PEO for a NEMT Company: Workers' Comp, Payroll, and the Certificate Your Broker Sees

How a PEO works

A PEO signs a written contract with your company and puts your workers on its payroll. It pays them, files the payroll tax returns under its own employer identification number, and often covers them under its workers’ comp policy. The IRS calls a PEO a type of third party payer and notes that it is sometimes called an employee leasing organization (page updated June 28, 2026).

State law fills in the terms. In Texas, the contract must have the PEO pay wages whether or not you have paid it, pay the payroll taxes, and share with you the right to hire, fire, and discipline and the right to set safety policies (Labor Code 91.032). Florida’s list is similar, though it gives the leasing company the authority to hire, fire, and discipline, while the client may accept or cancel any worker’s assignment (Florida Statutes 468.525).

Two products get confused with a PEO: a ghost policy and occupational accident insurance. Neither one co-employs your drivers, and each has its own page.

Who owes the payroll taxes: certified or not

The answer turns on whether the IRS has certified the PEO.

• A certified PEO (CPEO) is treated as the employer, and no one else is, for federal employment taxes on the wages it pays to your work site employees (26 U.S.C. 3511). To keep certification it posts a bond of 5 percent of its prior year liability, at least $50,000 and at most $1,000,000, and files audited financial statements and quarterly accountant attestations (26 U.S.C. 7705).
• The 85 percent rule. A worker counts as a work site employee only if at least 85 percent of the people working for you at that work site are under the CPEO contract. An owner with self-employment income from the business, such as a partner, is never one.
• Any other PEO leaves you exposed. The IRS says the client typically remains the common law employer, and its examiners tell clients that using a PEO generally does not relieve them of their employment tax obligation.

The IRS updates its list every quarter, by the 15th day of the quarter’s first month. The list dated August 7, 2026 names 122 certified entities, and one brand name can cover several of them. The IRS says a CPEO contract must show the exact name and employer identification number of the CPEO that handles your taxes, so match both against the list.

How PEO workers’ comp covers your drivers

Each state sets its own rules for who carries the policy:

• Florida. A licensed employee leasing company is the employer of its leased employees and must provide their workers’ comp. It cannot get or renew its license without filing proof of coverage for all leased employees in the state (Florida Statutes 468.529, 2026).
• Texas. A PEO license does not require workers’ comp, the state licensing agency says. The contract must say whether the PEO or your company has elected coverage and which one maintains it (Labor Code 91.042). Texas lets most private employers go without, as the workers’ comp guide explains.
• Virginia. A PEO must register with the Workers’ Compensation Commission before it serves any client. It may cover workers under a master policy in its own name, or your company may keep its own policy with a Virginia endorsement (FAQ revised February 2025).
• Ohio. A PEO keeps workers’ comp for shared employees under Ohio’s state fund law and registers with the Bureau of Workers’ Compensation every year (Ohio Revised Code 4125.03 and 4125.05). Ask who carries stop gap coverage, since Ohio contracts can ask for employer’s liability on top of the state fund.

The coverage reaches only the workers on the PEO’s payroll. Florida’s legislative research office found in March 2021 that a PEO policy may miss new hires not yet processed through payroll, day laborers paid in cash, and workers falsely called independent contractors. Florida’s Division of Workers’ Compensation, in its flyer for construction contractors (April 2025), adds that employees not reported to the leasing company get no workers’ comp benefits, and that any change in their job duties must be reported too.

A dispatch example

You hire a driver on Monday and put her on Tuesday’s 5:30 a.m. dialysis run, but the PEO will not finish her paperwork until Thursday. If she hurts her back on Tuesday helping a rider down a ramp, she is a new hire not yet processed through payroll, the exact case Florida’s review warns about. Make it a dispatch rule: no driver gets a trip until the PEO confirms in writing that she is on its payroll and its workers’ comp.

What stays your job

A PEO takes on payroll and some employer duties. The rides stay yours. Texas law says the client keeps sole responsibility for:

• directing workers as needed to run the business or meet any licensing, regulatory, or legal requirement,
• the goods and services the client provides, and
• the acts, errors, and omissions of covered employees within the scope of the client’s business (Labor Code 91.032).

