Regulating PEOs makes sense for Wisconsin’s small businesses

    Wisconsin’s small businesses and nonprofits deserve laws that will help them to get started, thrive and grow.

    We’re fortunate to have so many successful small firms – around 115,300 that employ about 54 percent of non-farm workers and represent 98 percent of all employers in our state, according to the most recent estimates of the U.S. Small Business Administration.

    As a former owner of a small business, I often ponder how our government can work for small firms, not against them. As we review new regulations, we need to consider their effect on our states’ employers. When President Ronald Reagan said, "The most terrifying words in the English language are: I’m from the government and I’m here to help," he articulated the sentiment of employers in America who think regulations are a hindrance, not a help. 

    Government can help the employers in our state by passing progressive legislation that will benefit both the employers and their workers. That’s why I’ve authored Assembly Bill 760. This bill will help small firms and their workers by providing sound regulation of a growing new industry – professional employer organizations, or PEOs. The bill has broad bipartisan support from legislators in nearly every part of the state, including Sen. Bob Wirch (D-Pleasant Prairie), who is authoring this legislation in the State Senate as Senate Bill 440.
    AB 760 will require PEOs serving business clients in Wisconsin to register each year with the Department of Regulation and Licensing (DORL) and meet certain requirements to operate in our state. It’s revenue neutral; the fees paid by PEOs will offset the administrative costs. The bill is supported by the PEOs already operating in our state and by the National Association of Professional Employer Organizations (NAPEO). 

    The PEO industry wants to be regulated – can you imagine that? What other industry goes to state legislatures and asks for regulation? They recognize the importance of their service offering being delivered in a manner that ensures professionalism and compliance.

    In fact, the NAPEO and its members want PEO registration or licensing bills in every state; 29 states currently have such laws. So why not Wisconsin, too?

    PEOs provide valuable services that I’ve experienced first-hand. My small business benefited from working with one for several years. I outsourced the time-consuming human resource operations, such as paying and filing the taxes of workers and managing their benefits, to the PEO so I could focus on running my business.

    Their professionals advised me on how to comply with local, state and federal employment regulations. And my workers had good health benefits that the PEO secured from major carriers.

    As good as PEOs can be for a small firm, it’s important to give all concerned – the PEOs, their clients and the workers, as well as the state of Wisconsin – the legal framework for PEOs operating in Wisconsin. We do want to make sure their important functions are delivered responsibly to workers and the state’s businesses while providing the state essential employment compliance. There have been only a handful of PEO problems since this young industry’s inception in the 1980s – none of those in Wisconsin – and we want to keep it this way.

    Compliance with the PEO registration bill is simple and straightforward, requiring annual registration, a minimum amount of working capital or security guarantee and annual audited statements. The bill also will give DORL the ability to effectively and efficiently administer the legislation. 

    This bill is a good example of sensible government regulation. This legislation makes sense for all concerned – Wisconsin companies, their workers and their PEOs.


    State Rep. Scott Newcomer (R-Hartland) represents Wisconsin’s 33rd District.

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