PEO in Washington [2024]

Professional employer organizations (PEOs) work with many small and mid-size businesses to help them reduce their administrative HR burdens. Among other things, PEOs streamline and automate many HR functions, including compliance management, payroll services, workers’ compensation insurance, and benefits administration. As a result, businesses have more time to focus on higher-value tasks—while also providing their employees with access to better, more affordable benefits through the PEO.

A business based in Washington State can reap many advantages by partnering with a PEO. In addition to having peace of mind that they’re compliant with federal and state laws, Washington business owners can gain back time and energy to focus on growing their company.

As with other important business decisions, it’s crucial to educate yourself and evaluate your options before selecting a PEO service. This article is a great place to start. And Rippling PEO—which does everything from remote laptop management to automatic state tax registration—makes hiring and onboarding employees in Washington fast and easy. 

Benefits of using a PEO in Washington

Employers can benefit from using a Washington PEO for many reasons. It can help reduce their administrative HR workload, give them access to cost-effective benefits, ensure they remain compliant with labor and employment laws, and more.

Let’s take a look at some of the benefits below in more detail.

Offload administrative HR work

A PEO acts as a co-employer of your workforce for tax purposes. What does that mean? You and the PEO divide up employer responsibilities. You become the worksite employer, retaining authority over strategy and business decisions, like staffing and how much you pay, along with control over business operations, such as marketing and sales.

The PEO becomes the administrative employer, meaning it employs your workers under its federal tax identification number. This enables it to assume control over employment-related human resources tasks like benefits management, HR compliance, and payroll.

PEOs streamline HR management by utilizing a combination of technology and expertise. As a result, your HR team is freed up to focus on the strategic work that helps your company achieve its growth-related goals.

Better employee benefits, at a lower price

One major benefit Washington PEOs provide is access to better employee benefits at a lower cost. PEOs co-employ millions of people at thousands of businesses across the US, giving them the bargaining power to negotiate with insurance providers and obtain access to lower-cost benefits for their clients.

PEOs also offer access to a variety of robust employee benefits plans, including health insurance, retirement plans, life and disability insurance, mental health support, and worksite benefits. These plans are often better than the ones a small employer can offer on their own, which gives companies an edge in attracting and retaining high-quality talent.

Worry-free compliance with Washington laws

Business owners must comply not just with federal labor and employment laws, but also state-level and local Washington laws—which are complex and frequently changing. Washington is well-known as a worker-friendly state with progressive laws on many fronts, including minimum wage rates. The state minimum wage in Washington is $15.74 per hour—the highest in the country. And the minimum wage is even higher in Seattle and the SeaTac area, at $18.69 per hour.

Keeping up with different minimum wage rates is tough, particularly if you have employees in different parts of Washington or even different states, where you have to comply with varying minimum wage laws. Fortunately, you can work with a PEO like Rippling, which will automatically flag minimum wage violations based on your employees’ locations, so you never have to worry about violating local laws.

And PEOs can do more than just help you comply with minimum wage laws. They also offer compliance support with:

• Labor laws, including providing workers’ compensation insurance and helping employers follow Equal Employment Opportunity (EEO) laws, as well as providing state-required labor posters
• Payroll regulations, such as classifying employees and contractors correctly; reporting, collecting, and depositing payroll taxes with the right authorities by the relevant deadlines; issuing and filing tax forms; and complying with other wage laws, such as overtime requirements
• Benefits laws, including the federal Affordable Care Act (ACA) and Washington’s paid sick leave laws, along with any other benefits-related regulations

Violating any federal or state laws can be costly. In fact, the IRS estimates that 40% of small businesses pay payroll penalties each year, making compliance support a significant benefit of using a PEO service.

Dedicated support team

PEO teams are experts in HR administration and management. By joining one, you’ll benefit from their expertise—which can be particularly useful to small business owners, who don’t often have an internal person with the same wealth of knowledge. A PEO will do more than help you save time and money. They can explain how you can streamline benefits administration, train managers more efficiently, create a useful employee handbook, and more.

