PEO Statistics and Trends 2026, With a 50-State PEO Licensing Tracker
How big the PEO industry is, who uses it, what public PEOs reported for Q3 2026 and what benefits cost employers. We also checked the statutes and agency pages of all 50 states and the District of Columbia, and recorded how each one regulates PEOs, what financial proof it asks for and whether it accepts accreditation.
Most states regulate PEOs. None lets IRS CPEO status replace its rules.
Three findings come from our own research and three from official sources. Each card carries its source, and Copy takes the sentence with it. The PEO industry itself is covered in the chapters below.
states license or register PEOs: 14 by license and 21 by registration, with 8 more that apply only a bond, tax or workers’ comp rule.
states accept IRS CPEO certification in place of their own PEO requirements. Several accept ESAC or a state-approved assurance organization for part of them.
worksite employees at each of the 472 smallest PEOs on average. The top 30 hold 64% of the market (our calculation).
worksite employees were co-employed through 502 PEOs at the end of 2025, serving 233,000 client businesses.
is the average annual family health premium in 2026, up 5%. Workers pay $7,471 of it, up 9%.
of private employer compensation is benefits: $14.07 of $46.89 per hour in June 2026.
PEO statistics at a glance: the 22 numbers that matter
Each figure shows its period and source. Use Copy to take the sentence with its source attached.
How big the PEO industry is
- 1502 PEOs operated in the US at the end of 2025, serving 233,000 client businesses.NAPEO PEO Industry Footprint 2026, end of 2025
- 25.4 million worksite employees were co-employed through PEOs at the end of 2025.NAPEO PEO Industry Footprint 2026, end of 2025
- 3$386 billion in wages ran through PEOs in 2025, and NAPEO puts industry revenue at $446 billion by applying gross markup to those wages.NAPEO PEO Industry Footprint 2026, end of 2025
- 423.2 worksite employees is the average PEO client size.NAPEO PEO Industry Footprint 2026, end of 2025
- 514% of businesses with 20 to 499 employees use a PEO.NAPEO PEO Industry Footprint 2026, end of 2025
- 663% of PEO clients have fewer than 20 employees, adding NAPEO’s three smallest size bands of 17%, 20% and 26%.HR Stacks calculation from NAPEO, 2026
How fast it grows and who holds the market
- 77.2% a year is the compound growth rate of PEO worksite employees from 2008 to 2025, against 0.7% for total US employment.NAPEO PEO Industry Footprint 2026, 2008 to 2025
- 86% a year was the annualized growth in PEO worksite employees from 2022 to 2025, while the number of PEOs fell 1% a year.NAPEO PEO Industry Footprint 2026, 2022 to 2025
- 9The top 30 PEOs held 64% of worksite employees in 2025, up from 58%.NAPEO PEO Industry Footprint 2026, end of 2025
- 10The 472 smallest PEOs average about 4,100 worksite employees each, once the top 30 are taken out of the 5.4 million total.HR Stacks calculation from NAPEO, 2026
What public PEOs reported for Q3 2026
- 11ADP’s PEO segment averaged about 771,000 paid worksite employees in its first fiscal quarter of 2027, up 2%, with PEO revenue up 7% to $1,808.1 million.ADP, first quarter fiscal 2027, reported 28 October 2026
- 12Insperity averaged 307,265 paid worksite employees in Q3 2026, down 2%, while gross profit per employee per month rose 8% to $225.Insperity, Q3 2026, reported 29 October 2026
- 13TriNet ended Q3 2026 with 295,494 worksite employees, down 11% from a year earlier.TriNet, Q3 2026, reported 29 October 2026
- 14Paychex’s PEO and insurance revenue rose 12% to $367.6 million in the quarter ended 31 August 2026.Paychex, first quarter fiscal 2027
What benefits cost employers
- 15$28,303 is the average annual family health premium in 2026, up 5%.KFF Employer Health Benefits Survey 2026
- 16$7,471 is what workers contribute toward family coverage in 2026, up 9% or $621.KFF Employer Health Benefits Survey 2026
- 17Workers at small firms pay $9,687 toward family coverage, against $6,840 at firms with 200 or more workers.KFF Employer Health Benefits Survey 2026, firms with 10 to 199 workers
- 18Benefits are 30.0% of private employer compensation, at $14.07 of $46.89 per hour in June 2026.BLS Employer Costs for Employee Compensation, June 2026
How states regulate PEOs
- 1935 of 50 states license or register PEOs: 14 by license and 21 by registration.HR Stacks PEO Licensing Tracker, 7 November 2026
- 208 states apply only a narrower rule such as a bond or a workers’ comp registration, and 8 jurisdictions have no PEO law we could find.HR Stacks PEO Licensing Tracker, 7 November 2026
- 21No state statute accepts IRS CPEO certification in place of its own requirements.HR Stacks PEO Licensing Tracker, 7 November 2026
- 22Massachusetts requires a $250,000 bond on top of positive working capital, the highest financial bar in our review.HR Stacks PEO Licensing Tracker, 7 November 2026
PEOs now co-employ 5.4 million workers and have grown more than 10 times faster than US jobs
A PEO becomes the co-employer of a client’s staff and runs payroll, benefits and compliance for them. Our PEO guide covers how that works. For the money pages, start with payroll software and HR software.
