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Bill

AB 1515

Professional employer organizations.

2025-2026 Regular Session

AB 1515 establishes state licensing and operational standards for Professional Employer Organizations to protect California workers and ensure financial accountability in the PEO industry.

Ordered to inactive file at the request of Senator Smallwood-Cuevas.
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Bill Summary · AB 1515

Legislative bill overview

AB 1515 regulates Professional Employer Organizations (PEOs) in California by establishing licensing requirements, operational standards, and consumer protections. PEOs are companies that assume employer responsibilities for other businesses' workers, handling payroll, benefits, and HR functions while the workers remain technically employed by the PEO.

Why is this important

PEOs serve thousands of California small businesses and employ hundreds of thousands of workers, yet currently operate with minimal state oversight. This bill would create regulatory standards to protect workers' wages, benefits, and workplace rights while ensuring PEOs maintain financial stability and adequate insurance coverage.

Potential points of contention

  • Compliance costs: New licensing requirements and operational standards could increase PEO expenses, potentially raising costs for small businesses that use PEOs to reduce administrative burden
  • Scope of regulation: Disagreement over whether state regulation is necessary or if federal oversight and market competition provide sufficient accountability
  • Worker classification concerns: Questions about whether PEO regulations adequately protect workers who are technically employed by the PEO rather than the company directing their work

Compiled from official sources — confirm details with the bill’s official record.

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