PEO in Kentucky [2024]

For small to mid-sized businesses that need an extra hand with their administrative lift, a professional employer organization (PEO) can help streamline and automate many HR functions like payroll services, benefits administration, compliance management, and workers’ compensation insurance. It gives time back to the businesses, allowing them to focus on other priorities. Plus, PEOs can provide their clients with access to more affordable benefits.

A Kentucky PEO can help businesses navigate state laws, like the Bluegrass State’s different types of required leaves. As an added benefit, a PEO can provide the expertise needed to tackle your team's HR challenges head on.

Before choosing a PEO, though, it’s important to consider certain factors to partner with the best fit for your company. Whether your business is based in Louisville, Lexington, or one of Kentucky’s smaller cities like Richmond or Owensboro, Rippling PEO offers a range of services that make it easier to hire and onboard employees in Kentucky and across the US, from automatic state tax registration to remote device management.

Benefits of using a PEO in Kentucky

By working with a Kentucky PEO, you can focus on growing your business instead of getting bogged down in HR tasks. Not only can you reduce your administrative workload, but you can also gain access to a range of cost-effective benefits and expert support. 

Offload administrative HR work

The primary advantage of partnering with a PEO is the ability to outsource administrative HR tasks. A PEO co-employs your workforce, resulting in the division of employer responsibilities between you and the PEO.

When you enter a co-employment relationship, you'll retain complete autonomy in hiring and firing decisions, setting employee salaries, and managing your business operations and strategy. You'll be recognized as the "worksite employer" and collaborate with the PEO provider.

On the other hand, the PEO handles employment-related tasks for your workers, including payroll and benefits administration, HR compliance, and more. The PEO will employ your workforce under their federal tax identification number and become your "administrative employer." The PEO will use a mix of training, expertise, and technology to simplify your HR management and help your team work more efficiently.

Better employee benefits, at a lower price

The National Association of Professional Employer Organizations (NAPEO) reports that over 500 PEOs exist across the US, co-employing 4.5 million workers at 200,000 businesses. Because they “employ” so many individual workers, PEOs have the bargaining power to negotiate benefits costs with third-party providers and pass on the savings to their clients.

Small businesses may struggle to offer the types of comprehensive benefit plans that larger companies can use to recruit and retain top talent. PEOs leverage those economies of scale to offer small businesses access to high-quality benefits plans they often can’t access otherwise. These plans often include health insurance, life and disability insurance, worksite benefits, mental health support, retirement plans, commuter benefits, dependent care, and more.

The federal Affordable Care Act (ACA) mandates that businesses in Kentucky with 50 or more full-time employees provide healthcare benefits to their employees. A PEO can assist businesses in meeting their health insurance coverage obligations, plus offer access to other benefits that employees want or need.

Worry-free compliance with Kentucky laws

Employers in Kentucky need to comply with various federal labor and employment laws, as well as state-level and local Kentucky laws, which are subject to constant change. A PEO can help you navigate the legal landscape and comply with all applicable laws. For example, in the Commonwealth of Kentucky, employers must offer up to six weeks of unpaid leave for adopting a child, separate from the federal Family and Medical Leave Act (FMLA). But leave laws vary by location, and keeping track of them all—especially with a distributed workforce—can be a significant challenge. A PEO like Rippling can track your employees’ time and attendance and automatically warn you of any leave law violations based on their location.

PEOs provide legal and compliance assistance for more than leave laws. They can also help you maintain compliance with the following:

• Payroll regulations, including correctly classifying employees and contractors; issuing and filing tax forms; reporting, collecting, and depositing payroll taxes with the right authorities; and complying with other wage laws, such as minimum wage and overtime requirements
• Benefits laws, including federal laws such as the ACA, COBRA, FSA, HSA, and other regulations related to benefits
• Labor laws, including providing workers' compensation insurance, assisting with Equal Employment Opportunity (EEO) compliance, and displaying labor posters required by the state

The IRS estimates that 40% of small businesses pay payroll penalties each year. Compliance support is a significant benefit of using a PEO service, preventing costly fines associated with violating laws.

Dedicated support team

A PEO provider plays a vital role in your company by sharing its expertise and providing you with any HR support you need. This can be particularly helpful for small businesses and startups that do not have similar resources internally. Your PEO can offer guidance on creating a more straightforward onboarding process, developing an employee manual, handling management training, reviewing safety practices, and managing compliance risks.

