How Are PEOs Regulated?
Most states require licensing and registration of PEOs and regulate their operation. State laws often specifically recognize PEO as employers or co-employers for purposes of workers compensation, state unemployment tax and other employment-related matters. At the federal level, the IRS has accepted the right of PEOs to withhold and remit income and payroll taxes. Specific IRS guidance has also been issued related to the authority of PEOs to provide retirement benefits to workers.