Texas also says its PEO law does not exempt you or your workers from any license requirement, and a licensed covered employee counts as the client’s employee for that license (Labor Code 91.004). Florida lets the client keep the control it needs to meet its own licensing and regulatory rules (Florida Statutes 468.525).

For a NEMT company, that means your Medicaid enrollment, broker credentialing, driver qualification files, background checks, drug tests, training records, vehicle inspections, and trip logs all stay in your company’s name and on your desk. A crash by a co-employed driver is still your company’s crash, and your commercial auto policy answers for it.

What your broker sees on the certificate

With a master policy, the PEO owns the workers’ comp policy. Virginia describes a master policy in the PEO’s name, and Florida’s 2021 review lists the PEO as the owner of a master policy. So the workers’ comp line on the certificate you send a broker may name the PEO, not your company, as the insured.

Under Texas law, a certificate showing that either the PEO or the client carries workers’ comp counts as proof of coverage for both, and state agencies and local governments must accept it (Labor Code 91.006). That rule binds governments, not private brokers. Before you sign with a PEO, send each broker a sample certificate and ask in writing whether it meets the workers’ comp requirement in your contract. See certificate of insurance for what else brokers check.

What happens the day the PEO drops you

Florida’s 2021 review found that an insurer there must give notice before canceling a policy, 10 days for nonpayment and 45 days for any other reason, while no rule made a PEO warn a client before ending its contract. Ending the contract ends the client’s workers’ comp, and the client has to find a replacement fast or face a lapse.

The notices that do exist mostly come after the fact:

• Florida, when your contract ends. The leasing company tells its workers’ comp insurer and the state within 30 days after a client relationship starts or ends (Florida Statutes 468.529).
• Florida, when the PEO’s own policy ends. A leasing company told that its workers’ comp policy will be canceled or not renewed must tell each client covered by it, by certified mail, within 15 days, unless a new policy starts the same day (Florida Statutes 627.192).
• Ohio. The PEO sends the Bureau of Workers’ Compensation and the client a lease termination notice, with payroll and claim information, within 30 days after the contract ends (Ohio Revised Code 4125.07, effective September 26, 2025).

Your claims history leaves with you. In Florida, a client leaving a leasing arrangement gets an experience modification that reflects its own record, including the claims of its leased employees (Florida Statutes 627.192). In Texas, a client leaving after the first two years pays on the lower of its own modifier from before the PEO or the PEO’s modifier when it leaves, and a PEO that provided the workers’ comp must, within 60 days of your written request, list the claims tied to your company with the payments and reserves on each (Labor Code 91.042). An Ohio PEO owes you the same kind of list, with premiums and payroll, within 45 days of a written request (Ohio Revised Code 4125.03). Ask for that list, and your loss runs, before you shop for your own policy. For state unemployment tax, a Texas client whose PEO contract ends is treated as a new employer with no experience record, unless it otherwise qualifies for an experience rating (Labor Code 91.044).

The broker side moves faster. CareOregon’s manual (version 1.3, February 2024) lets a brokerage stop assigning trips during an insurance lapse and pull trips already assigned. Keep a quote for your own policy current, and read NEMT insurance denied for the fallback markets before you need one.

How to check a PEO before you sign

1. Find it on the IRS list if it says it is certified, and make sure the contract uses the same legal name and employer identification number.
2. Check the state license or registration. In Texas, search TDLR’s licensing database under Professional Employer Organizations. Florida licenses employee leasing companies through the Board of Employee Leasing Companies, and Virginia and Ohio keep registrations.
3. Get workers’ comp in writing. The contract should say which party carries it, in which states, and who carries employer’s liability.
4. Ask how new hires get added, how fast, and who reports a change in a worker’s duties.
5. Ask what notice the PEO gives before it ends the contract, and put that notice period in the contract.
6. Run the certificate past each broker before you move your drivers.
7. Keep your own records. Driver files, training, broker credentialing, and a copy of every claim stay with you, so do not let the PEO become the only place they live.