Professional Employer Organization Bond Guide
Professional employment organizations (PEOs) in several states need a surety bond to receive a business license. Learn all about how PEO bonding works in this comprehensive guide.
Bond Overview
- Purpose: To provide financial security and operational certainty for PEO clients
- Who Needs It: Providers of outsourced HR and payroll services in many states
- Required Amount: Varies by state, typically $50,000–$100,000
- Premium Rates: Typically 1–10% of the total bond amount
Read on to learn more about how state-level PEO tax bonds work.
What Is a PEO Bond?
To reduce fraud and malpractice within the PEO market, many state government agencies have created bonding requirements. A PEO surety bond holds professional employment organizations financially liable for following state rules and regulations.
SuretyBonds.com is the nation’s top surety provider. We offer the best service, fastest delivery and most affordable prices for professional employment organization bonds.
PEO Surety Bond Requirements by State
Most U.S. states require surety bonds for PEOs to operate. Each state establishes unique bond requirements, so bond amounts vary, but typically range between $50,000 and $100,000.
Bond costs vary greatly per state due to different bond amounts and regulations surrounding each license. Select your state below for more information about PEO bonds in your area:
If the IRS requires your certified professional employer organization to file a surety bond, visit our CPEO bond page to learn more and get a free quote. Or, if you need an employment agency bond rather than a PEO bond, visit our Employment Agency Bond Guide instead.
How Do PEO Surety Bonds Work?
Outsourcing HR and payroll functions creates significant financial risk for companies. Surety bonds provide financial security and reinforce operational certainty for clients of PEOs. The legal language found on PEO bond forms typically requires companies to do the following:
- Meet state registration and licensing requirements
- Provide workers’ compensation policy collateral
- Guarantee PEO performance of employer responsibilities
- Guarantee payment of clients’ service fees
If a professional employment organization breaks the bond terms, clients can file a claim. The surety provider will then reimburse the harmed party for damages up to the full bond value. Then, the PEO must reimburse the surety in full.
How Do I Get a PEO Bond?
Call SuretyBonds.com to speak with a specialist or apply online in just minutes. After reviewing your application, we’ll call to discuss your options and help you get your bond at the most competitive rate.
PEO bond applications require underwriting to determine approval and pricing. Those who qualify for the standard bonding market will have an easier time getting a bond. Contact us today to learn more.
