September 11, 2026 · Business and Labor · 3,348 words · 3 speakers · 8 segments
Okay. Everybody sitting so far back. Welcome to the business and labor Committee. Are you ready to go? Julie? Yes. Okay.
I'm Senator kathleen kauth. I represent the 31st legislative district and. Derr. Senator ibach, I serve as chair of this Committee. Before we begin, I would like to ask for a moment of silence to remember the terrorist attacks by islamic extremists 25 years ago today that killed 2977 and the twin towers, the pentagon and shanksville, and several thousand more who have died since due to the illnesses caused by the rescue and female. Thank you. Now we can actually begin. The Committee will be holding a hearing today on the resolution LR 436. For those of you who may be joining us for the first time today. Interim study resolutions are introduced by senators who believe that the Legislature should investigate certain topics that may be the subject of future legislation. Business and labor Committee is here today to receive information about these topics. Committee members might come and go during the hearing. This is just part of the process. And I ask that you abide by the following procedures to better facilitate today's proceedings. Please silence or turn off your cell phones or electronic devices. We will have the introducing Senator make their opening statement before we begin with any testifiers. We will not use our usual procedure of asking for proponents, opponents or neutral as this is an interim study. Hello, mr. Bell. When all testifiers are done, we will then call the introducing Senator. Come up for closing remarks. Closing remarks are reserved for the introducing Senator only. If you're planning to testify, please pick up a green testifier sheet that's on the table in the back and fingers to the side. Complete one for the resolution that you're planning to testify on. Please print. It's important to complete the form in its entirety. This will help us make a more accurate public record. When it is your turn to testify, give the green sheet to a page of the Committee clerk. And today, our page will be rebecca bartnik. If you have handouts, please make sure you have 12 copies and give them to the page or clerk when you come up to testify, and they'll be distributed to the Committee. If you do not have enough copies, the page will make sufficient copies for you. When you come up to testify, please be clearly into the microphone. Tell us your name and please spell your first and last name to ensure we get accurate record. We'll be using a three minute light system for all testifiers. When you begin your testimony, the light on the table will be green with the yellow light comes on. You have one minute remaining and the red light indicates your time is ended. Questions from the Committee may follow. No displays of support or opposition to a resolution, vocal or otherwise, are allowed from the audience.
I don't think you guys look like a particularly rowdy group, but I thought I should say that Committee members with us today will introduce themselves starting on my life. Tony sorrentino, legislative district, 39 elkhorn in waterloo. Theresa ibach, district 44. Eight counties in southwest Nebraska. Terrell mckinney. District 11 north omaha. Thank you. Now, instead of asking the introducing Senator come up, I'm going to ask you, legal counsel, thomas hilgert, to come up and present the resolution. Good afternoon. My name is thomas hilgert. Thomashelget, and I, as you well know, I'm legal counsel for the business and labor Committee in the Legislature. This is LR 436. As required under the operational board reform act that we review the different different appointments and regulations under the act every five years. Up for us this year is professional employer organizations. We last review this, I believe, four years ago or five years ago. So it is now our opportunity to review it again. We're looking at an examination of the requirements of the professional employer organization registration act, in order to determine whether or not any additional regulations or deregulation need to occur. Once we have this hearing, I will get to draft a report of our findings with recommendations and make that to the legislative council and Legislature. Obviously, with the review of the Committee. And once we have all that data compiled, make those findings and see if any legislation needs to come forth from the findings of the Committee. Thank you. Mr. Are there any questions from the Committee? Seeing none, first testifier. Disclosure, I only have ten copies. I don't think we'll be okay. Okay. Well, maybe I count. I think I can do billable hours beyond that. That's questionable. Chairwoman and members of the business and labor Committee. My name is joel green, joelgreen. General counsel for the Nebraska department of labor. On behalf of commissioner thurber, thank you for the opportunity to provide testimony regarding the department's administration of professional employer organizations, or peos, and specifically the amendments made to regulations as a result of the passage of LB 293, as you recall. LB 293 made significant changes to Nebraska's peo registration act by authorizing a peo to offer a self-funded health benefit plan to its covered employees, provided that the plan meets specified regulatory requirements. That the self-funded plan maintains sound reserves consistent with generally accepted actuarial principles. Provide notice to participating employees that the plan is self-funded, and provide financial information to the department on quarterly and annual basis. The department of labor is responsible for the enforcement of the peo registration act, including ensuring the financial solvency of self-funded health benefit plans. In short, the department must ensure these health benefit plans have enough reserves to pay the claim of its enrollees. That is a specialized financial review. It requires actuarial actuarial expertise that the department did not maintain as an internal resource.