How big is the PEO industry? NAPEO counts 502 PEOs serving 233,000 client businesses and 5.4 million worksite employees at the end of 2025. Wages paid to those employees reached $386 billion, and NAPEO estimates industry revenue at $446 billion.
Worksite employee growth has stayed positive in every year but one
Annual growth in PEO worksite employees, 2009 to 2025, percent
Source: NAPEO PEO Industry Footprint 2026. 2020 is the only year with a decline (-0.4%).
5.4 million is close to a large state’s workforce
Employees, millions
Source: NAPEO comparisons for 2025.
Growth slowed after 2022 but stayed ahead of the market
Annualized change, 2022 to 2025
Worksite employees. Over 2008 to 2025 the rate was 7.2% a year, against 0.7% for US employment.
Client businesses.
Worksite wages and industry revenue.
Number of PEOs, so fewer firms serve more employees.
Source: NAPEO PEO Industry Footprint 2026.
PEO clients are small: nearly two in three have fewer than 20 employees
Small firms buy a PEO for pooled benefits and compliance help they cannot get alone. If you only need software, compare HRIS platforms first.
Most PEO clients have 10 to 49 employees
Share of PEO clients by employee count, 2025
Source: NAPEO PEO Industry Footprint 2026. Businesses with 500 or more employees are under 0.5%. The 63% figure under 20 employees is our calculation from the first three bands.
of US businesses with 20 to 499 employees use a PEO. The average client has 23.2 worksite employees.
Five PEOs hold 37% of worksite employees, and the top 30 now hold 64%
Concentration is rising while the number of PEOs falls. The four public companies below report different measures, so read them side by side but not as a ranking. For brand-level detail see the ADP and Paychex reviews.
The smallest 472 PEOs hold about a third of the market
Share of PEO worksite employees, end of 2025
Source: NAPEO PEO Industry Footprint 2026.
of worksite employees sat with the top 30 PEOs before the latest NAPEO count.
sit with the top 30 PEOs at the end of 2025.
What the four public PEO businesses reported
Latest quarter reported. These are different definitions, not a ranking.
Average paid PEO worksite employees, up 2%. PEO revenue $1,808.1 million, up 7% (up 4% excluding pass-throughs). Segment margin 13.0%, flat. ADP release, 28 October 2026
Average paid worksite employees, down 2%. Revenue $1,651 million, up 2%. Gross profit per employee per month $225, up 8%. Insperity release, 29 October 2026
Total worksite employees, down 11%. Revenue $1,175 million, down 5%. Insurance cost ratio 89%. TriNet investor relations, 29 October 2026
PEO and Insurance Solutions revenue, up 12%. No worksite employee count disclosed. Paychex investor relations
Benefits are 30% of what employers pay, and small firms ask workers to cover more
Pooled health plans are the main reason small employers look at a PEO. These figures show what they are pooling against. Our employee benefit statistics report goes deeper on plan design.
is what workers at firms with 10 to 199 employees contribute a year toward family coverage.
at firms with 200 or more workers, a gap of $2,847. Source: KFF Employer Health Benefits Survey 2026.
Benefits take 30 cents of each compensation dollar
Private industry, June 2026
of private industry employer compensation is benefits: $14.07 of $46.89 per hour. Wages are $32.82, or 70.0%.
Source: BLS Employer Costs for Employee Compensation, June 2026. Full-time workers cost $54.00 an hour with $17.03 in benefits; part-time workers cost $25.20 with $5.05.