What to consider when evaluating a PEO service in Washington

Business owners in the State of Washington have many PEO service providers to choose from. Here are some helpful criteria to consider as you evaluate different PEOs:

• Your business needs. Consider what services you need from a PEO. Some common ones include:
• Benefits administration
• Recruiting and onboarding
• Payroll processing
• Tax filing and compliance
• Time and attendance tracking
• Regulatory compliance
• Safety compliance and risk management
• HR outsourcing
• Your budget. Usually, PEOs charge either a percentage of each payroll run or a per-employee per-month fee. Consider both your current budget and your plans for the future of your business. If you were to hire more employees, would you be able to afford the same PEO? 
• Experience and reputation. Be sure to check online review sites to find out how well-regarded the PEOs you’re considering are. Look out for PEOs with local referrals. Have they worked with other Washington businesses before? What do past and current clients have to say about them? 
• Benefits. Carefully evaluate the quality, range, and cost of benefits plans the PEO offers access to. Consider their alignment with your company’s values and your employees’ wants and needs. 
• Benefits renewal rates. Transparency about benefits renewal rates is key since some PEOs hike renewal rates unexpectedly after just one year. Businesses that work with these companies either pay more than they budgeted for or start the process of finding a new PEO all over again. Transparent, high-quality PEOs will publicize how their rates change. 
• Integrations. Consider how well the PEO will integrate with your current systems and technology. 
• Does the PEO specialize in certain industries? Small, niche-industry businesses may want to look for a PEO with experience in their specialized field.
• Does the PEO specialize in certain legal or compliance issues? Some businesses must comply with specific federal or state regulations or have special legal concerns. If this is you, seek out a PEO that has applicable experience.
• Your exit strategy. Eventually, you might decide not to work with a PEO anymore. Many service providers make it hard for businesses to leave, requiring them to painfully remove all the systems they set up and start over from scratch. It’s wise to consider what would happen in the event of a separation before you join a PEO.

Why Rippling PEO is the right choice for your Washington business

Rippling PEO is the top modern PEO service and the first to sync HR, IT, and Finance in one platform. Many PEOs run on software built back in the 1980s, while Rippling runs on modern, easy-to-use software. All your busy work can be automated and streamlined, from 90-second onboarding to remote IT management. 

At Rippling, we handle all your critical compliance tasks, from setting up state and local tax accounts to automatically flagging minimum wage and overtime violations. We also provide your team with access to cost-effective, Fortune 500-quality benefits.

With Rippling, you get:

• HR, IT, and Finance in one platform
• Powerful and customizable reporting on any employee data
• 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
• Tools for managing remote teams, including state and local tax registration, paperless onboarding, and app and device management

And Rippling makes it easy to switch off the PEO if you decide to bring HR administration in-house. Whereas other PEOs make you go through a painful, disruptive switching process, transitioning to Rippling’s all-in-one workforce management platform is simple. Your HR, payroll, and employee information remains stored in the system, your integrations stay intact, and your employees keep the same login credentials. There’s no need to start over from scratch. 

FAQs about PEOs in Washington

What is a PEO, and how does it work?

A PEO is a company that provides comprehensive HR solutions, such as HR management, benefits administration, payroll services, and compliance assistance. Using a co-employment model, they partner with a client business and become the legal employer of their workforce for tax reasons.

How does a PEO arrangement affect control over my employees?

Business owners retain their authority over business operations and employee management, while the PEO takes care of employment-related HR work.

What is a Certified PEO?

Some PEOs get voluntary certifications to show they’ve passed assessments and satisfied IRS criteria relating to their background, finances, expertise, and reporting. In the past, becoming a Certified PEO (CPEO) offered certain tax benefits to businesses, but today, those benefits are mostly obsolete. Another thing to consider: A certification doesn't mean that the IRS endorses a PEO. 

What size company can benefit from a PEO?

Startups and small and medium-sized businesses tend to reap the most benefits by working with a PEO because it can help them save money on administrative costs through HR outsourcing. PEOs also provide access to higher-quality, lower-cost employee benefits plans than the company can typically offer on its own.

How does a PEO charge for its services?

The final price you pay for a PEO will depend on your number of employees and the complexity of the services provided. Typically, PEOs charge either a percentage of the total payroll or a per-employee fee.

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

When you start working with a PEO, they’ll collect all the information they need about your employees, like employment records, payroll data, and benefits information. They’ll also set up their systems to take on your administrative HR work, which might include integrating their technology with yours. The PEO will likely onboard your employees, explain the new systems and benefits, and train your team.

In total, the process can take a few weeks or a few months—depending on the complexity of the services and the size of your business.

Are PEOs regulated?

Yes. PEOs are subject to both federal and state regulations. Many are accredited by industry organizations as well. 

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

Even if a Washington PEO is not physically located in the state, it must register with the state government.

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

When you end your relationship with a typical PEO, you’ll go through a painfully inefficient process that requires you to remove all their systems. Then, you’ll need to search for new systems for all the processes they once handled for you.

That’s not the case with Rippling PEO. When you no longer need PEO services, just switch the PEO off and move to our all-in-one workforce management platform—which keeps all your systems, data, and integrations intact.

In what states is Rippling PEO available?

Rippling PEO is available in every state in the US.

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.