1. DEFINED TERMS
(a) “Administrative Fees” is defined in Section II(d) of the Agreement.
(b) “Agreement” is defined in the Preamble.
(c) “Applicable Law” is defined in Section 4(j) of Schedule 3.1 of this Agreement.
(d) “Client” is defined in the Preamble and also includes any name changes, incorporation changes, and/or corporate structure changes that Client undergoes during the Term of the Agreement.
(e) “Client Information” means all information provided by any owner, officer, director, employee, agent or representative (including, without limitation, third party representatives such as accounting firms) of Client to PEO in connection with the Services, including without limitation, with respect to Covered Employees, total compensation due (including any Special Compensation), total number of hours worked (including all overtime hours), tips received, leave or time-off status (including any leave mandated by Applicable Law), workers’ compensation classification code, overtime exempt status, applicability of any Applicable Law that is not a state or federal law (including without limitation, city, county or municipal minimum wage levels and any local taxes), and locations where work is being performed; and, any other information reasonably requested by PEO or otherwise necessary for PEO to perform the Services.
(f) “Client Personnel” means any person working for Client in any capacity whatsoever, as an employee, independent contractor, or otherwise.
(g) “Client Sponsored Plan” is defined in Section 4(g) of Schedule 3.1 of this Agreement.
(h) “Covered Employee Compensation” is defined in Section II(a) of the Agreement and specifically does not include any Special Compensation.
(i) “Covered Employee(s)” means any Client Personnel for whom all of the following conditions have been satisfied: (1) the individual has been: (a) identified in writing by Client as a Covered Employee subject to this Agreement, and (b) assigned an employee number by PEO; (2) Client has supplied all data required by PEO, including without limitation, a copy of a Form I-9 that has been completed in compliance with Applicable Law, a properly completed Form W-4, and an onboarding packet properly completed to PEO’s satisfaction; and (3) Client has (a) timely, completely, and accurately reported Payroll for such individual, and (b) paid in full and on time the initial payment according to the rate set forth in Schedule 2.
(j) “Early Termination Fee” is defined in Section 1(e) of Schedule 3 of this Agreement.
(k) “Effective Date” is defined in Section III(a) of the Agreement.
(l) “EPLI” is defined in Section II(a) of this Agreement.
(m) “Excluded Services” means any services generally regarded as professional services, including without limitation, the practice of law, medicine, dentistry, chiropractic, veterinary medicine, engineering, accounting, auditing, investment or financial advice, insurance sales or brokerage, banking, architecture, real estate sales or brokerage, surveying, inspecting, safety consultancy, compliance advice, regulatory advice, or any other service (excluding professional employer services) requiring any kind of licensure.
(n) “Extended Term” is defined in Section III(b) of the Agreement.
(o) “Fees” is defined in Section II of the Agreement.
(p) “Force Majeure Event” means an act of God, action of the elements, war (declared or undeclared), insurrection, revolution, rebellion or civil strife, piracy, civil war or hostile action, terrorist act, riot, act of public enemy, fire, floods, swarms, earthquakes, riots, strikes, war, and restraints of government, or any other causes (excluding financial causes) beyond the control of either Party.
(q) “Included Services” is defined in Section I of the Agreement.
(r) “Initial Term” is defined in Section III(b) of the Agreement.
(s) “Insolvency Event” means the occurrence of any of the following: with respect to the person or entity in question, such person or entity (i) admits in writing its inability to pay generally its debts as they mature; (ii) makes a general assignment for the benefit of creditors; (iii) is adjudicated bankrupt or insolvent; (iv) files a voluntary petition in bankruptcy; (v) takes advantage, as against its creditors, of any bankruptcy law or statute of the United States or any state or subdivision thereof now or hereafter in effect; (vi) has a petition or proceeding filed against it under any provision of any bankruptcy or insolvency law or statute of the United States or any state or subdivision thereof; (vii) has a receiver, liquidator, trustee, custodian, conservator, sequestrator or other such person appointed by any court to take charge of its affairs or assets or business; (viii) takes any action in furtherance of any of the foregoing; (ix) ceases to be in good standing in any jurisdiction in which it does business; or (x) liquidates, dissolves or winds up its business operations.
(t) “Losses” is defined in Section 2(a)(i) of Schedule 3 of this Agreement.
(u) “Optional Service Fee” is defined in Section II(d) of the Agreement.
(v) “Optional Services” is defined in Section I of the Agreement.
(w) “Other Worker Injury Coverage” is defined in Section 5(a)(iv) of Schedule 3.1 of this Agreement.
(x) “Party” or “Parties” is defined in the Preamble.
(y) “Payroll” is defined in Section II(a) of the Agreement.
(z) “Payroll Burden” is defined in Section II(a) of the Agreement.
(aa) “Payroll Date” means the regularly scheduled date that Covered Employees are set to receive Covered Employee Compensation.
(bb) “Payroll Percentage” is defined in Section II(a) of the Agreement.
(cc) “PEO” is defined in the Preamble. PEO and its Affiliates include but are not limited to G&A Outsourcing, LLC, Core Benefit Solutions, LLC, Core Innovative Solutions, LLC, G&A Outsourcing II, LLC, G&A Outsourcing III, LLC, G&A Outsourcing IV, LLC, G&A
Outsourcing VI, LLC, G&A Outsourcing VII, LLC, G&A Outsourcing IX, LLC, G&A Partners – Arizona, LLC, G&A Partners – California, LLC, G&A Partners – MSP, LLC, G&A Partners Illinois, LLC, GAO California, LLC, G&A Beneficial, LLC, The Employer Advantage, LLC, and EA Advantage, LLC. PEO’s Affiliates may provide Services under the Agreement and/or be the designated entity for regulatory, tax, or other purposes under the Agreement at the sole discretion of PEO.
(dd) “PEO Benefit Plan” is defined in Section 3(c) of Schedule 3.1 of this Agreement
(ee) “PEO EPLI Policy” is defined in Section 5(e)(i) of Schedule 3.1 of this Agreement.
(ff) “PEPM Fee” is defined in Section II(b) of the Agreement.
(gg) “Services” is defined in Section I of the Agreement.
(hh) “Special Compensation” means commission, deferred compensation, profit sharing, bonuses, stock options, vacation pay, sick leave pay, parental leave pay, severance pay, or other special compensation not considered part of regular wages.
(ii) “State Specific Terms” is defined in Section 1 of Schedule 3.2 of this Agreement.
(jj) “Term” is defined in Section III(b) of the Agreement.
(kk) “Wages” means gross wages, including but not limited to overtime, bonuses, severance, and commissions.
(ll) “Workplace Safety Laws” is defined in Section 4(w) of Schedule 3.1 of this Agreement.
2. THE PEO RELATIONSHIP
(a) Allocation of Employer Rights and Responsibilities. Under this Agreement, certain employer functions, rights, and responsibilities pertaining to Covered Employees are allocated between PEO and Client. As to the allocation of such employer functions, rights, and responsibilities, the Parties expressly agree as follows:
(i) Any employer functions, rights, or responsibilities not specifically allocated to PEO under this Agreement shall remain with Client;
(ii) Client shall retain all employer functions, rights, and responsibilities that are not specifically allocated to PEO under this Agreement;
(iii) Client acknowledges and agrees that PEO and Client are not joint or dual employers, as those terms are defined under Applicable Laws; and
(iv) This Agreement may reserve certain rights to PEO for the purpose of PEO delivering PEO services in compliance with applicable PEO licensing, registration, certification and other laws authorizing the delivery of PEO services. The reservation of rights in this Agreement is not an admission that PEO either has exercised, or will exercise, such rights. It is the intent of the Parties that no inference of liability arises from the reservation of rights, other than the liabilities arising from the express terms of this Agreement. Furthermore, notwithstanding any reservation of rights sets forth in the Agreement, Client remains solely responsible for the day-to-day supervision of Covered Employees and for the selection of qualified workers for employment.
(b) Notice of Co-Employment Relationship. PEO will provide, and Client will cooperate with PEO in providing, written notice to Covered Employees of the general nature of the co-employment relationship, as required under applicable law.
