Employee Leasing Provision

An employee leasing business, also known as a professional employment organization (PEO), is any independently established business entity which engages in the business of leasing employees to a client. A PEO is in the business of taking over and leasing back to a business its regular employees as opposed to the private employment agencies which provide individuals on a temporary basis. An employee leasing business is liable for Kansas's unemployment tax on wages paid by the business to individuals performing services for clients.

The employee leasing business shall keep separate records and submit separate quarterly unemployment tax and wage reports for each client. The leasing entity will be assigned a separate employer account for each client.

Individual proprietors, partners or corporate officers who are shareholders or a member of the board of directors of the client cannot be leased back to the client from the employee leasing business. If the client is a corporation, such corporate officers will continue to be reported by the client as employees of the client.

The employee leasing provision provides the client shall be jointly and severally liable for any unpaid unemployment tax, interest and penalties due from the employee leasing business attributable to wages for services performed for the client by employees leased to the client.

This provision does not include private employment agencies, which provide temporary workers to clients on a temporary help basis provided the private employment agencies are liable as employers for the payment of contributions on wages paid to the temporary workers. However, if such agency also provides leased employees to a client, the employee-leasing segment of the business would be subject to the employee leasing provisions.