PEO in Rhode Island [2024]

A professional employer organization (PEO) partners with companies to streamline and automate time-consuming administrative work on their behalf. By co-employing a company’s workforce, the PEO assumes responsibility for employment-related HR tasks like payroll processing, tax registration, and compliance with employment laws. It also provides small and medium-sized businesses affordable access to comprehensive benefits plans typically otherwise only available to large enterprises. 

Rhode Island-based businesses can use a PEO to automatically register for the state’s payroll taxes for job development, unemployment, and workers’ compensation insurance—all while accessing premier benefits that can help them attract and retain top talent. And if you employ some workers in the Ocean State but others elsewhere in the greater US, a PEO can help you comply with varying wage and employment laws across state lines, freeing up your internal team to focus on more strategic projects. 

But amid all your PEO options, which is best suited 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 Rhode Island-based workforce by automatically registering employees for taxes, distributing laptops to new remote workers, and much more.

Benefits of using a PEO in Rhode Island

PEOs can save companies time on onerous admin work and costs on premier benefits that attract top talent—all while handling compliance and offering HR expertise on-demand. Below is a closer look at what Rhode Island businesses can gain. 

Offload administrative HR work

PEO services co-employ your workforce. Under this arrangement, your company and the PEO divvy up employee-related responsibilities as follows: 

• Your company is the worksite employer—retaining full authority over all core business decisions. This includes personnel changes, compensation packages, and any strategic work from marketing to research and development.
• The PEO becomes your administrative employer—by hiring your workers under its own federal tax identification number (EIN), the PEO provider assumes legal responsibility for payroll, tax registration, benefits administration, compliance, and other HR tasks on your company’s behalf. 

The State of Rhode Island General Laws (RI Gen Laws) refer to PEOs as employee leasing companies and stipulate that they need to get certified by the Rhode Island Division of Taxation every year to do business in the state.  

Partnering with a PEO takes time-consuming paperwork off your HR department’s plate, allowing your team to focus on more 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 NAPEO, PEOs co-employ 4.5 million workers across 200,000 businesses in the US. Handling administrative HR tasks for this many employees at once creates economies of scale that allow PEO companies to bargain for more affordable benefits packages from third-party vendors. PEOs can also help small business owners access more comprehensive employee benefit plans typically otherwise only available to bigger companies. These often include:

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

Access to such big company benefits at affordable rates can help Rhode Island employers retain standout talent and boost profit margins. In fact, PEO clients have up to 14% lower turnover rates than average small businesses—all while being 16% likelier to report profitability. 

Worry-free compliance with Rhode Island laws

Navigating the tangled web of federal, state, and local employment laws in every jurisdiction where your workers live can be dizzying—especially if your workforce is spread throughout multiple states. 

Rhode Island, for instance, has unique state regulations—including its own Temporary Disability Insurance (TDI) tax and Job Development Fund tax—that are vastly different from employment laws in New England states close by. It’s also one of 10 states with pay transparency laws, requiring most employers to disclose salary information. 

Instead of hiring an expensive legal or tax expert in every locale you hire, a PEO moderates compliance with all relevant laws, no matter how much they differ. Rippling, for instance, automatically flags compliance issues like wage violations—monitoring whether employers abide by Rhode Island’s state minimum wage of $14.00 an hour. The platform also automatically adjusts for other wage policies in the neighboring states of Connecticut ($15.69 an hour) and Massachusetts ($15 an hour)—or elsewhere in the US.

PEOs help you comply with more than just minimum wage laws. They also offer reliable compliance support for:

• Payroll regulations: Register and file for Rhode Island’s payroll taxes—including unemployment insurance, state income tax, TDI, and Job Development Fund tax—and make the right withholdings to the Rhode Island Division of Taxation. 
• Benefits laws: Stay on top of state requirements like the workers’ compensation coverage administered by the Rhode Island Department of Labor and Training (DLT). PEOs also help navigate federal healthcare policies under the Affordable Care Act, COBRA, FSA, and HSA.
• Employment laws: Ensure your company complies with statewide statutes like Rhode Island’s minimum wage and pay transparency laws—all while following federal Equal Employment Opportunity (EEO) requirements, correctly classifying workers, and abiding by workplace health and safety standards. 

Non-compliance penalties can add up. Rhode Island tax authorities, for instance, charge 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 expensive violations or legal issues. 

Dedicated support team

PEO providers are HR experts. When you partner with a co-employer, you can lean on them for advice on administrative questions about tax filing paperwork or distributing workplace posters. They can also help guide you through more substantive challenges like overseeing performance reviews or writing employee handbooks that delve into company culture.

For any 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 Rhode Island

Hundreds of PEO providers operate nationwide. Here’s how to gauge which options are best suited to co-employ your workforce. 