(c) Not a Contract for Temporary or Short-Term Services. The Parties intend the co-employment relationship created by this Agreement to be a continuing and long-term arrangement, subject to the terms of this Agreement. Accordingly, the Parties do not intend this Agreement to be a contract for temporary or short-term services.
(d) Scope. This Agreement will pertain to and cover only Covered Employees. PEO’s services shall not apply to Client Personnel who are living and/or working outside of the United States, and such Client Personnel shall not be Covered Employees. Further, PEO’s services may not apply to Client Personnel who are living and/or working in a U.S. Territory. Client is solely responsible for compliance with laws of any non-U.S. jurisdiction, or of any U.S. Territory in which PEO is not providing services, as the case may be, including without limitation, any obligation to report income, maintain insurance or maintain benefits of any kind for any Client Personnel located or working in a non-U.S. jurisdiction or a U.S. Territory in which PEO is not providing services.
(e) Excluded Services. Notwithstanding anything contained herein to the contrary, whether explicitly or by implication, the Parties agree that Excluded Services are explicitly outside the scope of this Agreement. As such, PEO does not and will not provide (as part of the Services or otherwise), and Client shall not rely on the Services for the purpose of, Excluded Services. Client shall accordingly be solely responsible for retaining its own independent advisors for all matters relating to Excluded Services. PEO shall have no obligation to engage a third party for Excluded Services, but if PEO does so, such Excluded Services shall be for the sole benefit of PEO. If Client chooses to rely on Excluded Services provided by a third party engaged by PEO, Client’s professional relationship shall be directly with the third party and not with PEO, and PEO makes no representations or warranties whatsoever with regard to the Excluded Services provided by any third party PEO’s law department represents only PEO and not Client.
3. OBLIGATIONS OF PEO
(a) Payroll Administration. As set forth in Schedule 1.1 PEO will process payroll payments for Covered Employees in accordance with applicable law, conditioned upon Client timely and accurately supplying all data and funds necessary for PEO to perform its payroll processing services. In the event Client fails to pay PEO for its services, Client authorizes PEO to elect to pay Covered Employees using only the applicable minimum hourly wage and/or applicable minimum salary for exempt employees. Client acknowledges that by doing so: (i) PEO in no way waives any right to recover from Client; (ii) PEO in no way admits to any employer or joint employer obligation to pay wages following a failure by Client to pay PEO absent an express obligation arising from state PEO licensing and registration laws; and (iii) Client is not relieved of its obligation to pay any unpaid wages owed to Covered Employees. If applicable, Client will allocate employee hours worked to any federal or other contracts requiring specific payroll treatment and will provide PEO the relevant and required Wage Determination and Fringe Benefits information.
(b) Payroll Taxes and Unemployment Insurance. PEO will withhold, report, and remit federal, state, and local payroll taxes, including, without limitation, unemployment insurance contributions, for the Covered Employees. PEO will administer unemployment insurance filings and claims, including opposing unemployment claims when appropriate. The payments that PEO shall remit on Client’s behalf under this Agreement, including without limitation, any payment by PEO for Covered Employee Compensation or Payroll Burden, shall be paid out of PEO’s own accounts. In those states or other jurisdictions in which PEO may or must use Client’s employer account for purposes of reporting and remitting unemployment insurance contributions or any other payroll taxes, Client authorizes PEO to do so and agrees to cooperate with PEO in the use of Client’s account. Client will provide all required and requested forms, signatures, powers of attorney, reports, documents and historical data.
(c) Employee Benefits. As agreed to between PEO and Client, PEO will provide certain employee benefits to eligible Covered Employees and their eligible dependents through PEO-sponsored plans (“PEO Benefit Plan”) and administer such PEO Benefit Plans in compliance with applicable law and the terms and provisions of the applicable plan documents. The applicable plan documents will control eligibility for benefits and the extent of benefits provided under the PEO Benefit Plans. Client will cooperate with PEO in all matters necessary for PEO to properly administer the PEO Benefit Plans, including, without limitation, executing all necessary agreements or other documents. PEO’s obligations with respect to employee benefits will not extend beyond the scope of the PEO Benefit Plans.
(d) Insurance. Client acknowledges that PEO is not an insurance carrier and that as such PEO may not be subject to certain laws and regulations governing insurance or the sale of insurance.
(e) Workers’ Compensation Insurance. PEO will provide workers’ compensation insurance coverage for Covered Employees and administer claims under such coverage in accordance with the requirements of applicable law (with the exception of the “monopolistic states,” where state law requires workers’ compensation to be purchased from a government operated insurance fund, specifically, Ohio, North Dakota, Washington, and Wyoming). Client workers who are not timely reported to PEO pursuant to the terms of Section 4(a) and in compliance with PEO’s onboarding requirements will not be covered by workers’ compensation insurance provided through PEO for any period during which they are not a Covered Employee. Client will cooperate with PEO to provide any required notices to state agencies and/or Covered Employees in connection with the provision of workers’ compensation insurance to Covered Employees.
(f) Human Resource Consulting. To the extent requested by Client, as set forth in Schedule 1.1, and subject to payment of the related fees, as set forth in Schedule 2, PEO shall provide Human Resource consulting services to Client. Client expressly understands and agrees that in providing Human Resource Consulting services, PEO is not providing legal advice. Client is responsible to consult with legal counsel as needed regarding Human Resource or employment-related issues.
(g) Use of Affiliates and Other Sources of Revenue. Client understands, acknowledges and agrees that: (i) some of the products and/or services provided pursuant to this Agreement may be provided by affiliated entities or third parties that are affiliated with or otherwise related in some way to PEO (“Affiliates”) and therefore some of the fees or charges paid by Client may include amounts payable to Affiliates; and (ii) to the extent consistent with applicable law, PEO and/or Affiliates may receive commissions, referral fees or other sources of revenue with respect to the products and/or services provided pursuant to this Agreement.
4. OBLIGATIONS OF CLIENT
(a) Onboarding Process. Client will comply with PEO directives regarding the requirements to onboard Covered Employees. Client will submit onboarding documents to PEO before a newly hired employee commences work. Client agrees to have each Covered Employee sign a Worksite Employee Acknowledgement in a form provided by PEO.
(b) Covered Employee Termination. Client shall provide PEO with timely advance notice when it terminates the employment of a Covered Employee. At a minimum, Client will provide PEO with sufficient notice for PEO to timely issue the final paycheck to a terminated Covered Employee. Client is solely responsible for any late payment penalties resulting from Client providing PEO with inadequate advance notice of termination. Client authorizes PEO to add such penalties to the final paycheck and invoice Client for same.
(c) Change in Circumstances. Client shall notify PEO of the principal location of the workplace of each Covered Employee and each location where such Covered Employee performs services for Client, and of any changes in such locations. Client understands and agrees that prior approval must be obtained from PEO and PEO’s workers’ compensation insurance carrier prior to the addition of Covered Employee, or change of position or responsibilities for any Covered Employee, that would require an additional workers’ compensation classification code or prior to a change or addition to Client's worksite location. Client must provide at least thirty (30) days’ prior written notice to PEO of any new lines of business, new locations, and new class codes, and PEO reserves the right to approve or deny any such new business of class codes. Client shall pay an additional charge for any additional Services performed for this purpose, including without limitation any additional workers’ compensation policy obtained through PEO. Notwithstanding the foregoing, Client Personnel in new states shall become Covered Employees once the Parties determine the applicability of Services in such states. Client shall be solely responsible for any costs associated with the failure to make any of the foregoing notifications on time (e.g. insurance premiums associated with a terminated Covered Employee).
(d) Immigration. Client is solely responsible for all I-9 processes and procedures. Client will ensure that an I-9 is timely and properly completed for all hew hires; retain I-9 documents for the period required by law; and update I-9s when required by law. To the extent requested by Client, PEO may provide information to Client regarding the proper procedures for completion of the I-9; however, Client retains sole responsibility for complying with all Form I-9 legal requirements. Any fines or other penalties resulting from Client failing to follow proper I-9 procedures and processes will be solely Client’s responsibility. Client will not engage in any discriminatory or other unlawful acts with respect to the I-9 process.
