Gov. Bill Ritter recently signed into law the 2008 Professional Employer Organizations Modernization Act, which promises greater security for small businesses that rely on professional employer organizations (PEOs) to provide outsourced HR management, employee benefits, payroll and workers’ compensation services.

Roughly 200 PEOs currently serve thousands of small businesses in Colorado. Until now, they have operated with minimal regulation.

The act, shepherded through the Legislature by state Rep. Christine Scanlan, requires PEOs to have a state license, file annual audited financial statements and maintain a minimum amount of working capital.

“This legislation creates a responsible regulatory framework for unemployment insurance reporting and shields small businesses against unnecessary compensation litigation,” said Milan P. Yager, executive vice president of the National Association of Professional Employer Organizations.

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