PEO in Pennsylvania [2024]

A professional employer organization (PEO) can take onerous administrative HR work off a company’s plate and provide access to comprehensive benefits packages at lower prices. As a workforce’s legal co-employer, the PEO assumes responsibility for HR tasks like payroll processing, tax registration, and compliance with employment laws—all while making higher-quality benefits more accessible. 

If you're a small business owner in the Keystone State—or employ Pennsylvania workers—a PEO can automatically register both state and local income taxes and make the proper withholdings for unemployment and workers’ compensation insurance on your behalf, saving you manual work and compliance headaches. 

But since there are more than 500 PEO providers available nationwide, how do you choose the option best for your business? This guide will show you what to look out for. Rippling PEO, for instance, makes it easy to hire, onboard, and manage your Pennsylvania-based workforce by automatically registering employees for taxes, distributing laptops to new remote workers, and more.

Benefits of using a PEO in Pennsylvania

From time and cost savings to expert compliance assistance, here’s a look at how PEOs can help companies with Pennsylvanian employees. 

Offload administrative HR work

PEO services co-employ your workforce, splitting up employee-related responsibilities with your company. You’re still the worksite employer, with full authority over any core business decisions—like personnel changes, salaries, and sales strategy. 

The PEO, in turn, hires your workforce under its own federal tax identification number (EIN) and becomes your administrative employer. Under this arrangement, the PEO assumes legal responsibility for payroll, tax registration, benefits administration, compliance, and other HR tasks on your company’s behalf. 

According to the Pennsylvania Department of Labor & Industry, PEOs and their client companies must both sign an agreement establishing the co-employment relationship and separately fill out applications for workers’ compensation coverage. 

Once you’ve established what Pennsylvania state authorities call a “professional employer arrangement,” PEOs take on mountains of time-consuming paperwork on your company’s behalf, leaving your HR team with more time to focus on strategic projects. It can also help your company scale—PEO clients have up to 9% faster growth rates than average small businesses, according to the National Association of Professional Employer Organizations (NAPEO). 

Better employee benefits, at a lower price

According to the NAPEO, PEOs co-employ 4.5 million workers across 200,000 businesses. This creates economies of scale that allow PEOs to bargain for more affordable benefits packages from third-party vendors, making big-company benefits more accessible to small and medium-sized businesses. These robust benefits packages can include:

• Health insurance (including dental, vision, and mental health coverage)
• Life insurance
• Disability insurance
• Retirement plans
• Meal stipends
• Commuter stipends 

Offering such comprehensive benefits can help employers retain standout talent—PEO clients have up to 14% lower turnover rates than average small businesses.

Worry-free compliance with Pennsylvania laws

Adhering to ever-changing federal, state, and local employment laws in every jurisdiction your workers live can be tricky—especially if you employ a remote workforce spread throughout multiple cities or states.

Pennsylvania, for example, has state-specific regulations for workers’ compensation coverage and unemployment insurance. It also imposes a local Earned Income Tax (EIT) that varies by county. Allegheny County to the west levies a different rate than Philadelphia County to the east. There’s an additional Local Services Tax (LST) for doing business in some municipalities like Pittsburgh, Scranton, and Harrisburg. 

Instead of keeping track of every tax withholding and employment law where your employees live, a PEO can handle compliance for you. Rippling, for instance, automatically flags compliance issues like minimum wage violations and automatically triggers overtime pay bumps once Pennsylvania employees surpass 40 working hours in a week. 

PEOs also offer reliable compliance support for:

• Payroll regulations: Register and file for Pennsylvania’s payroll taxes—including unemployment compensation and state and local income taxes. The PEO provider will make the right withholdings on the deadline, like filing quarterly reports to the Office of Unemployment Compensation. 
• Benefits laws: Stay on top of state requirements for workers’ compensation coverage, administered via the Pennsylvania Department of Labor & Industry, and federal healthcare policies under the Affordable Care Act, COBRA, FSA, and HSA.
• Employment laws: Ensure your company complies with wage and overtime laws and federal Equal Employment Opportunity (EEO) requirements—all while correctly classifying workers and abiding by workplace health and safety standards. 

Failing to comply with tax and employment laws can result in steep fines. The Pennsylvania Department of Revenue, for instance, charges 5% monthly penalties for late filings. And according to the IRS, 40% of small businesses pay payroll penalties annually. PEOs can help you avoid any costly snafus. 

Dedicated support team

You can solicit your PEO for advice on just about any HR matters that arise. PEO companies are experts; you can lean on them for trusted support on issues related to tax filing paperwork and benefits administration, overseeing performance reviews, or writing employee handbooks.

No matter the human resources riddle your business could use a hand with, the PEO can help you troubleshoot—all while ensuring compliance with employment and tax laws.