(e) Business Operations. Client will have sole and exclusive responsibility to oversee all aspects of the operation of Client's business, including, but not limited to the production and delivery of services and products, product design, accounting, cash control, loss/breakage/theft prevention, all facilities, premises, equipment, tools, machinery, vehicles, operations, and the purchase, installation, modification, repair, replacement or maintenance of equipment, tools, vehicles or machinery owned, rented, leased or used by Client, any of the Client Personnel, or otherwise in connection with Client’s business. PEO shall have no responsibility for the operation, management, or control of Client’s business. PEO is not responsible for any crimes, torts, misconduct, or wrongdoing of Covered Employees because they are not under PEO’s direction, supervision, and control. Client is and shall be solely responsible for locating, recruiting, screening, and selecting competent workers in order for Client to conduct its business safely and lawfully. PEO shall have no responsibility whatsoever, under this Agreement or otherwise, to any Client Personnel, who is not a Covered Employee, and accordingly, such individuals shall not be eligible to participate in any of the employee benefits offered or sponsored by PEO to Covered Employees, as set forth herein, including without limitation, group health insurance coverage or workers’ compensation insurance coverage or any other employee benefit of any kind.
(f) Time Management System. Whether Client uses its own Time Management System, or one provided by PEO, Client is solely responsible for accurately recording and reporting work time for Covered Employees. Client shall be responsible to ensure: (1) all Covered Employees are accurately recording their work time, including start and stop times for meal periods and work periods, and (2) the Time Management System records are consistent with Client’s records. To the extent Client uses rounding procedures or processes for recording and reporting work time for Covered Employees, Client is solely responsible for any violations of Applicable Laws resulting from Client’s use of a Time Management System, including rounding procedures and processes, and Client shall indemnify PEO, as set forth in Section 2 of Schedule 3 for any resulting liability.
(g) Client Sponsored Plan. Client will not provide employee benefits to Covered Employees or their dependents in addition to or in lieu of the benefits available under the PEO Plans ("Client Sponsored Plan") without the express written consent of PEO. To the extent employee benefits are provided to Covered Employees or their dependents under a Client Plan, Client will ensure that the Client Plan is administered in compliance with applicable law and the terms and provisions of the applicable plan documents; and will retain sole responsibility and liability for the Client Plan.
(i) Client understands, acknowledges and agrees that If PEO is designated as the administrator of a Client Sponsored Plan, PEO’s responsibility for such Client Sponsored Plan shall be strictly limited to the performance of certain administrative functions as expressly agreed to by the Parties, and, as such Client shall remain solely responsible for all tax, legal and regulatory compliance obligations of such Client Sponsored Plan, including without limitation the obligation to produce and distribute all written plan documentation (including summary plan descriptions) required of a Client Sponsored Plan in accordance with ERISA. Additionally, Client shall not represent to the Covered Employees (or anyone else) that: (i) PEO is an administrator of any Client Sponsored Plan (unless PEO is designated as the administrator of the Client Sponsored Plan); or (ii) PEO is the sponsor of any Client Sponsored Plan.
(ii) Client further understands, acknowledges, and agrees that: (a) PEO is not a plan sponsor, plan administrator or fiduciary with respect to any Client Sponsored Plan; (b) PEO shall have no other role, responsibility or liability with respect to any Client Sponsored Plan, including, without limitation, that of a third-party administrator; and (c) to the extent that PEO provides any administrative or other services with respect to a Client Sponsored Plan, (1) all such services are taken on behalf of Client and at Client’s specific direction, (2) PEO shall have no discretion with respect to such services, (3) PEO shall not take on any fiduciary or other obligations as result of such services under the Employee Retirement Income Security Act of 1974, as amended (ERISA), or any other law and (4) Client shall remain solely responsible and liable for such services and any underlying Client obligations.
(h) Cooperation with PEO. Client will respond in a timely and accurate fashion to requests from PEO for records and data necessary for PEO to perform its services. Upon receipt Client will immediately (and no later than twenty-four (24) hours after receipt) send PEO copies of demands, notices, claims, summons and other legal papers related to the Covered Employees. Client will cooperate with PEO in the investigation, remediation, settlement, and defense of legal claims related to the Covered Employees.
(i) Downsizing Notices. Client will provide all notices required by the WARN Act and similar state and local laws. Client will provide PEO with no less than seventy-five (75) days’ notice of any temporary or permanent layoff or plant closing that may immediately, or in the future, require the provision of notice under such laws.
(j) Legal Compliance. Client will comply with federal, state and local laws governing its business, including labor and employment laws. Although PEO may consult with Client regarding labor and employment related compliance matters, Client is solely responsible for conducting its business and decision-making in a way that complies with all federal, state, and local labor, employment, and employee benefit laws, including, without limitation, the Civil Rights Acts of 1866, 1964 (including Title VII), and 1991; the Age Discrimination in Employment Act; the Americans with Disabilities Act (ADA); the Family and Medical Leave Act (FMLA); the Fair Labor Standards Act (FLSA) the Worker Adjustment and Retraining Notification Act (WARN); the National Labor Relations Act (NLRA); the Equal Pay Act; the Vietnam Era Veteran’s Readjustment Assistance Act; Executive Order 11246; the Rehabilitation Act of 1973; the Fair Credit Reporting Act (FCRA); the Employee Polygraph Protection Act; the Immigration Reform and Control Act (IRCA); the Older Workers Benefits Protection Act (OWBPA); the Occupational Health and Safety Act (OSHA); the Uniformed Services Employment and Reemployment Rights Act (USERRA); the Genetic Information Non-Discrimination Act (GINA); and all other local, state and federal laws governing the employment relationship, including but not limited to, such laws governing discrimination in the workplace (collectively, “Applicable Laws”).
(k) Employment Contracts. PEO is not bound by any employment contract between Client and a Covered Employee. However, PEO will comport with Client’s instructions in the course of providing services with respect to a Covered Employee covered by an employment contract with Client, so long as such instructions are lawful, fully disclosed to PEO, and consistent with all other terms of this Agreement. Client is solely responsible for compliance with and the legal interpretation of any employment contract. Further, if during the Term of this Agreement or within the six (6) months following any termination of the Agreement, a Party hires a then-current employee of the other Party or hires any individual who has been employed by the other Party within the six (6) months preceding the hire, the hiring Party shall owe to the other Party a one-time fee equal to twenty (20%) of the total annualized compensation of the hired employee, such payment being due within thirty (30) days of the hire.
(l) Collective Bargaining Agreement. If Client has entered into a Collective Bargaining Agreement (CBA) pertaining to any Covered Employees, Client agrees that it will remain the sole employer of such Covered Employees for purposes of the National Labor Relations Act (NLRA), and that it will remain solely responsible and liable for all obligations arising under the NLRA and any applicable CBA, including, without limitation, the duty to bargain. Additionally, Client expressly warrants that this Agreement will not modify any of the terms of any applicable CBA. If Client has entered into any CBA, then said CBA shall be specifically identified in Exhibit “C” attached to the Agreement. PEO shall not be considered a party to any such CBA. Client represents and warrants that Client has not entered into a CBA pertaining to any Covered Employee during the Term unless such CBA is identified in Exhibit “C.”
(m) Reversion Upon Termination. Upon termination of this Agreement for any reason, or upon Client's failure either to provide payroll data as required herein or to timely pay as required herein, all PEO obligations set forth herein (including, without limitation, the payment of wages and the provision of benefits) will revert to Client retroactive to the last date on which PEO was paid in full for PEO’s services.
(n) Leave and Disability Accommodation. To the extent applicable to Client and to the extent required by law, Client will accept obligations and costs associated with compliance with the FMLA, ADA, and similar state and local laws, including but not limited to the cost of determining eligibility, conducting an interactive process and providing reasonable accommodation of disabilities, recordkeeping requirements related to leave and disability accommodation (including for pregnancy-related disabilities), reinstating employees returning from leave or finding replacement employment for them if required by law, and the cost of continuing benefits or providing sick pay during leave if required by law. Client agrees that it is the primary employer, and that it will be the successor employer upon termination of this Agreement, for purposes of FMLA compliance.
