PEO in Tennessee [2024]

Tennessee is home to a thriving business landscape where, from Nashville to Memphis, many businesses can benefit from the services of a professional employer organization (PEO). A PEO partners with a business to streamline and automate its manual human resources tasks like payroll processing, benefits administration, and compliance with labor and employment laws.

In Tennessee, businesses often face heavy administrative burdens. A PEO can be a strategic solution because it handles HR tasks on a company’s behalf. PEOs also offer another unique advantage: They can help small to mid-sized businesses access high-quality employee benefits plans at more affordable rates, which can make them more competitive at recruiting and retaining top talent.

But choosing the right PEO is crucial. Rippling PEO offers features like automatic state tax registration and remote laptop management, making it fast and easy to hire and onboard employees in Tennessee and across the US.

Benefits of using a PEO in Tennessee

From saving time on administrative work to saving money on insurance costs, Tennessee businesses can benefit from using a PEO provider in many ways. Let's explore some of the key benefits of partnering with a PEO in Tennessee.

Offload administrative HR work

When you partner with a PEO, you divide up employer responsibilities with them under a co-employment model. Your business becomes the worksite employer, retaining full control over key decisions, including hiring, compensation, and overall business strategy in areas like research and development, marketing, sales, and customer service. Meanwhile, the PEO becomes the administrative employer, employing your workforce under its federal tax identification number (EIN). 

This arrangement allows the PEO to take on your employment-related HR tasks like payroll processing, benefits administration, and compliance management. PEOs leverage a mix of advanced technology, expert knowledge, and streamlined processes to efficiently handle these tasks. And this means your HR team is relieved from the burden of manual, administrative work, freeing them up to focus on strategic initiatives that drive your company's growth and success.

Better employee benefits, at a lower price

One of the most significant advantages for Tennessee businesses partnering with a PEO is the ability to access better employee benefits at more affordable prices. In a competitive job market like Tennessee's, offering robust, affordable benefits can set businesses apart and enable them to recruit and retain top talent.

PEOs co-employ workers from many different businesses, which gives them bargaining power to negotiate with insurance providers for better prices on benefits plans. As a result, businesses that partner with PEOs can offer their employees access to a wider range of benefits, often including health insurance, life insurance, mental health support, retirement plans, and more.

The Affordable Care Act (ACA) requires all businesses in Tennessee (and all other US states) with 50 or more full-time employees to provide healthcare plans to their workers. While Tennessee doesn’t require additional coverage on the state level, a PEO can still help businesses meet federal mandates by providing access to benefits plans that meet ACA requirements—plus, helping Tennessee businesses provide their employees with additional, optional benefits that make them more competitive.

Worry-free compliance with Tennessee laws

In addition to federal laws like the ACA, a PEO can help your business stay compliant with local and state-level Tennessee laws. This is especially beneficial since local laws are complex and known for frequently changing—and if you employ remote workers, keeping up with all the changes to state-level laws in all the different jurisdictions where your employees live is a massive administrative lift. A PEO like Rippling takes care of that for you, automatically flagging violations of wage and hour laws, workers’ compensation insurance requirements, and other state-level regulations, so you always know you’re safely in compliance.

A PEO can also help you maintain compliance with:

• Payroll regulations, including correct classification of employees and contractors, tax withholding and filing, and more
• Benefits laws, including the ACA, COBRA, FSA, HSA, and any other benefits-related regulations
• Labor laws, including workers’ compensation insurance requirements, Equal Employment Opportunity (EEO) laws, and displaying state-required labor posters

Violating these laws can lead to costly penalties. According to the IRS, 40% of small businesses incur payroll-related penalties annually. That’s why a PEO's role in managing compliance is not just a convenience but a trusted risk mitigation assistant for businesses.

Dedicated support team

Some businesses in Tennessee—particularly startups and small to medium-sized businesses—may lack extensive HR resources internally. Here, PEOs can help fill a crucial gap by providing expert advice and support. PEOs offer a team of professionals experienced in various areas of human resources, from tax and payroll services to benefits, compliance, and employee management.

Having access to this kind of dedicated support and expertise can be transformative for small business owners, giving them HR guidance on the same level as much larger companies with more resources. A PEO's support acts as a valuable extension of your business’s own team.

