Professional Employer Organization Licensing
Businesses that conduct human resources responsibilities and act as co-employers with their clients are often required to hold a professional employer organization (PEO) license. In some cases, these licenses are referred to as employee leasing company licenses. Although employee leasing companies provide slightly different services, most states use these license types interchangeably.
Professional employer organization licenses are required in 35 states. Entities should register with the secretary of state prior to applying for a license. Along with the application, entities are often required to meet a bonding requirement, provide proof of worker’s compensation insurance, and usually a financial statement. A dedicated compliance expert can help you keep track of varying jurisdiction requirements and updated laws.
Overview By State
Looking for PEO certification requirements in a particular jurisdiction? The following table summarizes employment service firm licensing requirements across the United States. Click on any state for the licensing information specific to that state.
- District of Columbia
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
Employee Leasing Company - Enter into leasing contracts with other businesses that require labor. The leasing company loans its workers to the lessee while still providing specified responsibilities, such as workers compensation insurance, to the employees. This includes long term (6 months or more) temporary arrangements but often excludes temporary help arrangements. Unlike professional employer organizations, employee leasing companies are contracted when an employer needs to hire staff and does not want to handle human resources responsibilities.
Employment Agency - An entity that, for compensation, procures or attempts to procure employment for a person.
Professional Employer Organization - PEOs take on the human resources role for businesses and act as a co-employer in the sense that the client company's workers are administratively employees of the PEO but functionally these employees are controlled by the client company. Unlike employee leasing companies, PEOs are contracted when an employer already has staff and does not want to handle human resources responsibilities.
Staffing Agency - An entity that procures temporary or part-time employment for a person who then works under the supervision of a worksite employer.
Talent Agency - An entity that, for compensation, procures or attempts to procure employment or placement for an artist. (Certain art forms are excluded)
American Staffing Association
Staffing, recruiting, and workforce solution industry advocacy group.
National Association of Personnel Services (NAPS)
Education and training oriented association for personnel services providers.
National Association of Professional Employer Organizations
Provides advocacy efforts, information, and other services to members of the employment industry.