(o) Government Contracts. Client will be solely responsible for compliance with requirements pertaining to government contracts pursuant to federal, state, county and local laws, regulations, and ordinances, including but not limited to compliance with Executive Order 11246, the Rehabilitation Act of 1973, the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, the Walsh-Healey Public Contracts Act, the Davis Bacon Act, and the Service Contract Act of 1965, if applicable.
(p) Business and Occupational Legal Compliance. Client will comply with all laws governing Client’s business, including but not limited to laws pertaining to required filings, licensing, taxes, fidelity bonding, insurance, facilities/building codes and regulations, and environmental compliance. If any Covered Employee is required to be licensed, registered, or certified under any federal, state, or municipal law or regulation, or to act under the supervision of such a licensed, registered or certified person or entity in performing the employee’s services, then any such person(s) will be deemed an employee of Client for such licensure purposes. Client will be solely responsible for verifying licensure and/or providing the required supervision.
(q) Other Taxes and Fees. Other than required payroll withholding taxes covered by this Agreement, Client is responsible for paying and reporting all applicable taxes and governmental fees (including environmental fees required by the California Health and Safety Code).
(r) Special Compensation. Client is solely responsible for funding and accurately determining eligibility for Special Compensation, including, without limitation, vacation, paid sick leave (including legally mandated paid sick leave), other paid time off, profit sharing, deferred compensation, bonuses, severance payments, stock or other equity-based compensation, commissions, and other incentive compensation payments. Although said payments should be made through PEO’s payroll in order to ensure proper reporting and remittance of taxes, PEO takes no responsibility for the administration or funding of Special Compensation payments. Additionally, Client is solely responsible to provide Covered Employees on pay days with any required information pertaining to Special Compensation, in the manner and within the time frame required under applicable law, including without limitation, printed wage statement information regarding piece rate wages and other incentive wage payments, applicable Special Compensation wage rate(s), calculation of Special Compensation pay, pay period to which Special Compensation pay pertains, gross and net Special Compensation wage amounts, and overtime wages, if any, applicable to Special Compensation. Notwithstanding the forgoing, at Client’s request PEO will process payroll with respect to Special Compensation and when appropriate and permitted by law, PEO will assist Client with tracking accruals and payments of Special Compensation when practicable, so long as such activities are consistent with all other terms of this Agreement.
(s) Payroll Data. Client will timely and accurately provide all data necessary for PEO to process payroll for the Covered Employees, including but not limited to hours worked, rates of pay, payments owed, and exempt/non-exempt status. Although PEO may, at Client's request, consult with Client regarding exempt status requirements, Client is solely responsible for determining the exempt status of Covered Employees and Client agrees that Client alone possesses sufficient information to make such decisions. After Client’s initial determination of Covered Employee compensation, Client may change Covered Employee compensation only by giving advance written notice to PEO of any such change. PEO shall not unreasonably refuse to accept compensation changes requested by Client. In order to ensure accurate calculation of fees and proper withholding and reporting of taxes, Client agrees not to pay any wages or salaries directly to Covered Employees without informing PEO in writing of such payment and obtaining PEO's written consent to do so. Client will not withhold or authorize the withholding of a payment of wages absent express permission from a Covered Employee and will not violate any applicable law pertaining to deductions from wages when instructing PEO to make deductions. Client agrees to immediately (and no later than two (2) business days after receipt) forward to PEO any order or notice of garnishment, involuntary deduction, IRS lien or other legal process received by Client affecting wages paid to Covered Employees and, if requested by PEO, to sign such documents as are necessary to authorize PEO to act on Client's behalf in responding to such legal process. Client shall be solely responsible for all non-compliance penalties and liabilities resulting from Client's failure to timely forward such legal process or other necessary payroll data to PEO or to sign required authorization documents.
(t) Delivery of Paychecks to Covered Employees. Client shall promptly deliver all paychecks, if applicable, to Covered Employees each pay period. Client shall return all unclaimed or undeliverable paychecks to PEO within five (5) business days of receipt thereof. Client shall cooperate with PEO in locating and delivering to Covered Employees (or former Covered Employees) any unclaimed paychecks. As provided by Applicable Law, PEO may be required to surrender unclaimed paychecks to the state, and as such, Client hereby consents to PEO surrendering such paychecks to the state and relinquishes any right to a refund from PEO of such unclaimed paychecks.
(u) Reporting of Errors. On a continuing basis throughout the Term, Client agrees to review all Services as provided, including without limitation, all Payroll payments (i.e. ensuring the accuracy of Covered Employee Compensation each pay period), time management systems (if applicable), and related information, and promptly report to PEO any errors, discrepancies, omissions or other issues of any kind. Client accepts sole responsibility for any errors, discrepancies, omissions or other issues of any kind with the Services that Client fails to report to PEO within five (5) business days of the date on which Client first knew, or in the exercise of reasonable diligence should have known, of the issue, e.g. the date payroll is submitted
(v) If the Effective Date is any date other than January 1st, Client will have built withholding tax wage credit for wages paid to Covered Employees during the first year of the Term, but prior to the Effective Date. In certain jurisdictions PEO may be permitted to apply such credit for prior paid taxable wages for purposes of calculating Covered Employee withholding taxes after the Effective Date. Client will need to provide to PEO, in a timely manner, all relevant information, in PEO’s required format, to claim such credit. Failure to provide such information will result in additional charges or waiver of the credit. Client agrees that all such information shall be regarded as Client Information. Client shall be solely responsible for any negative tax consequences resulting from failure to timely provide such information.
(w) Work Site Safety. Client is the sole Employer with respect to safety-related compliance. Client agrees that Client and PEO are not joint employers as that term is defined by OSHA. Client retains exclusive control over the safety of the workplace(s) where Covered Employees work, and thus retains sole responsibility for compliance with applicable federal, state and local health and safety laws, regulations, ordinances, directives and rules relating to the workplace (“Workplace Safety Laws”). Client is solely responsible to identify and eliminate all known workplace threats to Covered Employees’ health or safety. Client acknowledges and agrees that Client has not retained PEO to manage or control Client’s business or operations, and PEO has no duty or authority to inspect, install, modify, repair, or maintain any equipment, tools, vehicles, or machinery that Covered Employees may use. However, PEO reserves the right to inspect Client’s workplace for the sole purpose of verifying compliance with the terms of the Agreement. Any inspections that PEO or its workers’ compensation insurance carrier may conduct are not for the purpose of identifying the unique threats to the health and safety of Covered Employees that may exist in Client’s workplace(s), thus such inspections would not fulfill a requirement for a full safety audit or inspection under applicable laws or regulations. Thus, Client shall, at its sole cost and expense, take all necessary steps to comply with Workplace Safety Laws, including, without limitation, the following: (i) Client shall take reasonable steps to evaluate worksite conditions pertaining to the health and safety of Covered Employees, by doing periodic inspections; Client shall identify all known hazards to Covered Employees’ health and safety, inform Covered Employees of such health and safety hazards, and take all reasonable measures to eliminate such health and safety hazards; Client shall provide Covered Employees with appropriate and required personal protective equipment; Client shall provide legally required training to Covered Employees regarding the safe performance of job duties, the proper use of personal protective equipment, and the maintenance of a safe work environment; Client shall establish and maintain a written, effective Injury and Illness Prevention Program (“IIPP”) that protects Covered Employees, and Client shall fully implement Client’s IIPP; Client shall implement specific safety programs as required by OSHA / Cal/OSHA requirements, depending on the work environment and the type of work being performed by Covered Employees;
(ii) Client shall ensure that each Covered Employee has, and is informed of, the following protections: (a) Covered Employees have the right to complain or report work conditions that the Covered Employee reasonably believes to be unsafe, unhealthful, or hazardous; (b) Covered Employees have the right to refuse to work in conditions that the Covered Employee reasonably believes to be unsafe, unhealthful, or hazardous; and (c) Covered Employees will not be subjected to any sort of retaliation or discrimination for reporting unsafe, unhealthful, or hazardous conditions or for refusing to work in unsafe, unhealthful, or hazardous conditions; and
(iii) In the event PEO safety consultants provide advice or information to Client regarding safety in the workplace, PEO does so as a consultant only and not as the employer in control of the workplace. Client at all times retains sole responsibility for providing appropriate training regarding job duties, workplace safety, and other related topics.