Small firms carry higher deductibles
Average annual deductible, single coverage, 2026
Across all covered workers, 38% face a deductible of $2,000 or more, up from 34% in 2025. 32% of small-firm workers pay more than half of the family premium, against 6% at large firms.
Source: KFF Employer Health Benefits Survey 2026, 1,937 firms surveyed January to July 2026.
Series break: BLS removes workers’ compensation from ECEC starting with December 2026 data, so later benefit shares will not compare cleanly with the June 2026 figures above. Insperity reports benefits cost per covered employee up 4% in Q3 2026; that is one PEO’s book, not an industry rate.
Most states regulate PEOs, but none accepts IRS CPEO status in place of its own rules
We read the statutes and state agency pages for all 50 states and the District of Columbia as of 7 November 2026. The tracker records the regime, the agency, the financial proof asked for, whether accreditation helps and how often the PEO must renew. Pair it with the PEO guide.
| Jurisdiction | Regime | Agency | Financial requirement | ESAC or assurance org accepted | Renewal | Confidence |
|---|---|---|---|---|---|---|
| Alabama | Registration | Alabama Department of Workforce | $100,000 net worth | No | Annual | High Source |
| Alaska | No PEO law | Alaska Department of Labor and Workforce Development | None | No | None | Medium Source |
| Arizona | Narrower rule | No licensing agency | $100,000 net worth or bond, not checked by an agency | No | None | High Source |
| Arkansas | License | Arkansas Insurance Department | $100,000 bond | Yes | Biennial | High Source |
| California | No PEO law | Employment Development Department | None | No | None | Medium Source |
| Colorado | Registration | Colorado Department of Labor and Employment | Bond, $100,000 working capital or accreditation | Yes | Annual | Medium Source |
| Connecticut | Registration | Connecticut Department of Labor | $150,000 working capital or bond | Yes | Annual | High Source |
| Delaware | No PEO law | Delaware Department of Labor, Division of Unemployment Insurance | None | No | None | Medium Source |
| District of Columbia | No PEO law | None | None | No | None | Medium Source |
| Florida | License | Florida Department of Business and Professional Regulation | $50,000 net worth plus positive working capital | Filings only | Biennial | High Source |
| Georgia | Narrower rule | Georgia Department of Labor | Bond: greater of $10,000 or 2.7% of taxable payroll (UI reporting only) | No | Annual | High Source |
| Hawaii | Registration | Hawaii Department of Labor and Industrial Relations | Bond of $25,000 to $250,000 by payroll | No | Biennial | High Source |
| Idaho | Narrower rule | No licensing agency | None, client funds held in a trust account | No | None | High Source |
| Illinois | Narrower rule | Illinois Department of Insurance | None ($1,000 fee) | No | Annual | Medium Source |
| Indiana | Registration | Indiana Department of Insurance | Positive working capital or security of shortfall plus $100,000 | Yes | Annual | High Source |
| Iowa | No PEO law | None for PEO regulation | None | No | None | Medium Source |
| Kansas | Registration | Kansas Secretary of State | Positive working capital or bond | Filings only | Annual | High Source |
| Kentucky | Registration | Kentucky Department of Workers’ Claims | Positive working capital or security | Yes | Annual | High Source |
| Louisiana | Registration | Louisiana Department of Insurance | Financial responsibility, amount not verified | Filings only | Annual | Medium Source |
| Maine | Registration | Maine Bureau of Consumer Credit Protection | None ($500 fee) | No | Annual | High Source |
| Maryland | No PEO law | None for PEO regulation | None | No | None | High Source |
| Massachusetts | Registration | Massachusetts Department of Labor Standards | Positive working capital plus $250,000 bond | Yes | Annual | High Source |
| Michigan | License | Michigan Department of Licensing and Regulatory Affairs | $100,000 working capital or security | Filings only | Annual | High Source |
| Minnesota | Narrower rule | Minnesota Department of Commerce | None ($100 fee) | No | None | High Source |
| Mississippi | No PEO law | None for PEO regulation | None found | No | None | Low |
| Missouri | Registration | Missouri Secretary of State | Positive working capital or security | Yes | Annual | High Source |
| Montana | License | Montana Department of Labor and Industry, Employment Relations Division | $50,000 net worth, or $100,000 deposit | Yes | Annual | High Source |