• Your HR outsourcing needs: Take stock of which tasks your HR team could use a hand with. Remember that PEOs can handle:
• Payroll processing
• Tax registration and filing
• Compliance monitoring and risk management
• Benefits access and administration
• Recruiting and onboarding
• Time and attendance tracking
• Your budget: While pricing structures vary, PEOs typically charge either a flat rate per employee or a percentage of your total payroll. Since the service gets pricier as your headcount grows, keep in mind pricing and costs if you plan to scale.
• Experience and reputation: Which solutions do HR professionals in your industry rave about? Start with word of mouth, then check review sites like G2 and Capterra to see if the PEO’s clients are satisfied with the product. It’s also helpful if the company has experience in Rhode Island (and knows the state’s registration requirements). 
• Benefits: Compare the cost, quality, and range of benefits packages that different providers can help you access.
• Benefits renewal rates: Some PEOs offer an affordable initial rate only to jack up prices after the first year. Instead of paying a premium or looking for a brand new option after 12 quick months, look for PEO companies that are transparent about how renewal rates will change over time.  
• Integrations: The better PEOs function alongside tools already in your tech stack, the more time you’ll save on HR tasks. Look for solutions that sync with your tried-and-true systems.
• Does the PEO specialize in certain industries? Some PEOs are tailored to specific industries. Research whether your business could benefit from a specialized PEO option. 
• Does the PEO specialize in certain legal or compliance issues? Your business may have state or industry-specific compliance needs. In Rhode Island, for instance, maritime industries like defense shipbuilding and ocean sciences may require special administrative know-how. Check whether a PEO with this specific kind of expertise would be helpful. 
• Your exit strategy: You may relish a PEO’s help now but want to move off it once your headcount grows and it becomes more cost-effective to bring benefits in-house. Most PEO providers make this a pain, forcing companies to ditch all the systems that housed their data and start from scratch. Look for alternative options that let you transition away from the service with minimal disruption and keep employee and payroll data in the same accounts.

Why Rippling PEO is the right choice for your Rhode Island business

Rippling PEO is the first PEO to bring HR, IT, and Finance together under the same platform. Our modern, intuitive software allows you to automate your most time-consuming administrative tasks. For example, you can onboard new hires in 90 seconds and immediately configure and ship their new laptops. 

You’ll also steer clear of any dicey compliance mistakes. Rippling sets up state and local tax accounts, automatically detects wage and overtime violations, and helps you access top-tier benefits (that adhere to all relevant regulations) 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 supervision 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 

What’s more, instead of overhauling your existing systems, Rippling allows you to transition off the PEO with ease. All your systems, integrations, and logins—complete with your employee data—remain intact as you move to our all-in-one workforce management platform.

FAQs about PEOs in Rhode Island

What is a PEO, and how does it work?

A PEO is a firm that partners with companies to co-employ workforces. Under this arrangement, employment responsibilities are divided up so that the PEO becomes legally responsible for handling administrative HR duties like processing payroll and withholding taxes—while the company keeps control over its core business functions. 

Are PEOs in Rhode Island required to have special certifications or licenses?

Yes. PEOs, often referred to in Rhode Island as employee leasing companies or employee leasing organizations (ELOs), need to be certified by the Rhode Island Division of Taxation to operate legally in the state. Employee Leasing Licenses are valid from August 1 to July 30 annually. New licenses cost $500, and renewals cost $250. To get a license, the PEO needs to ensure they comply with all of Rhode Island’s tax obligations. 

More information about PEO licensing requirements in Rhode Island is available on the Division of Taxation website.

What is a Certified PEO?

A Certified PEO (CPEO) meets IRS guidelines concerning its background, expertise, finances, and reporting. Certification isn’t mandatory and doesn’t mean the IRS recommends or endorses that PEO; it just means the provider fulfilled certain criteria. While being certified used to help PEOs grant tax benefits to businesses, most of those advantages are no longer available. 

What size company can benefit from a PEO?

While companies of all sizes can use a PEO to save time on HR paperwork and compliance issues, small to mid-sized businesses get the added perk of gaining access to comprehensive benefits packages at affordable rates they’d otherwise be excluded from. 

How does a Rhode Island PEO charge for its services?

PEOs typically charge either a flat monthly fee per employee or a specified percentage of total payroll. Some providers also charge administrative fees. 

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

First, the PEO collects your employee and payroll data along with benefits information. Then, it configures its systems to handle your data. Providers may also hold training sessions to help onboard your employees, explain the new benefits, and provide ongoing support. 

Implementation can take several weeks to a few months, depending on your business’s size and the services you need.

Are PEOs regulated?

Yes. PEOs are subject to both federal and state regulations, like the State of Rhode Island General Laws. 

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

If you want to end your partnership with a PEO, you typically need to abandon the systems you used to process payroll, administer benefits, register for taxes, and anything else your PEO handled for you.

Rippling PEO allows for an easier transition. You can simply switch off the PEO and 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.