(x) Accident and Injury Reporting Procedure. Client shall immediately (and under all circumstances within twenty-four (24) hours), report accidents and injuries involving Covered Employees (including “first-aid” events). Client shall deliver a complete written report of an accident or injury to PEO no later than three (3) business days after the occurrence of such accident or injury. Client is solely responsible to report accidents and injuries involving Covered Employees to OSHA and similar state agencies as required by Workplace Safety Laws and Applicable Laws. Client's failure to timely report an accident or injury involving Covered Employees may result in one or more substantial fines, or other costs, pursuant to applicable law or to insurance company protocols and/or operating procedures. Any fines or any other costs incurred as a consequence of Client’s failure to comply with the provisions of Sections 4(w) and 4(x) of Schedule 3.1 shall be the sole responsibility of Client. Client agrees that if PEO receives a citation as a consequence of Client’s failure to comply with Sections 4(w) and 4(x) of Schedule 3.1, Client’s indemnification obligations, set forth in Section 2 of Schedule 3 shall apply. Client will cooperate in accident/injury investigations by the applicable workers’ compensation carrier or its representative.
(y) Contractors. Client shall ensure that contractors and others providing services to Client have the appropriate and required workers' compensation insurance coverage. Client shall also maintain appropriate and required workers' compensation insurance coverage for Client workers who are not covered by this Agreement, if any.
(z) Record Keeping. Client will maintain accurate records of hours worked to the extent required by law and will make such records available to PEO upon request. Client is solely responsible for creating and maintaining records of hours worked and attendance, regardless of whether Client utilizes time and attendance tracking systems provided by PEO (if any). Client will maintain other records as directed by PEO and in compliance with PEO’s policies and procedures. Client is solely responsible for complying with any posting requirements imposed by any applicable law.
(aa) Healthcare Reform / ACA Compliance. Client understands, acknowledges and agrees that Client is solely responsible and liable for all obligations with respect to Healthcare Reform’s Employer “Play or Pay” Mandate under Section 4980H of the Internal Revenue Code of 1986, as amended (IRC), and other applicable laws, including, without limitation, any tax reporting obligations under IRC Sections 6055 and 6056. To the extent that PEO agrees to assist Client with satisfying these obligations, Client understands, acknowledges and agrees that: (i) PEO is not providing legal or tax advice to Client and Client will seek appropriate legal and tax advice from its own legal and tax advisors; (ii) PEO will rely on the accuracy of all information and documents provided by Client with respect to such assistance; and (iii) Client will remain solely responsible and liable for such obligations.
(bb) Access and Use of PEO Services, Databases, and Platforms. Services provided by PEO to Client may include access to, use of, or interaction with PEO’s service platform(s) and/or third-party timekeeping, payroll, or other software support platforms pursuant to this Agreement. Client shall not: (i) resell, sublicense, lease, time-share or otherwise make the Services or any PEO databases or platforms available to any third party; (ii) send or store infringing or unlawful material; (iii) attempt to gain unauthorized access to, or disrupt the integrity or performance of, the Services, databases, platforms, or the data contained therein; or (iv) permit or fail to reasonably prevent unauthorized access to or disruption of the Services, platforms, or the data contained therein. Client shall have no implied license in or to any of PEO’s Services, service platforms, or support software or that of any third party involved in said Services, service platforms, or support software. PEO disclaims any and all warranties regarding the Services, service platforms, or support software.
5. INSURANCE AND BENEFITS
(a) Required Insurance Coverage for Client. At all times during the Term and to the extent appropriate for Client’s industry and business, Client will maintain and keep in full force and effect the insurance policies described below. With respect to each such policy of insurance, Client shall: (i) waive all subrogation rights against PEO; (ii) name PEO as an additional insured; (iii) provide PEO with a certificate of insurance; and (iv) provide PEO with thirty (30) days' advance notice of cancellation, lapse, material change or reduction in coverage.
(1) Commercial General Liability Insurance: Such insurance shall provide coverage for claims based on the acts or omissions of all Client Personnel, including all Covered Employees. Client's policy shall provide coverage limits of no less than one million dollars ($1,000,000.00) per occurrence and two million dollars ($2,000,000.00) annual aggregate.
(2) Business Automobile Insurance: Such insurance shall include hired, owned and non-owned automobiles, coverage for bodily injury, including death resulting therefrom. Client's policy shall provide coverage limits of no less than one million dollars ($1,000,000.00) per occurrence combined single limit. Such policy shall provide coverage applicable to the use or operation of vehicles of any kind by Client Personnel, including all Covered Employees. If Client owns or operates any vehicles subject to the Federal Motor Carrier Safety Act, Client is solely responsible for maintaining all required insurance thereunder, including all insurance required under Part 387 of the FMCSA regulations.
(3) Professional Services Insurance: If Client is engaged in or provides any professional services, Client shall retain a policy of professional liability or errors and omissions insurance, with limits of not less than one million dollars ($1,000,000.00) per occurrence. Client shall ensure that such policy provides coverage for the acts, errors or omissions of Client Personnel, including all Covered Employees.
(4) Other Worker Injury Coverage. If worker disease, injury or illness coverage other than workers' compensation ("Other Worker Injury Coverage") is applicable to Client's business or required of Client by Applicable Law or otherwise, Client shall obtain insurance policies providing such Other Worker Injury Coverage at its sole expense in accordance with Applicable Law. Examples of such Other Worker Injury Coverage include (but are not limited to): coverage required under the Defense Base Act, the Federal Employers Liability Act, the Mine Safety & Health Act, admiralty or maritime law, or any other federal law providing benefits to workers who suffer any work-related disease, injury or illness. Client acknowledges that Other Worker Injury Coverage is not and shall not under any circumstances be provided by or through PEO as part of the Services or otherwise.
(5) Other. Any other insurance coverage, including increased limits of any of the foregoing coverage, that PEO may require Client to obtain if PEO, in its sole judgment, deems it necessary for PEO's own protection. Client further understands and agrees that, except as otherwise stated on Schedule 1 hereto, any policy of insurance held by PEO is for PEO’s sole benefit and shall not provide coverage of any kind to Client or any Client Personnel.
(b) Health Benefits. The allocation of responsibilities for group health insurance coverage and employee benefit plans applicable to Covered Employees shall remain with Client, except to the extent that Client has adopted a PEO Benefit Plan.
(c) PEO Benefit Plan. If Covered Employees participate in a PEO Benefit Plan, then Client shall immediately notify PEO of any personnel action or other event involving or affecting Covered Employees or their qualified beneficiaries that would amount to a “qualifying event” under COBRA or any comparable Applicable Law. Client shall notify PEO of any events causing any participant (whether a Covered Employee or a family member) in a group health plan to lose eligibility for group coverage. Client shall endeavor to notify PEO within one (1) business day and shall make such reports on the forms provided by PEO. To the extent PEO is required, under Applicable Law to continue coverage for former plan participants through the end of the calendar month in which the insurance carrier receives notice that the individual is no longer eligible to participate in the group plan. Client agrees that any such costs shall be Client’s sole responsibility. Client understands that any delay in reporting a loss of eligibility for group coverage may result in liability for additional premiums, and Client shall be solely responsible for any such additional premiums or related costs. If for any reason PEO is required to pay any of the foregoing costs, Client shall pay PEO for such costs in advance, and such payments shall be considered part of Payroll. Notwithstanding the allocation of health benefits responsibilities set forth herein, PEO may non-renew coverage for Client under a PEO-sponsored health plan, if: (i) Client’s enrollment in said plan falls by more than 30% from its enrollment as of the Effective Date or below 5 total participants; (ii) Client is unwilling to contribute the requisite premium to maintain carrier contribution requirements; or (iii) Client’s plan participation falls below 50% of Covered Employees.
