Companies that provide professional employment services, previously known as staff leasing, must be licensed as a Professional Employment Organization (PEO) with the Texas Department of Licensing and Regulation (TDLR). To get and maintain a license, professional employment organizations with negative working capital are required to obtain a Professional Employer Organization Bond.
Jet Insurance Company provides the Professional Employment Organization Bond to PEO’s as a financial guarantee to the Texas Department of Licensing and Regulation that the PEO and its owner will follow the regulations of their license, and fulfill all employer and co-employment contractual obligations. If violations such as negligence, a breach of contract, or fraud are committed, the surety bond may be used to cover the financial losses incurred by any damaged party.
The Texas Department of Licensing and Regulation determines the Professional Employer Organization Bond limit by adding the organization’s negative working capital (i.e. current liabilities that exceed their current assets) with their positive working capital. Your positive working capital is based on the number of your assigned employees. Take a look at the list below to determine the correct amount for your positive working capital.
Once added together, the total amount is required to be your PEO Bond limit.
At Jet, the cost of the Professional Employer Bond is a small fraction of the custom limit and is based on a soft credit check of the PEO owner. For example, applicants that are seeking a $50,000 bond amount can pay as little as $500 for a one-year term. For additional examples of bond amounts and approved tier rates, take a look at the Jet price chart below.
Jet is a direct surety company which means our underwriters will work firsthand with you to ensure that you get an affordable rate and fast service. You won’t have to deal with middlemen brokers and agents here!
The Texas Department of Licensing and Regulation defines “professional employer organizations” as the new term for a staff leasing company. PEO’s are businesses that provide co-employment services to client divisions or work units in which a majority or all of their employees are providing services to a client company, but are still covered by the PEO regarding pay and employee benefits.
If you are a professional employer organization with negative working capital (your current liabilities exceed your current company assets), the Professional Employer Organization Bond is required by the TDLR to be approved for and to maintain a PEO license.
Companies that provide temporary help, as well as independent contractors are not considered PEO’s and do not require a license or a form of financial security such as a surety bond with the Texas Department of Licensing and Regulation.
Jet’s application for the Professional Employer Organization Bond can be completed online in just a few minutes! All we need is some general information which includes your contact details, an indication of the required bond limit, and your personal social security number for a soft credit check (it doesn’t affect your credit score). Once submitted, a Jet underwriter will review your application to get you an approved rate. As soon as this step is finalized, you will receive price options via email that are ready for immediate purchase. Simply fulfill the standard payment due and receive a copy of your receipt and bond form right away.
Jet can file your surety bond for you at no additional cost! However, if you would prefer to file the bond form yourself, this option may be selected at checkout. The original signed and sealed Professional Employer Organization Bond, along with your completed Professional Employer Organization License Application, must be submitted to the Texas Department of Licensing and Regulation at the following mailing address:
Texas Department of Licensing and Regulation
Attn: Licensing Department
PO Box 12157
Austin, TX 78711
For additional forms and license application instructions, take a look at the TDLR Professional Employer Organizations Forms webpage.
Professional employer organizations are required to renew their license with the Texas Department of Licensing and Regulation each year. If you are still in the negative when it comes to your working capital upon renewal, you will once again be required to obtain a custom Professional Employer Organization Bond. No need to worry though! Jet will send you a renewal invoice for your bond prior to its expiration date via mail and email. Simply confirm that the bond limit required is correct (we can adjust it if necessary) and fulfill the standard payment due. Once completed, you will be all set for licensure with the TDLR for another term.
The Professional Employer Organization Bond may be cancelled with Jet at any time. If you decide to cancel, all we ask is that you send us a written cancellation request to [email protected]. Once received, the Jet team will send a termination notice to the Texas Department of Licensing and Regulation. Your bond will then be officially cancelled within a 60-day period.
It is important to note that the liability of your Professional Employer Organization Bond will continue for two years following either the expiration of your license or your organization ceasing to do business in the State of Texas. So even with your bond being cancelled, you could still have a claim filed within this required liability period. This could be a good thing as no claim may be filed on the PEO Bond beyond this timeline. However, any number of claims can be brought against you during the active status and liability period of your surety bond as well.
Professional employer organizations are expected to follow all rules and regulations pursuant to Title 2, Chapter 91 of the Texas Labor Code, as it pertains to the obligations of the license. Failure to comply may result in the suspension or permanent loss of your license, large fines per violation, and/or a bond claim brought on by the Texas Department of Licensing and Regulation.
Claims on the Professional Employer Organization Bond typically occur if it is found by the Texas Department of Licensing and Regulation that the PEO has committed negligence, a breach of contract, or fraud. If any of these violations occur and the PEO refuses to resolve the issue, the TDLR may file a claim on the surety bond on behalf of any damaged employee or client company of the PEO. Funds from the bond claim will then be dispersed appropriately by the TDLR to any harmed party of the professional employer organization.
If you receive a bond claim notice from the Texas Department of Licensing and Regulation, contact Jet Insurance Company as soon as possible! Once contacted, we will ask that you provide us with all available information and documentation regarding the claim. The Jet team will review these details for our own investigation of the alleged license violation.
Per the Texas Professional Employer Organization Bond form, Jet is legally required to payout justified claims up to the bond’s limit. However, claim payments will never exceed the amount of the surety bond. You are responsible for your own actions and the actions of your company. Therefore, you must reimburse Jet for the bond claim payout made on behalf of your transgression. Failure to do so will lead to future difficulties in obtaining surety bonds in the State of Texas, specifically the Professional Employer Organization Bond that is required for licensure purposes of certain professional employer organizations.