As used in this chapter, the following terms shall have the following meanings:

(1) ADMINISTRATIVE FEE. The fee charged to a client by a professional employer organization for professional employer services. The term does not include any amount of a fee by the professional employer organization that is for wages and salaries, benefits, workers' compensation, payroll taxes, withholding, or other assessments paid by the professional employer organization to or on behalf of covered employees under the professional employer agreement.

(2) CLIENT. A person or entity that enters into a professional employer agreement with a professional employer organization, including a worksite employer.

(3) CONTROLLING PERSON. Any of the following:

a. An officer or director of a corporation operating as a professional employer organization, a shareholder holding 25 percent or more of the voting stock of a corporation operating as a professional employer organization, or a partner of a partnership operating as a professional employer organization.

b. An individual who possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of a company operating as a professional employer organization through the ownership of voting securities, by contract or otherwise, and who is actively involved in the day-to-day management of the company.

(4) COVERED EMPLOYEE. An individual having a relationship with a professional employer organization and a client who meets all of the following criteria:

a. The individual has executed a written employment agreement with the professional employer organization.

b. The individual is a co-employee of both the professional employer organization and the client.

c. The individual's relationship with a professional employer organization and a client pursuant to a professional employer agreement is subject to this chapter. Individuals who are officers, directors, shareholders, partners, and managers of the client are covered employees to the extent the professional employer organization and the client have expressly agreed in the professional employer agreement that the individuals would be covered employees and provided the individuals meet the criteria of this subdivision and act as operational managers or perform services for the client.

(5) DEPARTMENT. The Alabama Department of labor.

(6) PERSON. An individual, sole proprietorship, business, partnership, corporation, limited liability company, association, firm, or any other form of legally recognized entity.

(7) PROFESSIONAL EMPLOYER ORGANIZATION. A person engaged in the business of providing professional employer services through one or more professional employer organization arrangements. A person engaged in the business of providing professional employer services shall be subject to registering under this chapter regardless of its use of the term professional employer organization, PEO, staff leasing company, registered staff leasing company, employee leasing company, or any other name. The term does not include:

a. Arrangements where a person, whose principal business activity is not entering into professional employer arrangements and which does not hold itself out as a professional employer organization, shares employees with a commonly owned company within the meaning of Section 414(b) and (c) of the Internal Revenue Code of 1986.

b. Arrangements by which a person assumes responsibility for the product produced or service performed by the person or his or her agents and retains and exercises primary direction and control over the work performed by the individuals whose services are supplied under the arrangements.

c. Temporary help services, which consist only of: (i) recruiting and hiring their own employees; (ii) finding other organizations that need the services of those employees; (iii) assigning those employees to perform work at or services for the other organizations to support or supplement the other organizations' workforces, or to provide assistance in special work situations such as, but not limited to, employee absences, skill shortages, seasonal workloads, or to perform special assignments or projects, and (iv) customarily attempting to reassign the employees to other organizations when they finish each assignment. However, notwithstanding any provision to the contrary, a temporary help service entity shall annually, at no cost, certify on a form approved by the secretary that the temporary help service is not providing professional employer organization services.

(8) PROFESSIONAL EMPLOYER ORGANIZATION ARRANGEMENTS. An arrangement under contract where an employee of a professional employer organization is assigned or leased, or both, to work at a client company. The assignment of the covered employee is intended to be of a long-term or continuing nature, rather than temporary or seasonal in nature. The term shall be liberally construed to include any and all arrangements meeting the criteria set forth by this chapter, by whatever term known.

(9) PROFESSIONAL EMPLOYER SERVICES. The service of entering into relationships under this chapter in which all or a majority of the employees providing services to a client or to a division or work unit of clients are covered employees. More specifically, professional employer services may include, but are not limited to, the payment of payroll, payment of payroll taxes, payment of unemployment compensation taxes, providing for workers' compensation coverage, providing for health insurance coverage, and any and all other additional services as may be contracted for under the professional employer organization agreement. Exclusively providing, selling, or administering workers' compensation and/or health insurance plans to one or more clients is not the provision of professional employer services.

(10) REGISTRANT. A person or entity registered as a professional employer organization under this chapter or renewing a registration under this chapter.

(11) SECRETARY. The Secretary of the Alabama Department of Labor.

(12) TEMPORARY EMPLOYEE. A person employed either through a staffing service or directly by an employer to support or supplement the existing work force in special situations such as employee absences, temporary skill shortages, seasonal workloads, and special assignments and projects with the expectation that the position of the person shall be terminated upon the completion of the task or function.