(d) Workers’ Compensation.
(i) Coverage for all Covered Employees. At all times during the Term, Client shall ensure that all of the Covered Employees are covered by a policy of workers’ compensation insurance in compliance with Applicable Law. Such workers’ compensation insurance coverage will be obtained by Client or by PEO, as determined by Applicable Law and as set forth on Schedule 1, will be provided for all Covered Employees. If a workers’ compensation policy is obtained by Client, Client shall execute Exhibit “B,” attached to the Agreement, and the policy that Client obtains will include a 30-day “material change endorsement” in favor of PEO whereby PEO will receive 30 days’ advance notice before any cancellation or other material change to the policy. Client will arrange for a certificate of insurance (or other official instrument) evidencing the policy, including said material change endorsement, to be delivered to PEO. If the workers’ compensation policy is obtained by PEO, PEO will arrange, at Client’s request, for a certificate of insurance (or other official instrument) evidencing the policy, to be delivered to Client. No policy of workers’ compensation shall take effect until the effective date designated by the insurer in the policy of workers’ compensation insurance.
(ii) Coverage for Client Personnel. Client shall ensure that contractors and others providing services to Client have the appropriate and required workers' compensation insurance coverage. Client shall also maintain appropriate and required workers' compensation insurance coverage for Client Personnel who are not covered by this Agreement, if any.
(i) PEO will provide employment practices liability insurance (the “PEO EPLI Policy”) for Covered Employees. Client shall not have access to the PEO EPLI Policy unless Client elects to have access, as indicated on Schedule 1. If Client so elects on Schedule 1, the PEO EPLI Policy shall provide coverage for Client as defined and limited by the terms of the policy and the conditions contained herein. PEO’s EPLI will only apply to claims made and submitted for coverage during the Term of the Agreement and arising from events occurring during the Term of the Agreement. In the event of a conflict between the terms of the EPLI policy and this Agreement, the EPLI policy terms will control. PEO makes no representations regarding the insurance carrier, insurance limits, Deductible, or scope of coverage provided by PEO’s EPLI policy, and all such terms are subject to change without notice. PEO reserves the right to modify the PEO EPLI Policy at any time or rescind Client’s access to the PEO EPLI Policy if Client fails to pay for any costs or fees associated with said policy owed by Client or if Client violates any terms of this Agreement.
(ii) Client’s EPLI Coverage. Client and PEO agree that any EPLI policy that Client maintains shall be primary with respect to coverage for Client as to claims by or concerning the Covered Employees, and the coverage, if any, afforded Client under the PEO EPLI Policy shall be excess to any policy held by Client.
(iii) Additional Requirements. Additionally: (1) Client represents and warrants that as of the Effective Date there are no circumstances that would be reasonably likely to give rise to a claim under any EPLI policy that Client has not disclosed to PEO. Client agrees that any coverage afforded Client under the PEO EPLI Policy shall not extend to any claim that originated prior to the Effective Date;
(2) Client shall immediately notify PEO of any circumstances that may be reasonably likely to give rise to a claim under any EPLI policy and Client agrees to consult with PEO and cooperate with PEO, including disclosing all relevant information to PEO;
(3) PEO retains the right to appoint and direct legal counsel engaged in connection with any claim or potential claim, with the understanding that Client shall always be free to engage its own legal counsel at its sole expense;
(4) In the event of a claim against Client and/or PEO covered by PEO’s EPLI, Client will be responsible for payment of the deductible or self-insured retention (collectively “Deductible”) including all legal fees and costs incurred within the Deductible. Client will be responsible for any legal or general defense costs associated with any claim brought by a Covered Employee against Client and/or PEO not covered by PEO’s EPLI as well as any settlement or claim costs that exceed the amount paid by the EPLI carrier.
(f) Other Benefits. Client shall be solely responsible for any employer contribution toward the cost of benefits, or any voluntary employer contributions to any 401(k) plan.
(g) If Covered Employees participate in a flexible spending account (FSA or section 125 plan), Client shall pay any sums required to cover shortfalls in Covered Employee contributions, and all such amounts shall be considered part of Payroll.
6. PAYMENT OF FEES
(a) Fee Rates. As set forth in Section II of the Agreement, Client will pay the Fees according to the rates set forth in Schedule 2. Schedule 2 is not intended to be a comprehensive list of all Fees. All Fees (other than the one-time implementation fee) shall be calculated on a per payroll period basis and shall be due in full not later than at least two (2) business days prior to Client’s Payroll Date for each pay period, unless, for Administrative Fees only, otherwise agreed to by PEO in advance and in writing.
(b) Fee Calculations. Fee Calculations are set forth in Section II of the Agreement. Should Client require additional services not referenced in this Agreement, or Schedules 1, 1.2, and 2, separate charges will apply.
(c) Fee Rate Increases. PEO may increase its Fees as follows: (i) immediately, at any time during the Term, in response to any increase in the items that form the basis of the Payroll Percentage, including without limitation any increase in tax rates, any special assessments including retroactive assessments, or insurance (including third party fees associated therewith); (ii) immediately, at any time during the Term, to account for any new Services; (iii) immediately, at any time during the Term, in response to any new or modified gross receipts, sales, use or other taxes that would apply to the Services; (iv) by delivering thirty (30) days’ notice to Client during any Extended Term of this Agreement; or (v) immediately, at any time during the Term, if Client fails to pay any Fees on time for any reason or if any payment by Client is returned for insufficient funds or otherwise refused by Client’s financial institution.
(d) Invoiced Amounts May Not Equal Costs. Client understands, acknowledges and agrees that any fees, charges or other amounts invoiced and/or paid pursuant to this Agreement (“Invoiced Amounts”) may not equal the actual costs of PEO, regardless of how such Invoiced Amounts are presented on any invoice, proposal or otherwise, including, without limitation, Invoiced Amounts identified as or related to taxes, contributions, premiums, fees or deductibles. To the extent that any such Invoiced Amounts exceed the actual costs of PEO, Client understands, acknowledges and agrees that such excess is part of the reasonable compensation payable to PEO for the services provided pursuant to this Agreement.
(e) Retroactive Fees or Charges. To the extent that any tax, premium or other cost of PEO is unilaterally increased by a governmental body or other third party beyond the control of PEO, whether prospectively or retroactively, Client understands, acknowledges and agrees that PEO will invoice Client for such increases and that any fees or charges associated with such increases will be due and payable in the same manner as any other fees or charges invoiced pursuant to this Agreement, even if such fees or charges are invoiced after the termination of this Agreement.
(f) Payment Procedures. On or before 12:00 noon Central Time at least three (3) business days in advance of Client’s Payroll Date Client will provide to PEO, in the method authorized by PEO, the payroll data upon which Covered Employee Compensation is calculated, in the format prescribed by PEO. As soon as practicable following receipt of the payroll data, PEO will send to Client an invoice for payment. Upon receipt of the invoice, and no later than two (2) business days in advance of Client’s Payroll Date, Client shall: (1) provide PEO with final approval of Covered Employee Compensation data and information, and (2) ensure that payment in full is made. Client agrees to payment through either automated clearing house transaction (“ACH”) or funds drawdown transaction (“Reverse Wire”). PEO specifically reserves all of its right to payment of all Fees. Client hereby authorizes PEO to deduct or debit from Client’s bank account any monies due and owing, outstanding, or including outstanding Fees, retroactive changes in payroll tax amounts, unpaid insurance premiums, delinquent payroll and other related taxes including assessed fines, penalties and interest, charge backs due to Client’s bank account having insufficient funds (“NSF charges”), and any other amounts that may accrue or may become outstanding relating to services provided by PEO. In addition, any Fees or other charges not paid on or before the due date will be subject to a $100.00 late payment fee and finance charges equal to one and one-half percent (1.5%) of the outstanding balance per month. This Section will survive termination of the Agreement.
