Statement of Purpose and Operation
The Employer Services Assurance Corporation (ESAC) was established to operate as an independent, non-profit organization in 1994 by the National Association of Professional Employer Organizations for the purpose of providing services to the Professional Employer Organization (PEO) industry that could not be provided by an industry trade association.
ESAC's mission is to build integrity and trust and provide assurance to the PEO industry so the industry can reach its full potential in support of America's small businesses. To accomplish its mission, ESAC will:
- Establish standards for ethical conduct, professional competency, and financial and operational reliability;
- Provide a credible program of accreditation based on independent verification of standards compliance, so PEOs can voluntarily demonstrate they meet the industry’s gold standard of reliability;
- Provide financial assurance and notification programs to assure clients, employees, insurers and government authorities that accredited PEOs are meeting their contractual and fiduciary responsibilities;
- Provide services to make PEO compliance with state and federal laws and regulations more efficient and reliable; and
- Educate the employer services industry, the public, and state and federal regulators about the importance of ESAC’s mission.
ESAC's vision is for PEO services to be a trusted, commonly accepted way for small to mid-sized businesses to meet their employer responsibilities.
PEO participation in ESAC programs is totally voluntary. Membership in any industry trade association is not a prerequisite for participation.
ESAC is managed by its officers and staff under the supervision of the Board of Directors. The number of directors is established by the Board of Directors and includes independent directors, including distinguished former regulators, professional advisory directors, and experienced PEO industry executives representing various sizes of PEOs and various geographical regions. Only independent directors have access to confidential information and vote on matters involving the accreditation or compliance of individual PEOs. Officers and directors are nominated by a nominating committee appointed by the chairman and are elected by the vote of a majority of participating PEOs.
Ad hoc industry committees, ESAC staff, and professional advisors to the Board develop ESAC programs, standards and procedures. Participation requirements are based on studies of past industry failures and defaults, consideration of current industry best practices, consideration of the demonstrated strengths and weaknesses of various state PEO licensing and registration laws and applicable state and federal regulations, and the requirements of surety bond and insurance carriers backing ESAC programs. Participation requirements and program administrative procedures are offered for the broadest possible industry review, including all participating PEOs, ESAC surety and insurance carriers, Industry trade associations, nationally recognized industry attorneys, and industry-related national regulatory organizations. Program features and requirements are approved by the Board of Directors by majority vote after considering all review comments and recommendations.
ESAC programs are administered in the most objective and professional manner possible by outsourcing key evaluation functions to independent service providers with nationally-recognized expertise in the areas of background investigations, monitoring of critical business functions, PEO employment and service practices, finance and accounting, and applicable state and federal regulations.
Annual fees paid by participating PEOs provide funding for ESAC programs. The accreditation fee schedule is established by majority vote of the Board of Directors as necessary to cover administrative and program costs. The Board diligently seeks to manage the affairs of ESAC in the most cost-effective manner possible consistent with accomplishing its mission and its nonprofit status.
Any Accredited PEO and Controlling Person, as a condition of eligibility for continued accreditation, agrees to be bound by the terms and conditions set forth in these Standards. Any Applicant for accreditation or as a Controlling Person, as a condition of consideration of such application, agrees to be bound by the terms and conditions set forth in these Standards.
Any Professional Employer Organization (PEO) or group of Affiliated
Professional Employer Organizations (PEO Group) is eligible to apply
for accreditation and participation in the Client Assurance Program.
IMPORTANT NOTE: A PEO may be eligible for accreditation even if it enters into a service arrangement that does not conform to the requirements of this section if the non-conformance of the arrangement is due to a requirement of state law, regulation or administrative rule applicable to PEOs operating in that state.