| Nebraska | Registration | Nebraska Department of Labor, Labor Standards | $100,000 working capital or bond | Yes | Annual | High Source |
| Nevada | License | Nevada Labor Commissioner | Positive working capital or security | Yes | Annual | High Source |
| New Hampshire | License | New Hampshire Department of Labor | $100,000 working capital or bond | Yes | Biennial | High Source |
| New Jersey | Registration | New Jersey Department of Labor and Workforce Development | Positive working capital or bond | Yes | Annual | High Source |
| New Mexico | Registration | New Mexico Regulation and Licensing Department | $100,000 bond | No | Annual | Medium Source |
| New York | Registration | New York State Department of Labor | $75,000 net worth or bond | No | Annual | High Source |
| North Carolina | License | North Carolina Department of Insurance | $50,000 net worth plus $100,000 bond | Yes | Annual filing, no expiry | High Source |
| North Dakota | License | North Dakota Secretary of State | Bond: lesser of $100,000 or 5% of quarterly wages | No | Annual | High Source |
| Ohio | Registration | Ohio Bureau of Workers’ Compensation | Positive working capital or security | Yes | Annual | High Source |
| Oklahoma | Registration | Oklahoma Insurance Department | $50,000 net worth or bond | No | Annual | Medium Source |
| Oregon | License | Oregon Department of Consumer and Business Services | None, proof of workers’ comp coverage | Filings only | Biennial | High Source |
| Pennsylvania | Narrower rule | No licensing agency | None | No | None | High Source |
| Rhode Island | Registration | Rhode Island Division of Taxation | $50,000 bond, waived after 2 years | Statute allows, no rule | Annual | High Source |
| South Carolina | License | South Carolina Department of Consumer Affairs | $50,000 net worth | Statute allows, no rule | Biennial | High Source |
| South Dakota | Narrower rule | South Dakota Department of Revenue | None | No | None | Medium Source |
| Tennessee | Registration | Tennessee Department of Commerce and Insurance | Positive working capital or $100,000 security | Yes | Biennial | Medium Source |
| Texas | License | Texas Department of Licensing and Regulation | $50,000 to $100,000 working capital by headcount | Yes | Annual | High Source |
| Utah | License | Utah Insurance Department | $100,000 working capital or bond | Yes | Annual | High Source |
| Vermont | License | Vermont Department of Labor | Net worth plus bond, each the greater of $100,000 or 5% of liabilities | Yes | Annual | High Source |
| Virginia | Registration | Virginia Workers’ Compensation Commission | None | No | None | High Source |
| Washington | Narrower rule | Washington Employment Security Department | None, bond optional | No | None | High Source |
| West Virginia | License | West Virginia Offices of the Insurance Commissioner | $100,000 working capital or bond | No | Annual | High Source |
| Wisconsin | Registration | Wisconsin Department of Financial Institutions | $100,000 working capital or bond | Yes | Annual | High Source |
| Wyoming | No PEO law | None for PEO regulation | None | No | None | Medium Source |
What is changing
- Kentucky: registration has been required since 15 July 2024.
- Arizona: the planned registration was repealed in April 2024 before it started. Some vendor lists still show it.
- Oregon: a 2025 law renames worker leasing companies to PEOs and adds client reporting from 1 July 2027.
- Montana: a November 2025 proposed rule would recognize ESAC and IRS CPEO status. We could not confirm it was adopted.
- Kansas: oversight moved from the Insurance Department to the Secretary of State.
- Nebraska: a January 2026 bill would change PEO fees and unemployment tax reporting. It had only reached committee referral as far as we can confirm.
Where older guides are wrong
- North Dakota licenses PEOs through the Secretary of State, even though its workers’ comp code makes it look unregulated.
- Pennsylvania has a PEO law (Act 102 of 2012) that splits duties between PEO and client but creates no license or registration.
- Wisconsin registers PEOs through its Department of Financial Institutions. Guides that cite only the workers’ comp rules undercount it.
- Illinois and Minnesota register leasing firms only so they can buy workers’ comp cover, so they are not PEO registration states.
- Tennessee calls it registration in the statute while its agency reviews it like a license. We count it by the statute.
- Nevada and New Jersey changed their rules: Nevada moved oversight to the Labor Commissioner, and New Jersey replaced its net worth test with working capital in 2011.