(g) Disputed Fees. Client shall promptly notify PEO in writing of any disputed Fees and shall only dispute Fees in good faith. Client waives all right to dispute any Fees if Client fails to deliver written notice of its dispute to PEO within thirty (30) days of the date on which Client first knew or in the exercise of reasonable diligence should have known of any alleged error or discrepancy in Fees or other alleged issue with the Services. Client may not under any circumstances withhold, and hereby waives all rights it may have to withhold, any portion of Payroll for any reason, even if disputed by Client.
(h) Pre-payment. In the event Client fails to timely report data upon which Covered Employee Compensation is calculated, or fails to timely approve Covered Employee Compensation or timely pay invoices, PEO in its discretion may require Client to: (1) pre-pay the estimated invoicing for upcoming pay periods prior to commencement of that pay period; and/or (2) provide a deposit equal to the largest periodic Fee payment made by Client to date, which amount shall be held by PEO as security against any future default by Client, and shall be returnable only upon expiration or termination of this Agreement, after giving effect to any deductions by PEO for unpaid amounts due hereunder; and/or (3) pay a fee to PEO equal to the greater of five hundred dollars ($500) or one percent (1%) of the most recently due periodic Fee amount; and/or (4) if Client has not already done so, retain a letter of credit in favor of PEO to support Client’s debts and obligations under this Agreement in a form and with a financial institution preapproved by PEO. These requirements may be imposed indefinitely or, in PEO’s discretion, may be imposed temporarily until Client has demonstrated its ability to pay on a timely basis.
(i) Default. Should Client default in any of its payment obligations hereunder, Client shall pay all attorneys’ fees and costs incurred by PEO in connection with its effort to collect such amounts.
(j) Insolvency Event. Client will immediately notify PEO of any Insolvency Event. Client agrees that any wages or taxes or contributions paid or advanced by PEO prior to such Insolvency that remain unpaid by Client shall be treated as outstanding wage obligations for the purposes of determining priority in the associated legal proceedings with the intended effect that PEO shall have the same rights as Covered Employees with respect to such wages and associated taxes and shall be entitled to relief as necessary to apply such status.
(k) Lien. To support the full and timely payment of Client’s debts and obligations to PEO under this Agreement, Client hereby grants to PEO a lien and security interest in the following collateral and all proceeds therefrom: (i) any and all equipment, fixtures, furniture, and accounts receivable now owned or hereafter acquired by Client; and (ii) a specific account assignment of all depository accounts of Client. The foregoing lien and security interest (i) shall be senior to all debts of the Client, other than those debts specifically identified to PEO in writing prior to execution of this Agreement; (ii) shall secure the payment and performance of all Client’s debts and obligations under this Agreement; (iii) shall continue, even if beyond the Term of this Agreement, until all such debts and obligations are extinguished; and (iv) shall not be subordinated to any other debts of the Client without the prior written consent of PEO. Client agrees to cooperate with PEO in executing and filing all documentation needed to perfect, defend and maintain the lien and security interest granted herein. This Agreement and any carbon, photographic, electronic or other reproduction of this Agreement shall constitute a good and enforceable financing statement for purposes of evidencing the lien and security interest granted herein.
7. CLIENT COVENANTS, REPRESENTATIONS, AND WARRANTIES
Client represents and warrants as follows:
(a) Power to Enter Into Agreement. Client has the power to enter into this Agreement; Client’s execution of this Agreement has been duly authorized by its managing authority, by corporate action or otherwise; and this Agreement constitutes a valid and binding obligation on Client, enforceable in accordance with its terms;
(b) Qualified to Conduct Business. Client is, and shall continue to be throughout the Term, duly qualified to do business and is in good standing in all states where Client conducts business;
(c) Insolvency Event. Neither Client nor any of its owners or predecessors in interest has suffered or undergone an Insolvency Event within the seven (7) years preceding the Effective Date, and (ii) covenants that it will immediately notify PEO should it become reasonably likely that Client may suffer an Insolvency Event;
(d) Client’s Obligations to Covered Employees. (1) All compensation of the Covered Employees accrued prior to the Effective Date and for which Client or any third party is responsible and obligated has been paid in full; (2) there are no separate contracts, agreements or other arrangements existing with respect to the Covered Employees as a group or any of them which would bind or obligate Client, except as expressly set forth herein; (3) Client will notify PEO of the principal location of the workplace of each Covered Employee and each location where such Covered Employee performs services for Client, and of any changes in such locations; and (4) all pension, profit-sharing, or other employee benefit plans existing at the Effective Date are current and in compliance with applicable law, and execution of this Agreement will not be deemed a breach under the terms of those plans;
(e) Accuracy of Data. As of the Effective Date, and throughout the term of this Agreement, (1) all information provided by the Client in contemplation of this Agreement or pursuant hereto, including but not limited to financial data, employee lists, job descriptions and classifications, compensation, benefits, and time reports, all Client Information, whether provided by Client directly or on Client’s behalf is and will be true and correct; (2) no material adverse change has occurred in the financial condition of the Client or any guarantor of Client’s obligations under this Agreement since the date upon which any financial data of Client or guarantor were provided to Client; (3) PEO may rely on the Client Information in its performance of the Services without reservation and without independent verification; and (4) each time Client releases Client Information to PEO (e.g., by submitting payroll), by operation of such release, Client will have reviewed and approved of the released Client Information and that PEO may proceed with its performance of the Services in reliance upon such Client Information;
(f) No Litigation. Except as previously disclosed to PEO in writing, there is no action, suit, proceeding or investigation pending, or, to the knowledge of Client, threatened against Client, related to the Covered Employees or the Client’s employer/employee relationship with the Covered Employees or which may result in a material adverse change in the financial condition of Client or of any guarantor of Client’s obligations under this Agreement. Client will advise PEO promptly upon the inception of any such action, suit, proceeding, investigation or threat thereof;
(g) Compliance with Applicable Law. Client has not violated any applicable statute or regulation in any respect, which would adversely affect the Covered Employees or Client’s employment relationship with the Covered Employees. Client is and will remain in compliance with all applicable statutes, regulations, and executive orders respecting Covered Employees and employment practices, including but not limited to the state and federal employment laws. Client acknowledges that certain requirements applicable to employers under various federal and state statutes, rules, and regulations are based on the status of the employer and number of employees, and that Client’s status under one or more of such statutes, rules, and regulations may change as a result of entering into this Agreement;
(h) Work Site Safety. Client is in compliance with all applicable Workplace Safety Laws, and Client has maintained, and will continue to maintain throughout the term of this Agreement, Client’s workplace(s), machinery, equipment, and environmental factors in compliance with applicable Workplace Safety Laws.
(a) Independent Contractor Relationship. PEO is an independent contractor of Client and will not be its principal, director, agent, master, servant, or employee. This Agreement does not create a joint venture, partnership, joint employment, or any similar arrangement between PEO and Client. Neither Client nor PEO is an agent for the other except as explicitly stated herein. Neither Client nor PEO shall have the authority to bind the other to any contract, agreement or obligation.
(b) Third Party Beneficiaries. The Parties acknowledge and agree that no parties, other than the Parties hereto, are intended to benefit hereunder. No rights of any third party are created by this Agreement and no person other than Parties to this Agreement may rely on any aspect of this Agreement notwithstanding any representation, written or oral, to the contrary. This Agreement may only be enforced by PEO and Client.
(c) Security or Guaranty. PEO may, at its option, request security from Client. This security may, but is not required to be, in the form of a security deposit or personal guaranty. If such security or guaranty is requested, Client shall to deliver on or before the Effective Date a guaranty in favor of PEO to support Client’s debts and obligations under this Agreement, executed by a person approved in advance by PEO in PEO’s sole discretion, in substantially the form attached to the Agreement as Exhibit A. Client further agrees that, at PEO’s request and Client’s sole expense, Client shall retain a letter of credit in favor of PEO to support Client’s debts and obligations under this Agreement in a form and with a financial institution preapproved by PEO. Client acknowledges that such guaranty and letter of credit, if requested, each constitute a material inducement to PEO entering into this Agreement.
