1.    Except as specifically provided in this chapter or in a professional employer agreement, in each coemployment relationship:

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a.    The client is entitled to exercise all rights and is obligated to perform all duties and responsibilities otherwise applicable to an employer in an employment relationship.

b.    The professional employer organization is entitled to exercise only those rights and obligated to perform only those duties and responsibilities specifically required by this chapter or set forth in the professional employer agreement. The rights, duties, and obligations of the professional employer organization as coemployer with respect to any covered employee are limited to those arising under the professional employer agreement and this chapter during the term of coemployment by the professional employer organization of the covered employee.

c.    The client retains the exclusive right to direct and control any covered employee as is necessary to conduct the client’s business, to discharge any of the client’s fiduciary responsibilities, or to comply with any licensure requirements applicable to the client or to a covered employee.

2.    Except as specifically provided in this chapter, a coemployment relationship between the client and the professional employer organization, and between each coemployer and each covered employee, must be governed by the professional employer agreement. Each professional employer agreement must include:

a.    The allocation of rights, duties, and obligations. b.     (1) A statement that provides that:

(a)    The professional employer organization shall pay wages to any covered employee and shall withhold, collect, report, and remit payroll-related and unemployment taxes on wages paid to the covered employee by the professional employer organization; (b)    The client shall accurately report all wages of a covered employee to the professional employer organization; and

(c)    The professional employer organization shall make payments for employee benefits for covered employees to the extent the professional employer organization has assumed responsibility in the professional employer agreement.

(2) As used in this subdivision, the term “wages” means all remuneration for services to the professional employer organization and the client, regardless of source, including a commission or bonus and the cash value of any remuneration in a medium other than cash. Any gratuity customarily received by an individual in the course of the individual’s service from any source other than the client or the professional employer organization must be treated as wages received from the individual’s coemployers.

c.    A statement providing that the professional employer organization has the right to hire, discipline, and terminate a covered employee as may be necessary to fulfill the professional employer organization’s responsibilities under this chapter and the professional employer agreement and that the client has the right to hire, discipline, and terminate a covered employee.

d.    A statement addressing the responsibility to obtain workers’ compensation coverage.

    3.    Under each professional employer agreement entered by a professional employer organization, the professional employer organization shall provide written notice to each covered employee affected by the agreement of the general nature of the coemployment relationship.

4.    Except to the extent otherwise expressly provided by a professional employer agreement:

a.    A client is solely responsible for the quality, adequacy, or safety of the goods or services produced or sold in the client’s business.

b.    A client is solely responsible for directing, supervising, training, and controlling the work of a covered employee with respect to the business activities of the client and solely responsible for any act, error, or omission of a covered employee relating to those activities.

c.    A client is not liable for any act, error, or omission of a professional employer organization or of any covered employee of the client and a professional employer organization if the covered employee is acting under the express direction and control of the professional employer organization.

d.    A professional employer organization is not liable for any act, error, or omission of a client or of any covered employee of the client if the covered employee is acting under the express direction and control of the client.

e.    This subsection does not limit any contractual liability or obligation specifically provided in the written professional employer agreement.

f.    A covered employee is not, solely as the result of being a covered employee of a professional employer organization, an employee of the professional employer organization for purposes of general liability insurance, fidelity bond, surety bond, employer’s liability not covered by workers’ compensation, or liquor liability insurance carried by the professional employer organization unless the covered employee is included by specific reference in the professional employer agreement and applicable prearranged employment contract, insurance contract, or bond.

5.    A professional employer organization is not engaged in the sale of insurance or in acting as a third-party administrator by offering, marketing, selling, administering, or providing professional employer services which include services and employee benefit plans for a covered employee.

6.    Nothing in this chapter or in a professional employer agreement may be construed to affect the provisions of section 52-04-24 or 65-01-08.