AB 1515 California Assembly · 2025-2026 Regular Session

Professional employer organizations.

Summary

Existing federal law provides for certification of a professional employer organization (PEO) by the Secretary of the Treasury and, for purposes of specified taxes and other obligations, treats a PEO as the employer of any work site employee performing services for any customer of the PEO. Existing law authorizes the Director of Industrial Relations to adopt regulations reasonably necessary to carry out certain laws relating to workers' compensation insurance requirements, including regulations regulating the workers' compensation self-insurance obligations of professional employer organizations. This bill would define the terms "professional employer organization" and "professional employer services" for purposes of the Labor Code.

Bill status passed 3 of 5 stages cleared

Introduction

Mar 2025

Committee Review

Aug 2025

Assembly Passage

May 2025

Senate Passage

Governor

Introduced Mar 10, 2025 Last action Aug 24, 2026

Maddy AI version diff · 3 comparisons

What changed between versions

08/10/26 - Amended Senate → AB1515 · 1 edit

MINOR

No substantive policy changes were made between these two versions. The diff reflects a change in document formatting and presentation only: the 'from' version uses the traditional legislative document layout with line numbers and page headers, while the 'to' version is a web-published format that includes website navigation elements around the same bill text. All operative provisions (Sections 1650-1652) are identical in content.

TECHNICAL

The document was reformatted from the official legislative print layout (with line numbers, page headers/footers, and formal header blocks) to a web-published version that includes site navigation elements (skip to content, home, accessibility, FAQ, etc.) surrounding the same bill text. No changes to the actual statutory language were made.

06/23/25 - Amended Senate → 08/10/26 - Amended Senate · 4 edits · Aug 10, 2026

MODERATE

The August 2026 amendment removes a separate provision that would have required Cal/OSHA to submit an annual report to the Governor and post it online, narrowing the bill's scope. It also adds explicit exclusions from the PEO definition (temporary services employers, motion picture payroll companies, and certain controlled-group arrangements) and tightens the regulatory citation for IRS certification. These changes clarify who is and is not subject to the new PEO registration requirement.

Scope change

The bill's scope narrowed by removing the Cal/OSHA annual reporting amendment. At the same time, the PEO registration requirement's applicability was refined through new exclusions that carve out temporary services employers, motion picture payroll companies, and certain intra-group employee sharing arrangements from the definition of a PEO.

SCOPE

The entire amendment to Labor Code Section 6330 was deleted. This provision would have required the Cal/OSHA director to submit an annual report on division activities to the Governor and Legislature by March 1 and post it on the department's website. Its removal means the bill no longer touches occupational safety reporting requirements.

DEFINITION

A new exclusion provision (Section 1650(b)(2)) was added specifying that a PEO does NOT include: (A) persons whose principal business is not entering into professional employment agreements, who do not hold themselves out as a PEO, and who share employees with a company in a controlled group or under common control per IRC Section 414(b) and (c); (B) temporary services employers as defined in Labor Code Section 201.3; and (C) motion picture payroll services companies as defined in Unemployment Insurance Code Section 679(f)(5)(A).

The IRS certification criterion was made more specific, now referencing 'Section 301.7705-1(b) of Title 26 of the Code of Federal Regulations' rather than just 'Section 7705 of Title 26 of the United States Code.'

The definition of 'professional employer services' was clarified: wage reporting now specifies 'for purposes of federal law,' and the workers' compensation insurance requirement now includes the phrase 'as specified in the professional employer agreement, in compliance with' before citing the relevant Labor Code sections.

03/10/25 - Introduced → 06/23/25 - Amended Senate · 6 edits · Jun 23, 2025

MODERATE

The Senate amendment dramatically expanded AB 1515 from a narrow Cal/OSHA annual reporting requirement into a bill that also creates an entirely new chapter regulating Professional Employer Organizations (PEOs) in California. The new provisions require PEOs to register with the Division of Labor Standards Enforcement before providing, advertising, or holding themselves out as providing professional employer services in the state, and establish an initial registration fee capped at the reasonable cost of registration. The original Cal/OSHA reporting amendment was retained but renumbered as Section 2.

Scope change

The bill expanded from a single-purpose Cal/OSHA reporting requirement to a dual-purpose bill that also establishes a new state-level registration framework for Professional Employer Organizations, significantly broadening the regulatory reach into the PEO industry.

SCOPE

Added a new Chapter 1 (Sections 1650-1652) to Part 6 of Division 2 of the Labor Code creating a registration regime for Professional Employer Organizations in California.

DEFINITION

Defined 'Professional employer organization' as a person certified by the Secretary of the Treasury under IRC Section 7705, accredited by the Employer Services Assurance Corporation, or providing professional employer services to a client under a written agreement intended to create an ongoing relationship.

Defined 'Professional employer services' as services covering all or substantially all employees of a client that include reporting wages using the PEO's federal EIN, securing workers' compensation insurance, and offering employee benefit plans.

REQUIREMENT

Prohibited any person from providing, advertising, or holding themselves out as providing professional employer services in California unless registered with the Division of Labor Standards Enforcement (Section 1651).

FISCAL

Required PEOs to pay an initial registration fee upon registration, capped at the reasonable cost of providing the registration (Section 1652).

TECHNICAL

The original Section 6330 amendment (Cal/OSHA annual report submission to Governor and posting online) was retained but renumbered from Section 1 to Section 2, with minor cleanup of duplicate words and grammar fixes.

Floor votes · Assembly May 15, 2025

How they voted

68–0

Passed · 10 other

Total votes 78

May 15, 2025

D Democratic59

52 Yea 7

88% Yea

R Republican19

16 Yea 3

84% Yea

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Aug 10, 2026

Upper · Passed

Read second time and amended. Ordered returned to second reading.

upper

Aug 29, 2025

Upper · Passed

From committee: Do pass. (Ayes 5. Noes 2.) (August 29).

upper

Aug 18, 2025

Committee

In committee: Referred to suspense file.

upper

Jul 9, 2025

Upper · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 1.) (July 9). Re-referred to Com. on APPR.

upper

Jun 23, 2025

Introduced

From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on L., P.E. & R.

upper

May 28, 2025

Committee

Referred to Com. on L., P.E. & R.

upper

May 15, 2025

Lower · Passed

Read third time. Passed. Ordered to the Senate. (Ayes 69. Noes 0. Page 1570.)

lower

May 7, 2025

Lower · Passed

From committee: Do pass. To Consent Calendar. (Ayes 15. Noes 0.) (May 7).

lower

Apr 24, 2025

Lower · Passed

From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (April 23). Re-referred to Com. on APPR.

lower

Mar 17, 2025

Committee

Referred to Com. on L. & E.

lower

Mar 11, 2025

Lower · Passed

From printer. May be heard in committee April 10.

lower

0 primary · 0 co-sponsors

What changed between versions

How they voted

Actions timeline

Sponsors