What to consider when evaluating a PEO service in Tennessee

Choosing the right Tennessee PEO company is a crucial decision that can impact the future success of your business. Here are some key factors to consider:

• Your business needs: Think about what you need from a PEO. Common offerings include payroll processing, tax filings, benefits administration, onboarding, compliance management, and HR outsourcing.
• Your budget: PEOs often charge either a per-employee per-month fee or a percentage of your payroll. If you're a startup or a small business with plans to scale, be sure to factor in how the cost of the PEO may change as your business grows.
• Experience and reputation: Check the PEO's track record in Tennessee. Online reviews on platforms like G2 or Capterra can provide insights into their performance and customer satisfaction.
• Benefits: Evaluate the quality, range, and cost of the benefits plans the PEO offers access to and whether they align with your employees’ wants and needs.
• Benefits renewal rates: Understand how the costs of benefits plans might change over time. Avoid PEOs that jack up renewal rates by looking for one that’s transparent about potential rate increases.
• Integrations: Assess how the PEO's services will integrate with your existing systems, tools, and technology.
• Industry specialization: Does the PEO have experience in your industry? For instance, if you're part of Tennessee's growing healthcare sector, a PEO with relevant expertise might be preferable.
• Legal or compliance specialization: This is especially important in Tennessee, where specific state and local regulations may apply. If you have specific legal or regulatory needs, a PEO with specialized knowledge can be invaluable.
• Your exit strategy: Consider how easy it is to transition away from the PEO if you choose to bring HR in-house or switch to a different provider. Many PEOs make it difficult to leave, so think about this eventuality ahead of time.

Why Rippling PEO is the right choice for your Tennessee business

Rippling PEO syncs HR, IT, and Finance into a single platform, streamlining busy work for Tennessee businesses—from 90-second onboarding to comprehensive remote IT management. 

Rippling takes care of your most critical compliance tasks, including setting up state and local tax accounts and managing workers’ compensation. It can also provide your team with access to premium benefits at a more affordable cost.

With Rippling, you get:

• HR, IT, and Finance in one platform
• Powerful and customizable reporting on any employee data
• Tools for managing remote teams, including state and local tax registration, paperless onboarding, and app and device management
• Access to superior benefits plans, plus below-average, predictable renewal rates
• Automatic flagging for federal, state, and local compliance infractions, along with recommended plans to fix each one
• Automated risk management processes, 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

Plus, if you choose to move your HR processes in-house, switching off Rippling PEO is easy. Unlike other PEOs, there’s no painful rip-and-replace process—with Rippling, you can move seamlessly on and off our workforce management platform at any time. Your HR, payroll, and employee data stay in your account, your existing integrations stay intact, and your employee logins stay the same.

FAQs about PEOs in Tennessee

What is a PEO, and how does it work?

A professional employer organization, or PEO, collaborates with companies to manage essential HR responsibilities. These can include payroll services, administering employee benefits, ensuring HR compliance, managing tax filings, and more.

How does a PEO arrangement affect control over my employees?

While the PEO handles employment-related HR tasks, your business retains full authority over employee management, day-to-day operations, and key business decisions.

What is a Certified PEO?

A Certified PEO (CPEO) meets criteria established by the IRS related to its background, expertise, finances, and reporting. Certification is not mandatory and doesn’t mean the IRS endorses the PEO—just that it has passed a specific number of assessments. In the past, getting certified meant a PEO could provide certain tax benefits to its clients, but today, the main advantages of PEO certification are largely obsolete.

What size company can benefit from a PEO?

PEOs are a versatile solution for businesses of all sizes, from burgeoning startups in Memphis to established medium-sized businesses in Nashville, Knoxville, or Franklin. However, they tend to be especially advantageous for smaller firms because of their ability to provide small businesses with access to comprehensive, cost-effective benefits plans typically only available to much larger enterprises.

How does a PEO charge for its services?

PEOs generally charge in one of two ways: per employee per month or a percentage of the total payroll. However, keep in mind that PEO costs can vary based on the HR services they provide.

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

Joining a PEO service means integrating your business operations with the PEO’s system. The timeline can range from several weeks to months, depending on the complexity and size of your Tennessee business and what services you need from the PEO.

Are PEOs regulated?

Yes. PEOs must follow regulatory frameworks at both federal and state levels to ensure they adhere to employment laws and uphold financial standards. Some also choose to become accredited by industry organizations for even more credibility.

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

In Tennessee, PEOs must register with the Tennessee Department of Commerce and Insurance in order to operate in the state.

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

Ending a relationship with a PEO usually involves transitioning your HR processes either back in-house or to another service provider. The complexity of this process varies based on the depth of services provided and the terms of your agreement, but many PEOs make it difficult and disruptive to your business to remove their systems and processes.

In what states is Rippling PEO available?

Rippling PEO is available in all US states, including Tennessee.

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.