Florida De-regulates Employee Leasing Companies

Florida Employee Leasing May Be Deregulated

March 15, 2011 – Tallahassee, Florida
PCB BCAS 11-01

Update: April 2011. It appears that the Employee Leasing industry has been dropped from the list of industry and professions targeted for deregulation in Florida.

Two proposed committee bills have passed the Florida House Business and Consumer Affairs Subcommittee that will deregulate the Employee Leasing industry. The intention of the bill is to remove burdensome regulations that are viewed as an impediment to business creation and growth. Over 50 industries are affected by the proposed legislation. The bill is known as PCB BCAS 11-01 and its companion bill PCB BCAS 11-02. Update 3/23/2011 – The Florida House of Representatives has brought forth HB5005 – Deregulation of Professions and Occupations. This is the house bill that was recommended by the Business and Consumer Affairs subcommittee.
Florida House Regulatory Reform Press Release

Employee Leasing Regulation in Florida

In the late 1980s a series of scandals in the employee leasing industry happened. Several employee leasing companies in Florida were found to be not making tax deposits on behalf of their client companies or were not providing workers’ compensation insurance coverage. The 1980s was the birth of the employee leasing industry in Florida (now known as Professional Employer Organizations or PEOs). In response to those early problems with a few bad apples employee leasing companies banded together to work with the state to create a self-governing body to regulate the industry. In addition the state of Florida has worked closely with the employee leasing board to ensure that each PEO maintains financial solvency and each PEO must submit audited financials to the state on an annual basis. In addition new PEOs wishing to do business in Florida must submit information about its controlling person(s). PEOs must provide the state with quarterly financial statements that it is maintaining positive working capital and accounting net worth and has adequate reserves to pay, when due, all payroll taxes, workers’ compensation and health insurance premiums, and amounts due under any plan of self-insurance or partial self-insurance.

Why is de-regulation being considered for Employee Leasing companies?

In our opinion, the list of professions being de-regulated in PCB BCAS 11-01 includes many occupations that can reasonably be argued SHOULD be de-regulated… “hair braiders” and “television tube labelers” are rightly on the list. In addition, most business owners would probably agree that government regulation has often been used by various occupations as a way to restrict new entrants to the business type and prop up wages for those who perform the service. It serves to restrict competition and to raise prices. Fixing that is the intention of the bill…a sound objective.

Keep Some Oversight of Employee Leasing in Florida

The PEO industry in Florida has gone many years with very few problems with client companies (or the government) being financially impacted by the fraud or mismanagement of any employee leasing company. In fact Florida’s employee leasing model has been the blueprint for other states that have had problems. Employee Leasing companies are acting as a fiduciary for hundreds of thousands of employees and their client companies in the state of Florida. Payroll taxes and workers compensation premiums handled by Florida’s PEOs are in the billions of dollars on an annual basis. While a PEOs profit on these dollars is small, the amount of money they collect, deposit and remit is very large. Fraudulent actions by a PEO can have large financial consequences. In addition, the bad actions of a single PEO can create STRONG negative perceptions in the mind of he public about the entire PEO industry.the one bad apple concept. This has been the strength of the self-policing mechanism of the Florida Employee Leasing Board. The principals at StaffMarket have monitored the minutes of the boards meetings through the years and have never seen an instance of the board using its approval/denial power to restrict new entrants to the industry or to unfairly limit competition. For the long term best interest of employee leasing companies, their clients and Florida’s workers, we believe the state of Florida should maintain licensing for employee leasing companies.
Florida DBPR for Employee Leasing