare

arrangement, or MEWA, as provided for in Section 633 of Title 36 of

the Oklahoma Statutes, and shall be exempt from the licensing

Oklahoma Statutes - Title 40. Labor Page 330

requirements contained in Section 634 of Title 36 of the Oklahoma

Statutes.

3. For purposes of the Small Employer Health Reform Act, a PEO

shall be considered the employer of all of its covered employees and

all covered employees of one or more clients participating in a

health benefit plan sponsored by a single PEO shall be considered

employees of the PEO.

4. If a PEO offers to its covered employees any health benefit

plan which is not fully insured by an authorized insurer, the plan

shall:

a. utilize a third-party administrator licensed to do

business in this state,

b. hold all plan assets, including participant

contributions, in a trust account, and

c. provide sound reserves for such plan as determined

using generally accepted actuarial standards.

G. Limitations on liability. Except to the extent otherwise

provided in a professional employer agreement:

1. A PEO shall not be liable for the acts, errors, or omissions

of a client, or of any covered employee when such covered employee

is acting under the direction and control of a client;

2. A client shall not be liable for the acts, errors, or

omissions of a PEO, or of any covered employee of the client and a

PEO when such covered employee is acting under the direction and

control of the PEO;

3. Nothing in this subsection shall serve to limit any

contractual liability or obligation specifically provided in a

professional employer agreement, nor shall this subsection in any

way limit the liabilities and obligations of any PEO or client as

defined elsewhere in the Oklahoma Professional Employer Organization

Recognition and Registration Act; and

4. A covered employee is not, solely as the result of being a

covered employee of a PEO, an employee of the PEO for purposes of

general liability, insurance, fidelity bonds, surety bonds,

employer’s liability which is not covered by workers’ compensation,

or liquor liability insurance carried by the PEO unless the covered

employees are included by specific reference in the professional

employer agreement and applicable prearranged employment contract,

insurance contract, or bond.

H. Services not insurance. The sale of professional employer

services provided by PEOs registered under the Oklahoma Professional

Employer Organization Recognition and Registration Act shall not

constitute the sale of insurance for purposes of Oklahoma Insurance

Law.

I. Sales taxes. Covered employees whose services are subject

to sales tax shall be deemed the employees of the client for
nd.

H. Services not insurance. The sale of professional employer

services provided by PEOs registered under the Oklahoma Professional

Employer Organization Recognition and Registration Act shall not

constitute the sale of insurance for purposes of Oklahoma Insurance

Law.

I. Sales taxes. Covered employees whose services are subject

to sales tax shall be deemed the employees of the client for

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purposes of collecting and levying sales tax on the services

performed by the covered employee.