(d) Confidential Information and Data Privacy. In the course of performing its obligations set forth herein, a party (“Disclosing Party”) may disclose, furnish, or provide to the other party (“Recipient”) non-public confidential information, including, but not limited to, personal information of Covered Employees and payroll data (collectively, “Confidential Information”). The Recipient shall keep confidential and shall not directly or indirectly disclose, disseminate, or use Confidential Information except as necessary to perform its obligations hereunder or as required by law, and shall take reasonable efforts to protect Confidential Information. Confidential Information does not include information which: (1) was in the possession or control of the Recipient prior to the time of disclosure hereunder; (2) at the time of disclosure or thereafter becomes public knowledge through no action of the Recipient; or (3) is lawfully obtained by the Recipient from a third party under no enforceable obligation of confidentiality to the Disclosing Party. The Recipient represents that it has implemented and maintains information security policies and procedures that are reasonably designed to protect against unauthorized access to, or use of, Confidential Information. For purposes of this section, "breach" means any unlawful access to, disclosure or use of data that compromises the security, integrity, or confidentiality of Confidential Information. The Recipient will use reasonable information security measures to safeguard Confidential Information against breaches and in compliance with applicable law. If the Recipient discovers reasonable grounds to conclude Confidential Information of the Disclosing Party was breached, the Recipient will comply with investigation and notice requirements dictated by law. The Recipient will also promptly inform the Disclosing Party in writing to the extent required by law. In the event of a breach as defined by applicable law, or any other event regarding Confidential Information that requires notification under applicable law, the Recipient agrees to provide reasonable assistance to the Disclosing Party. Upon receiving written notice about such breach from the Recipient, the Disclosing Party will permit the Recipient to take reasonable steps to stop or remediate unlawful use of Confidential Information and ensure that Recipient’s use of Confidential Information is consistent with this Agreement. These obligations shall survive the termination of the Agreement. The Recipient will not be in breach of this Agreement by disseminating Confidential Information as required by legal process or to comply with a disclosure obligation required by law. To the extent permitted by law, Recipient will notify the Disclosing party as far in advance as reasonably possible before the Recipient delivers such Confidential Information to any third party. If Client and PEO have entered into a separate Confidentiality and/or Non-Disclosure Agreement, the terms of that document will control with regard to the issues addressed in this paragraph. To the extent this Agreement or the Services provided hereunder is subject to certain data privacy laws, both Client and PEO will comply with said laws as applicable to them and will have policies, practices, and/or procedures in place to facilitate compliance.
(e) Force Majeure. Neither Party shall be liable for any delay in delivery or nonperformance in whole or in part of its obligations under this Agreement if prevented from doing so by a Force Majeure Event. The suspension of performance shall be of no greater scope and no longer duration than is reasonably required and the non-performing party shall use reasonable efforts to remedy its inability to perform.
(f) NEITHER CLIENT NOR PEO WILL BE RESPONSIBLE FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR OTHER SIMILAR DAMAGES (INCLUDING WITHOUT LIMITATION, LOST PROFITS OR BUSINESS INTERRUPTION DAMAGES) HOWEVER CAUSED OR UNDER ANY THEORY OF LIABILITY EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(g) Definitions. Terms and phrases that are defined in any part of this Agreement shall have the defined meanings wherever used throughout the Agreement. The terms "hereunder" and "herein" and similar terms used in this Agreement shall refer to this Agreement in its entirety and not merely to the section, subsection, paragraph or subparagraph in which the term is used.
(h) Assignability. PEO may otherwise assign this Agreement or its rights and duties hereunder, or any interest herein, without the prior written consent of Client, to a third party that provides services substantially similar to the Services. Furthermore, Client agrees and consents to PEO’s use of third parties to perform non-essential aspects of the Services or to otherwise facilitate the provision of the Services. Client may not assign this Agreement or its rights and duties hereunder, or any interest herein, without the prior written consent of PEO.
(i) Terms Surviving Termination of Agreement. Termination of this Agreement will not affect the continuation of any outstanding obligation or liability incurred by either Party during the term of this Agreement. The obligation of either Party to notify, indemnify, defend and hold harmless the other under the terms of this Agreement will continue after the termination hereof with respect to events occurring prior to such termination.
(j) False or Omitted Information. Any false statement or omission with regard to any information supplied by Client to PEO in anticipation of Client's contracting with PEO or at any other time will be deemed a material breach of this Agreement and PEO, at its option, may terminate this Agreement and seek appropriate relief.
(k) Reference to “Day” or “Days”. Unless there is a specific reference to the contrary, any reference to "day" or "days" in this Agreement shall mean calendar days.
(l) Legal Rights and Obligations. Client acknowledges and agrees that PEO is not engaged in the practice of law or the provision of legal services, and that Client alone is completely and independently responsible for its own legal rights and obligations. PEO’s agreement to perform certain employer functions does not establish an obligation to perform all employer related functions, and PEO reserves the right to reject claims by Covered Employees with respect to matters that are not the responsibility of PEO.
(m) Scope of Services. PEO will provide only the services expressly described in this Agreement. No other services will be provided or implied. PEO is not obligated to provide, nor is it responsible for, strategic, operational or other business-related decisions with regard to Client's business. Nor shall PEO have any obligation to provide equipment for Covered Employees.
(n) No Inducement. Client understands, acknowledges and agrees that the PEO services provided pursuant to this Agreement are not being provided as an inducement to purchase insurance coverage of any kind, nor do such services constitute insurance or the sale of insurance of any kind.
(o) PEO Does Not Provide Legal or Tax Advice. Client understands, acknowledges and agrees that the PEO services provided pursuant to this Agreement shall not constitute legal or tax advice to Client and Client shall seek all appropriate legal and tax advice from its own legal and tax advisors.
(p) No Waiver of Rights. Except as otherwise provided herein, failure by either Party at any time to require performance by the other Party or to claim a breach of any provision of this Agreement will not be construed as a waiver of any subsequent breach nor affect the effectiveness of this Agreement, nor any part hereof, nor prejudice either Party as regard to any subsequent action.
(q) Severability. Should any term, warranty, covenant, condition, or provision of this Agreement be held to be invalid or unenforceable by a court or other body of competent jurisdiction or pursuant to arbitration, the balance of this Agreement will remain in force and will stand as if the unenforceable part did not exist. The invalid or unenforceable provision will be replaced by a provision as similar as possible and which is valid and enforceable.
(r) Headings. Captions, headings, and organization of this Agreement are for reference only and shall not be considered in the interpretation of this Agreement.
(s) Notices. Notices under this Agreement shall be given as stated herein, or, if not stated herein, may be given in commercially reasonable manner calculated to reach promptly the addressee, such as first-class mail, certified mail, facsimile transmission, hand delivery or email. Notice shall be given to the addresses specified on the first page of this Agreement. In addition, notice may also be given to any other address customarily used by the receiving Party for business communications.
(t) Signatures. Any individual signing this Agreement on behalf of Client or PEO represents, warrants and guarantees that she or he has full authority to do so. Signatures may be provided electronically, and the parties agree that all future transactions between them may be executed via electronic signature. The parties agree that digitally signed, scanned, or faxed copies of this Agreement, shall be deemed to have the same legal force and effect as the original signed copy. Thus, neither party will contest an otherwise valid signature on the basis that it was provided electronically.
(u) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.
(v) Time of Performance. Time is of the essence with respect to performance of all obligations set forth herein.
(w) Duty to Cooperate. Each party will have the duty to cooperate with the other in the event of any claim filed by an employee or former employee, or any government agency investigation of a complaint filed by an employee or former employee covered by this Agreement. Such duty will survive the termination of this Agreement. Client agrees to cooperate with PEO as needed for any state licensing and/or registration requirements. Client further agrees to cooperate with PEO as needed for compliance with any additional state statute, regulation, or other requirement not aforementioned or referenced above or below. Such duties will survive the termination of this Agreement.
Last updated: September 1, 2022