What to consider when evaluating a PEO service in Kentucky

Not all PEO providers offer the same services or have expertise in all industries. When evaluating Kentucky PEOs, consider these factors:

• Your business needs. Break down the tasks you need to delegate to a PEO. Some standard PEO features include:
• Benefits administration
• Payroll processing
• Tax filing and compliance
• Recruiting and onboarding support
• Time and attendance tracking
• Regulatory compliance and risk management
• HR management and consulting 
• Your budget. Think about your budget now, but also in the future. PEOs usually charge either per-employee per-month fees or a percentage of each payroll run. But if you plan on scaling your team, be sure to consider how the PEO’s costs will change as your headcount increases.
• Experience and reputation. Research PEO providers' reputations. Have they provided their services in Kentucky before? What kind of referrals have your colleagues given, or what reviews have you seen online at G2 or Capterra? 
• Benefits. PEOs offer access to a range of third-party benefits. Consider whether they meet your employees’ wants and needs.
• Benefits renewal rates. Choosing a transparent PEO that communicates potential price increases can help you avoid unexpected costs that may arise from renewal rates increasing abruptly after your first year.
• Integrations. Ensure the PEO works seamlessly with your existing technology and processes.
• Does the PEO specialize in certain industries? If your business operates in a specialized industry, you may want to choose a PEO with specialized experience.
• Does the PEO specialize in certain legal or compliance issues? If your business must comply with federal or state regulations or address legal issues, it can be helpful to have help from a PEO with relevant expertise.
• Your exit strategy. Leaving a PEO can be difficult as it requires removing its systems and starting over. To avoid difficulties, ask about offboarding procedures before choosing a PEO.

Why Rippling PEO is the right choice for your Kentucky business

Rippling PEO runs on modern, user-friendly software—unlike other PEOs that use outdated systems. It’s the first PEO to sync HR, IT, and Finance in one platform, streamlining all your HR busy work—from remote IT management to 90-second employee onboarding.

We also provide your team access to affordable, high-quality benefits. And Rippling helps you stay on top of critical compliance tasks, such as setting up state and local tax accounts and automatically flagging minimum wage and overtime violations.

With Rippling, you get:

• An all-in-one platform for HR, IT, and Finance
• Easy-to-use tools for managing remote teams, including tax registration, paperless onboarding, and device management
• Access to excellent benefits plans, plus below-average, transparent renewal rates
• Powerful and customizable reporting on any employee data and metrics
• Automatic detection of compliance violations with recommended solutions for federal, state, and local regulations
• Automated processes for risk management, including ACA and COBRA administration, anti-harassment training, and sending digital labor law posters to your employees
• Access to hundreds of HR resources, guides, and templates

If you ever decide to switch from Rippling PEO to our all-in-one workforce management platform, it's an easy transition. Unlike other PEOs, you won't lose your HR, payroll, and employee data or integrations with other systems. Your employees can keep using the same login credentials without any interruptions or compliance gaps.

FAQs about PEOs in Kentucky

What is a PEO and how does it work?

A professional employer organization (PEO) is a service that helps businesses by taking care of their administrative human resources tasks. PEO services handle payroll processing, risk management, and workers' compensation while providing companies access to third-party benefits.

How does a PEO arrangement affect control over my employees?

In a partnership with a PEO, your business keeps control of day-to-day operations, hiring, and overall company strategy. 

What is a Certified PEO?

A Certified PEO (CPEO) is a type of PEO that meets specific IRS criteria related to its background and overall expertise. While obtaining certification as a PEO is optional and does not indicate an endorsement from the IRS, it shows the PEO has successfully completed a set of evaluations. In the past, being a certified PEO provided tax benefits to business filings, but nowadays, most of the advantages of PEO certification are not applicable.

What size company can benefit from a PEO?

Small and mid-sized businesses can generally benefit the most from using a PEO to handle their HR tasks, saving them time and money while helping them access high-quality benefits plans from third-party providers that are typically only available to large enterprises.

How does a PEO charge for its services?

A PEO's pricing varies based on the services provided and the size of your team. The two most common pricing structures are a flat fee per employee or a percentage of the total payroll.

What is the implementation process and how long does it take to go live?

The time it takes to implement a PEO service can range from a few weeks to a couple of months, depending on the size and complexity of your company’s requirements. Once you finalize the contract with your new PEO, it will securely collect your employee data, including payroll, employment, and benefits information.

The PEO provider will evaluate your current technology and processes to identify areas where they can integrate their systems to manage your human resources, payroll, and benefits administration.

Are PEOs regulated?

Yes, PEOs comply with federal and state regulations to ensure fair business practices. Many opt for additional accreditation from industry organizations to enhance their credibility.

Are PEOs in Kentucky required to have special certifications or licenses?

Under a new law (KRS 336.236), the State of Kentucky requires all people and businesses providing employee leasing or professional employer services to register with ​the Department of Workers' Claims by July 15, 2024. 

What happens if I want to terminate my relationship with a PEO?

Whether you've outgrown your PEO or want to switch to another solution, most PEO relationships are difficult to end as they require removing the PEO from your systems—often disrupting your teams, leaving gaps in compliance, and making you find and set up a brand new solution. 

Switching from Rippling PEO to our all-in-one workforce management platform, by contrast, is seamless. Just switch off the PEO when you’re ready—all your data and integrations stay intact, and your employees keep their Rippling logins.

In what states is Rippling PEO available?

Rippling PEO is available in all US states. 

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.