What to consider when evaluating a PEO service in Pennsylvania

If you’re in the market and want to narrow down your options, use the criteria below to land on the best PEO for your business. 

• Your HR outsourcing needs: Think about the administrative tasks you’d like to delegate. PEOs can help with:
• Payroll services
• Tax registration and filing
• Compliance monitoring and risk management
• Benefits access and administration
• Recruiting and onboarding
• Time and attendance tracking
• Your budget: PEOs typically charge either a fixed fee per employee per month or a percentage of your total payroll. If you plan to scale, think about how prices will increase along with your headcount. 
• Experience and reputation: Check review sites like G2 and Capterra to see if the PEO’s clients are satisfied with the product. 
• Benefits: Consider the range, cost, and quality of plans that different services can help you access.
• Benefits renewal rates: Beware of low PEO rates in the initial year, as some services impose dramatic price hikes after 12 months. If you don’t want to scramble for a new, more affordable PEO provider, look for companies that are transparent about how renewal rates will change over time. 
• Integrations: Look for PEOs that sync with your tried-and-true collaboration tools and systems already in your tech stack.
• Does the PEO specialize in certain legal or compliance issues? Top Pennsylvania industries like advanced manufacturing, energy production, and life sciences may require special administrative know-how. Research whether you should use a PEO tailored to your niche. 
• Your exit strategy: After first using a PEO, your workforce may grow to the point where it becomes more cost-effective to bring benefits in-house. Most providers make this transition a pain, forcing companies to rip out all the systems that housed their data and start anew. Look for alternative options that let you move off the PEO service with minimal disruption.

Why Rippling PEO is the right choice for your Pennsylvania business

Rippling PEO is the first of its kind, merging HR, IT, and Finance in the same platform. Our easy-to-use software allows you to automate burdensome administrative tasks. Now, you can onboard new hires in 90 seconds and immediately configure and ship their new laptops. 

You also get proactive compliance support that ensures you abide by all relevant laws. Rippling sets up state and local tax accounts, automatically detects wage and overtime violations, and helps you access top-tier benefits at affordable costs. 

With Rippling, you get:

• An all-in-one HR, IT, and Finance solution
• Customizable reporting on employee data that you can easily share with your team
• Tools for managing remote teams, including state and local tax registration, remote I-9 verification, and seamless app provisioning
• Access to premier benefits packages with below-average renewal rates
• Automatic monitoring of compliance infractions, with recommended courses of action on how to fix them
• Automated risk management, including ACA and COBRA administration, digital labor law poster distribution, and access to anti-harassment training
• Full access to hundreds of HR resources, guides, and templates—like an employee handbook builder and performance review tools 

Rippling also allows you to move off the PEO whenever you’re ready. Instead of replacing HR data and starting over after leaving a co-employer, you can move to our all-in-one workforce management platform, keeping all the same systems, integrations, and logins. 

FAQs about PEOs in Pennsylvania

What is a PEO, and how does it work?

PEOs co-employ workforces along with their client companies. Under this “professional employer arrangement,” HR responsibilities are split up; the PEO becomes legally responsible for handling administrative duties like processing payroll and withholding taxes, while the company keeps control of all strategic business decisions. 

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

Yes. To do business in Pennsylvania, PEOs need to register with the Pennsylvania Department of Labor and Industry, providing:

• A State Workers’ Insurance Fund (SWIF) application
• A copy of the professional employer agreement between the PEO and the client company
• A list of employees the PEO is co-employing or those employees’ I-9 forms
• Five years’ worth of loss runs for client companies with a premium of more than $40,000
• A list of all of the PEO’s clients

What size company can benefit from a PEO?

Companies of all sizes can leverage a PEO to save time on HR paperwork and compliance issues. But small to mid-sized businesses get the added advantage of accessing comprehensive benefits packages at affordable rates, often only available to larger enterprises. 

How does a Pennsylvania PEO charge for its services?

PEOs typically charge:

• A flat monthly fee per employee or 
• As a percentage of the total payroll

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

The PEO collects your employee and payroll data along with benefits information, configures its systems to handle your data, and often holds training sessions to help onboard your employees, explain the new benefits, and provide ongoing support. 

All in all, the implementation process takes several weeks to a few months, depending on your business’s size and HR needs.

Are PEOs regulated?

Yes. PEOs are subject to both federal and state regulations. For example, Pennsylvania’s Unemployment Compensation Law mandates certain tax reporting requirements for PEOs doing business in the Keystone State. 

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

Typically, ending a partnership with a PEO means abandoning the systems they used to process payroll, administer benefits, and register for taxes. 

Rippling PEO allows for a breezier transition. You can move to our all-in-one workforce management platform, which keeps all your existing systems, data, and integrations in place. 

In what states is Rippling PEO available?

Rippling PEO is available nationwide.

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.