On average, approximately 200 to 220 peos are registered with the department of labor at any given time. While it is not clear how many of these peos intended to offer self-funded benefit plans to covered employees, the department determined the best way to fund the actuarial services needed for the administration, and enforcement associated with these plans was through an adjustment to pay registration fees rather than through the state's general fund. Accordingly, the department amended 230 Nebraska administrative code chapter three and returned the registration fees to amounts originally set forth in regulation. When the peo registration act was first passed by the Legislature starting in january of this year, initial registration for a peo is $2,500 and annual renewal is $1,500, and the initial registration of a limited peo is $1,000. Since the return of regulatory fees to their original amounts, the number of registered peos operating in Nebraska has remained consistent compared to recent years. In fact, we have seen an increase in the number of peos registering in Nebraska in 2026. Rather than hire a full time actuary, the department signed on to an existing state contract for actuarial services. Utilization of the state contract allows the department to assess how many self-funded health benefit plans may be offered by peos, while providing the department with the flexibility to determine what regulatory and administrative oversight may look like in future years. As of today, we have one registered peo utilizing a self-funded benefit plan, but it remains unclear how many peos will offer these plans in the coming years. The department's continued objective is to provide appropriate regulatory and administrative oversight of peos. As I conclude my testimony, I would just like to take a moment to express my appreciation to the representatives of those pos in attendance at today's hearing for their continued willingness to have conversations about the peo registration act. The department values the good relationship it has with those peos registered in Nebraska and including those associated with the national association of professional employer organizations. With that, I see my time is out and I'd be happy to answer any questions you may have. Well timed. Any questions from the Committee? Seeing none. Thank you. Thank you very much. Next. Come on up. Okay. Can I give it to you after? Okay. Okay. Good afternoon. My name is erica brown. Ericabrune. Good afternoon. My name is erica brown. Ericabrune. Good afternoon, chairwoman kauth and the members of the business and labor Committee. Thank you for the opportunity to testify today regarding LR 436 and Nebraska's regulation of professional employer organizations.
My name is erica bruhn and I am the ceo of lover 1po. I serve as the leadership council chair for the heartland's region, for the national association of professional employer organizations, or napo, the national trade association representing the p e industry. By way of background, peos provide payroll benefits, worker's compensation and hr compliance services to small and midsize businesses. More than 550 Nebraska businesses partner with the peo, employing more than 15,000 Nebraska residents. First, we want to thank the Nebraska. Thank Nebraska for recognizing and regulating the p e industry. Napo supports appropriate state oversight of peos. A clear and effective regulatory framework protects Nebraska businesses and their employees. Provide certainty to peos operating in the state, and helps ensure that reputable providers can continue serving Nebraska employers. As the Committee reviews the peo registration act through LR 436, however, we encourage you to examine the significant registration and renewal fee increases implemented implemented by the department of labor earlier this year. Initial registration fees increased from $250 to $2500, while the annual renewal fees increased from $150 to $1500. We recognize that effective regulation requires adequate resources, and we are not asking Nebraska to eliminate its registration or renewal fees. However, a ten fold increase is substantial. Nebraska law provides that these fees should not exceed what is reasonably necessary to administer the registration act, and we believe the current amounts warrant additional review. Under that standard, we respectfully encourage the Committee to examine the actual costs associated with administering the act and consider whether the current registration and renewal fees can be reduced, while continuing to fully fund effective oversight of the industry. Our goal is a reasonable and proportionate fee structure that supports the department without unnecessarily increasing the cost of operating a peo in Nebraska. We also want to emphasize that napo and its members are available as a resource to this Legislature. We have peo leaders throughout the nation, including here in Nebraska, who are happy to provide industry expertise, answer technical questions, and help explain how proposed policies may affect peos in the small and midsize businesses they serve. Leave with just thanking you for the opportunity to testify and that I'm happy to answer any questions. Thank you very much. Are there any questions from the Committee? Sorry, sir. Thank you very much. Thank you for joining us today, too. Could you I'm looking back at some information that we got with our original or with our first testifier. Can you tell me again what those initial. In his testimony, he says they returned the fees to their to their original amount. So as of january of this year, those amounts were increased. Correct. So what were they previous? Can you just tell me that again? Yes. You gave us those amounts, but I wasn't quick enough with my pen. Initially they were $250 for an initial registration increased to 2500.
And then the annual renewal was initially $150 increased to 1500. Okay. And those those original amounts had been in existence for several years. Correct. Do you think that fee increase was still warranted, though? I'm not aware of how much time it takes to conduct the administration. We just were thinking it was so significant, especially if there's only 1peo utilizing that. Alright. Thank you. Thanks for that clarification. Thank you chair. Thank you. Thank you for your testimony. There's one platte. I believe we said we self-funded that. That's right. In your role as the ceo of your company and your active participation in the association, do you think that there may be more or is this given our state, given the size of the players, the insurance community, that we're only going to have one or 2 or 3? Or do you have any opinion on that whatsoever? I do, I believe there would only be a handful going forward. Most of the peos are registered in Nebraska because they have a handful of employees that are working for a company outside of the state. So many of them are not operating here or headquartered here. I have a little bit of experience in the insurance industry, and we we looked at pos as as an answer to a lot of things, specifically property and casualty worker's comp that was didn't see a lot of health insurance. So much. And when I saw that they were allowing self-funding, it made me think a little bit simply because unless you have a fairly large group of clients, self-funding can be a little bit risky. So I would agree that I don't think you're going to see a lot of this, but with respect to the fees, 2500 or 2, 25 to 2500, etc. It is a big increase, but I think it's going to take a while, a year or 2 or 3 to figure out maybe it is too high, but we've only been in this one eight, nine months or something like that. It seemed to me that we need a year or two under our belt to figure out if that really is true. Do you share that or do you think out of the gate, this was just inappropriate? I think the increase was so significant that we wanted to voice our opposition, not that some increase wasn't warranted. Has it driven any away? I do not believe so. In fact, we're continuing to grow as peos primarily due to the nature of the remote workforce. So the p e os that basically all of them at once who don't self-fund, are they finding a home with fully insured carriers in Nebraska? That's correct. Okay. I know we have some people here in the insurance industry. It wasn't that many years ago that fully insured carriers shied away from peos, but I do believe they've kind of joined the crowd.
