North Dakota Professional Employer Organization Bond Cap Removed

professional employer organization

On March 24, 2017, House Bill 1237 was passed in both the North Dakota House and Senate with almost unanimous consent. The new legislation amends section 43-55-05 of the North Dakota Century Code, establishing professional employer organization licensing—specifically, the amount of the surety bond required of applicants prior to receiving or renewing a license.

What is a professional employer organization and how do I get a license?

Professional employer organizations—or employee leasing companies—employ workers from several companies and take on the responsibilities typically associated with a human resources department. A professional employer organization essentially operates as human resources for multiple companies by handling all personnel business, allowing the business owner to focus solely on their employees’ work.

The North Dakota Secretary of State has been responsible for licensing professional employer organizations since October 1, 2007. Prior to applying for a professional employer organization license, applicants must first register their business with the Secretary of State. Once the business has been registered in North Dakota, applicants must provide the following documents and information to be considered for a license, pursuant to North Dakota Century Code 43-55-03:

  • Name of organization
  • Designation of applicant whether domestic or foreign and jurisdiction of origin of organization
  • Addresses of principal place of business and all offices in the state
  • Taxpayer number or EIN
  • Date of end of applicant’s fiscal year
  • Jurisdictions in which licensee has operated in previous five years
  • Statement of ownership for anyone owning 25% or more of business
  • Surety bond
  • Copy of employer’s quarterly contribution and wage report to job service North Dakota for quarter ending immediately before date submitted to Secretary of State

Once the license has been issued, it is valid for one year and must be renewed annually within 60 days of its expiration date. More information on license renewals may be found in chapter 43-55 of the Century Code.

What does the legislation change?

House Bill 1237 amends the required bond amount for professional employer organizations in North Dakota. Previously, licensees were required to have a surety bond in the amount of $100,000 or five percent of wages reported on the employer’s quarterly contribution and wage report, whichever was greater. However, the new legislation requires licensees to obtain their bond in the lesser amount of $100,000 or five percent of wages reported. The other significant change to the law is the removal of a maximum required bond amount, which was previously set at $500,000.

What does the change mean for my surety bond premium?

In some instances, you may find that your annual premium is not affected by the new legislation. For example, if your bond amount does not change, you will most likely pay the same amount as in previous years. However, if your credit has changed during the previous year, your premium may increase or decrease despite the amount of the bond remaining the same.

Even if your bond amount changes—barring a change in your credit—you should expect to pay the same rate as in previous years. It is important to note that rate is not to be confused with actual premium. If your bond amount increases, your premium will also increase, even though you are still approved at the same rate of one percent of the total bond amount.

Professional employer organizations must be sure to renew their bond on time, as the state will cancel the license the day following the bond’s expiration if the licensee fails to do so. In the event that a license is canceled, the applicant must restart the licensing process—including payment of the $1,000 filing fee.

Whether you are a new applicant or currently licensed and need to renew your professional employer organization bond, give SuretyBonds.com a call today at 1 (800) 308-4358 to get your free, no obligation quote!

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About the Author

Jon Gottschalk
Jon Gottschalk is the Educational Outreach Director for Suretybonds.com and regularly blogs at the Surety Bond Insider to keep consumers informed on new legislation and updates in the commercial surety industry. He is also a licensed property & casualty insurance producer in Missouri.