Professional Employer Organizations (PEO)

Exception 1:

• An arrangement through which a person who does not have its principal business activity as entering a professional employer arrangement; AND 

• Does not hold itself out as a professional employer organization; AND

• Shares an employee with a commonly owned company within the meaning of section 414(b) and (c) of the Internal Revenue Code of 1986

Exception 2:

• An independent contractor arrangement through which a person assumes responsibility for a product produced or a service performed by the person or the person’s agents and retains and exercises primary direction and control over the work performed by an individual whose services are supplied under the arrangement.

Exception 3:

• The provision of temporary help services, which consist of:
  • A person recruiting and hiring its own employee
  • Finding another organization that needs the services of those employees
  • Assigning those employees to perform work at or services for the other organization to support or supplement the other organization’s workforce, to provide assistance in special work situations, such as an employee absence, skill shortage, or seasonal workload, or to perform a special assignment or project
  • Customarily attempting to reassign the employees to another organization when the employers finish each assignment

A PEO must submit a surety bond or irrevocable letter of credit held by the Secretary of State with a minimum value of the lesser amount of $100,000 or 5% of the total wages reported on the employer's quarterly contribution and wage report filed with Job Service North Dakota for the quarter immediately preceding the submission of the application to the Secretary of State. 

If you have not filed an employer's quarterly contribution and wage report with Job Service North Dakota, you will need to submit a surety bond or irrevocable letter of credit in the amount of $100,000. 

A PEO license will not be issued without a surety bond or irrevocable letter of credit in the required amount. If the surety bond lapses or the bonding company cancels the surety bond, the Secretary of State will revoke the license on the day following the lapse. The license can only be reinstated by submitting all the requirements for a new license, including the $1,000 filing fee.

A professional employer organization shall provide the Secretary of State notice of cancellation of the surety bond or irrevocable letter of credit at least 45 days before the cancellation or nonrenewal of the surety bond or irrevocable letter of credit.

A copy of the quarterly contribution and wage report filed with Job Service North Dakota or a letter from Job Service North Dakota stating that the applicant is not liable for unemployment insurance must accompany the application.

If you are unable to supply a copy of a contribution and wage report because you do not have an account with Job Service North Dakota and do not currently have employees in the state, contact Job Service North Dakota at (701) 328-3224 and request that it provide a statement to the Secretary of State indicating that no liability is owed to Job Service North Dakota.