I could ask another testify that. Thank you. Yes. Any other questions? Thank you. Can you give your testimony? Thank you. Thank copies made. I appreciate it. Next. Testifier. Good afternoon. My name is amy kenobi. A myknodbe. Good afternoon, chairwoman and members of the business and labor Committee. Thank you for the opportunity to testify today regarding LR 436 and Nebraska's regulation of professional employer organizations. I'm the co-founder and managing partner of pando p o, the only Nebraska based peo. I'm here today on behalf of the national association of professional employer organizations, or napo, and the national trade, the national trade association representing the industry. By way of background, peos provide payroll, employee benefits, worker's compensation, hr and compliance services to small and medium sized businesses here in Nebraska. Panhandle alone partners with approximately 225 businesses and supports more than 5000 Nebraska residents through the p o relationship. As Nebraska's only locally based peo, we have a unique perspective on how policies impacting the peo industry directly affect Nebraska employers, their employees, and our state's business community. As a Nebraska based peo. We appreciate the state's commitment to regulating our industry. A strong regulatory framework is important to companies like pando because it promotes a responsible peo. Marketplace and protects the Nebraska businesses and employees that rely on our services. At the same time, I want to offer the perspective of a po that is headquartered in doing business here in Nebraska. Earlier this year, the department of labor increased the initial registration fee from $250 to $2500 in the annual renewal fee, from $150 to $1500 for Nebraska headquartered peo. These are real costs associated with operating and growing a business in our home state. We understand that appropriate regulation requires funding, and we support paying reasonable fees to maintain that oversight. However, a ten fold increase in a single year is significant and we believe there is an opportunity through lr for 36 to determine whether the current amounts are necessary and appropriately calibrated. We respectfully ask the Committee to examine these costs associated with administering the registration act, and consider whether the recently implemented registration and renewal fees can be reduced, while still providing the department with the resources necessary to effectively regulate our industry. I also want the Committee to know that you have resources right here in Nebraska. When questions about the peo industry arise. As the only peo headquartered in the state, pando was always willing to serve as a resource to policy makers and regulators. Whether. The question involves how the peo relationship works in practice, or how a particular law or regulation may affect peo clients, or simply how our industry operates, we are happy to answer questions and provide Nebraska specific perspective. We are proud to be headquartered in Nebraska and appreciate the state's recognition and regulatory of our industry.
We hope LR 436 provides an opportunity not only to reconsider the recently increased fees, but also to strengthen the ongoing relationship between Nebraska policy makers, regulators and the peo industry. Thank you for the opportunity to testify today. Thank you. Very much. Happy to answer any questions, Senator sheryl. Thank you, chair mckenney. What are the cons of the increased fees? How how how have the increased fees impacted you? Well, as you can imagine, I mean, our original cost was $150 and then increased by 1000. And also in doing so, other states around us also can see that you that we are increasing fees and that could lend to other states increasing our fees. So as a peo we're we're registered to do business in 49 states. So if each state increases those fees, that percentage amount, that's a considerable considerable expense. Thank you. Senator. Thank you for your testimony. As a as a father of sustainable. Is health insurance number one on your radar problems? We're in the we're in the scheme of things. Is health insurance rank for you as far as providing that for your clients. Say current. We're in renewal season. So I would say number one. Do you happen to be the self-funded one? We are not. But we did propose legislation. And just to give you a little bit more context, it's the the statute read fully insured and you're in the insurance or you were in the insurance space. You understand that there's a difference between fully insured and even level funded. So this would also allow a level funded opportunity. It's a level of funding in your bracket is considered self-funding. I'm just kind of curious because it has changed so much over the years of the plan that you're able, assuming you do offer a group insurance to your. Yes. And we have. It's fully insurance. Fully insured. Is is there a number of carriers to pick from? And it's just 1 or 2 nowadays for in your. In the peo space, there's 4 or. 5, 4 or 5 in Nebraska. Oh yes. So blue cross, blue Nebraska. Oh yes. So blue cross, blue shield of Nebraska and then aetna, cigna. Unitedhealthcare. And you've chosen to stay fully insured. Is that. At this time. Decision the volume of people you have covered or something else. Based off of based off of our population. Thank you. Questions and seeing none. Thank you for your testimony. Thank you. All that to the clerk. We'll get copies of the. Thank you. Next. Mr. Bell, are you coming on up? Anyone else? Going once, going twice. Okay,