To:         CALSAGA member PPOs

From:     William Hodges, Deputy Association Manager

Re:         Clarification on Legality of Professional Employees Organizations

Date:      April 2, 2007

Recently, some PPO members have expressed concern that the use of a Professional Employee Organization (PEO) by a PPO for the purpose of running payroll and insurance through an outside company could be a technical violation of the Private Security Services Act.  Since in many cases the PEO is the actual employer, some were concerned that a PEO not holding a PPO license would be in violation of the law.

In an effort to clarify this question so that members could have the widest range of options, CALSAGA asked our Legal Advisory, Barry Bradley of Bradley & Gmelich, to contact BSIS Chief Paul Johnson on behalf of CALSAGA for a formal response.

 

We are pleased to report that the use of a PEO by a PPO does not violate the Private Security Act.  A person or company who is hired by a PEO solely to perform functions of payroll and insurance for a PPO is not required to have a PPO or Security Guard License/Registration, since they do not perform the duties outlined in the Business and Professions Code Section 7582.1(a).

Click here to download a pdf version of Chief Johnson’s letter.

Whether or not to use a PEO in the course of your business is a decision each company has to make, but we are pleased that you now have confirmed this flexibility is available to you should you choose to utilize it.  If you have any questions, please contact me at (916) 930-0552 or via email at whodges@calsgaa.org.