31A-40-401. Prohibited acts.
(1) A person may not: offer or provide a professional employer service if the person is not licensed under this chapter; use one of the following names if the person is not licensed under this chapter: "administrative employer"; "employee leasing"; "PEO"; "professional employer organization"; "staff leasing"; or other name that represents the provision of a professional employer service; knowingly provide false or fraudulent information to the commissioner: in conjunction with an application to be licensed or to renew a license under this chapter; or in a report required under this chapter; knowingly make a material misrepresentation to the commissioner or other governmental agency; fail to make a filing with a state agency that is required by this chapter or the professional employer agreement within 30 days of the day on which the filing is due; fail to make a payment to a state agency that is required by this chapter or the professional employer agreement within 30 days of the day on which the payment is due; offer a covered employee a self-funded medical plan unless the self-funded medical plan is maintained for the sole benefit of covered employees; misrepresent that a self-funded medical plan it offers is other than self-funded; or offer to a covered employee a self-funded or partially self-funded medical plan without delivering to a plan participant a summary plan description that accurately describes the terms of the plan, including disclosure that the plan is self-funded or partially self-funded; subject to Subsection, divert to another purpose or use other than as designated funds paid by a client to the professional employer organization and designated for: (2) compensation of a covered employee; a benefit of a covered employee; a payroll-related tax; an unemployment insurance contribution; withholding of compensation for a covered employee; a workers' compensation premium; or another assessment paid by a professional employer organization to or on behalf of a covered employee under a professional employer agreement; provide a covered employee to a client under a provision, term, or condition that is not contained in a professional employer arrangement between the professional employer organization and client; engage in a willful, fraudulent, or deceitful act that: is by a professional employer organization, caused by a professional employer organization, or at a professional employer organization's direction; and causes material injury to a client or covered employee; fail to comply with a federal law or state law, to the extent state law is not preempted by federal law, regarding an employee benefit offered to an employee; or willfully or recklessly violate this chapter or an order or rule issued by the commissioner under this chapter.
(2) If a client defaults on a professional employer agreement or otherwise fails to pay a professional employer organization, the professional employer organization is not in violation of this section if the professional employer organization allocates the deficient payment to the portions of an invoice.