ORS 657.426: Professional employer organizations; payroll reporting; charging of benefits; excess wages; election.

(1)(a) Notwithstanding any other provision of this chapter, during the term of a PEO relationship, the professional employer organization shall elect to treat covered employees as either employees of: (A) The professional employer organization; or (B) The client employer. (b) Notwithstanding any other provision of law, if a professional employer organization elects to treat a covered employee as its own employee under paragraph (a) of this subsection, such treatment shall be limited to the payroll tax reporting provisions of this chapter. (c)(A) Benefits based on the wages of the covered employees reported in accordance with paragraph (a)(A) of this subsection shall be charged, in accordance with ORS 657.471, to the professional employer organization and not to the client employer. (B) Benefits based on the wages of the covered employees reported in accordance with paragraph (a)(B) of this subsection shall be charged, in accordance with ORS 657.471, to each respective client employer and not to the professional employer organization. (2) For purposes of determining wages in excess of the taxable wage base under ORS 657.095, any remuneration covered by this chapter that is paid by a client employer or a professional employer organization to an individual during a calendar year shall be included in payroll for both the client employer and the professional employer organization. (3)(a) A professional employer organization shall notify the Director of the Employment Department in writing of its election of a reporting method under subsection (1)(a) of this section. (b)(A) A professional employer organization electing the reporting method under subsection (1)(a)(B) of this section shall produce all documentation and information requested by the director within 60 days after submitting the written notice. (B) If the professional employer organization has not complied with a request under subparagraph (A) of this paragraph on or before the end of the 60-day period, the professional employer organization shall use the reporting method described in subsection (1)(a)(A) of this section. (4)(a) After an initial election of treatment under subsection (1)(a) of this section, a professional employer organization may change its election by written notice to the director. (b) Such subsequent change of election: (A) Shall become effective in the calendar year following the year in which the written notice is received by the director; and (B) May not be changed again for two calendar years following the effective date of the change. [2025 c.280 §3] Sec. 2. Sections 3 [657.426] and 4 of this 2025 Act are added to and made a part of ORS chapter 657. [2025 c.280 §2] Sec. 4. A professional employer organization’s election of its treatment of covered employees under section 3 (1) of this 2025 Act [657.426 (1)] made during the first 120 days following the effective date of this 2025 Act [September 26, 2025]: (1) Becomes effective as of the first day of the calendar quarter in which the election is made. (2) Does not count toward the limit on subsequent changes of election under section 3 (4) of this 2025 Act. [2025 c.280 §4] Sec. 5. Section 4 of this 2025 Act is repealed on January 2, 2027. [2025 c.280 §5]