Texas PEO company: how to choose

Advertised prices, verified

How engaging a Texas PEO works

1. Verify the license before anything else. Look the provider up on the Texas Department of Licensing and Regulation's register. Chapter 91 of the Labor Code requires a license for anyone offering professional employer services covering even one employee in Texas, and TDLR publishes penalties and sanctions, so an unlicensed or sanctioned operator is visible before you sign.
2. Share your census and get co-employment quotes. The PEO underwrites your workforce: headcount, wages, job classifications, claims history and benefits expectations. Quotes come back either as a percentage of total payroll or as a flat per-employee monthly fee; insist on both formats being translated into dollars per employee so vendors can be compared on the same line.
3. Sign the co-employment agreement. The contract allocates employer responsibilities between you and the PEO. Under Chapter 91 the PEO takes on payment of wages and collection and remittance of payroll taxes for covered employees; read precisely which obligations transfer, which stay with you, and how workers' compensation coverage is provided.
4. Run payroll and benefits through the PEO. From the first cycle the PEO pays covered employees, files employment taxes, and administers the benefits and workers' compensation program, invoicing you for salary costs plus its fee. You keep hiring decisions, day-to-day direction and performance management; disputes and terminations run with the PEO's involvement because employer duties are shared.

What is specific about Texas

Two features shape the Texas market. The first is licensing: Chapter 91 of the Labor Code makes professional employer services a licensed activity, with a limited license available to small out-of-state operators, and TDLR enforcement on the record. Verification is therefore cheap and should be the first filter; a Texas PEO company that is not on the register is not a candidate.

The second is workers' compensation. Texas, unusually, does not require most private employers to carry workers' compensation insurance, so PEO proposals in Texas differ more than elsewhere: some quote with full coverage through the PEO's program, others quote as non-subscribers with alternative occupational benefit plans. The two structures carry very different risk profiles for you as the client, and a quote cannot be evaluated until you know which one it contains.

Comparing Texas PEO pricing

PEO pricing has two moving parts: the administrative fee and everything that passes through at cost plus margin, chiefly benefits premiums, workers' compensation and state unemployment. Administrative fees quoted as a percentage of payroll rise automatically with every raise you give, which is why flat per-employee pricing is generally easier to govern; either way, ask each vendor to itemize the fee separately from pass-through costs.

The comparison table on this site shows verified prices from the vendors that publish them, checked against each vendor's own pricing page rather than quoted from sales calls. Published prices are starting tiers, and a Texas quote will move with your claims history and benefits choices, but the published floor tells you which vendors are even in your range before you spend time on underwriting. The service agreement, not this page, controls what you actually get; nothing here is legal or tax advice.

Common questions

Does a PEO need a license to operate in Texas?

Yes. Chapter 91 of the Texas Labor Code requires anyone offering professional employer services with covered employees in Texas to hold a TDLR license, and a limited license exists for small out-of-state operators. The register is public; check it first.

Does a Texas PEO have to provide workers' compensation?

Texas does not require most private employers to carry workers' compensation at all, so PEO arrangements come both ways: coverage through the PEO's program, or non-subscriber alternatives. Confirm which structure a quote contains before comparing prices.

Who pays the employment taxes under a Texas PEO?

The co-employment contract must provide that the PEO assumes responsibility for paying wages and collecting and remitting payroll taxes for covered employees. Federal liability depends on whether the PEO is IRS-certified; ask for its CPEO status in writing.

Can I leave a PEO without disruption?

Exits are workable but need planning: benefits continuity, payroll tax account restarts and workers' compensation replacement all land at once. Negotiate notice terms and data return before you sign, not when you want out.

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