Dates that matter for PEO rules
Changes we found, oldest to next
- 2018Massachusetts enacts its PEO law with a $250,000 bond
- Apr 2024Arizona repeals its planned PEO registration before it starts
- Jul 2024Kentucky begins requiring PEO registration
- 1 Jul 2027Oregon’s law renaming worker leasing companies to PEOs takes effect
Source: state statutes, legislature and agency pages, linked in each row. Accessed 7 November 2026. Our review, not legal advice.
A PEO fits workers you employ in the US. An EOR fits workers you hire abroad.
The two models get mixed up because both share employer duties. They solve different problems, and some companies use both. Our EOR vs PEO vs staffing agency guide sets them side by side.
Choose a PEO when
Your employees are in the US and you already have a US entity. You want pooled health benefits, payroll and compliance support, and you accept co-employment. Check the tracker above, because the PEO must be authorized in each state where you have staff.
Choose an EOR when
You are hiring in a country where you have no entity, or testing a market before opening one. The EOR becomes the legal employer there. See whether you can use both.
More reviews: Multiplier, RemoFirst, Pebl, Rippling. Comparisons: Deel vs Remote, Remote vs Multiplier, Deel vs Rippling. Browse all reviews and comparisons.
Hiring outside the US as well?
Compare Employer of Record providers on price per employee and country coverage.
Where to go next when you are choosing a PEO or a software alternative
Start with the guides, then compare the providers behind them.
Payroll-led suites with PEO options: ADP, Paychex, Rippling and Paylocity. Category pages: payroll software, best HRIS software and HR software.
Public PEOs guide to slow headcount growth for the rest of 2026
Company guidance is the best near-term signal we have, and it points to flat to low single-digit worksite employee growth with steadier margins.
is the worksite employee growth ADP expects for its PEO business in fiscal 2027, with PEO revenue up 5% to 7% (3% to 5% excluding pass-throughs).
Source: ADP first quarter fiscal 2027 release, 28 October 2026
What the other public PEOs guide to
Full-year company guidance
Average paid worksite employees, down 1.3% to 1.5%. Adjusted EBITDA $194 million to $214 million. Insperity release
Revenue guidance. Adjusted EPS $4.50 to $5.10, toward the high end. TriNet investor relations
Raised outlook for PEO and Insurance Solutions revenue growth. Paychex investor relations
These are company forecasts, not industry data, and they can change with each quarterly report.
How we built this report
Data reviewed 7 November 2026. Industry and company figures are the latest published at that date.
Industry data
NAPEO Industry Footprint 2026, with data to the end of 2025. Revenue is NAPEO’s derived estimate, not reported revenue.
State tracker
Statutes, legislature sites and state agency pages for 50 states and DC, in force on 7 November 2026. Laws passed but not yet in force are noted, not counted.
Company and cost data
Each public PEO’s own Q3 2026 release or latest quarter, the KFF 2026 survey (small firms are 10 to 199 workers) and BLS ECEC for June 2026.
Our calculations
Anything we computed is labelled. Examples: the 472 smaller PEOs’ average size and the 63% of clients under 20 employees.
Update log
| Figure | Previous | Now | Source |
|---|---|---|---|
| Industry growth multiple | 12 times US employment growth | More than 10 times, NAPEO’s wording | NAPEO 2026 |
| Smaller PEOs | 493 PEOs under 4,000 worksite employees | 472 PEOs averaging about 4,100 | HR Stacks calculation |
| Seasonal cost figure | $2,844 a year | Removed: it annualized a single seasonal quarter | n/a |
| Industry revenue 2024 and 2022 | $358B and $254B | Removed: not verifiable to a primary source | n/a |
| State PEO rules | Not covered | 50-state tracker added | HR Stacks, 7 November 2026 |
All sources (8)
| Publisher | Used for | Link |
|---|---|---|
| NAPEO | Industry size, growth, client mix, concentration | napeo.org |
| ADP | PEO worksite employees, revenue, FY27 outlook | SEC exhibit 99 |
| Insperity | Q3 2026 results and FY2026 guidance | SEC exhibit 99.1 |
| TriNet | Q3 2026 results and FY2026 guidance | investor.trinet.com |
| Paychex | PEO and Insurance Solutions revenue, FY27 outlook | investor.paychex.com |
| KFF | Premiums, contributions, deductibles | kff.org |
| BLS | Employer costs for employee compensation | bls.gov/ecec |
| State agencies and legislatures | PEO regulation in 50 states and DC | Linked in each tracker row |
PEO questions, answered with the numbers above
How many states license or register PEOs?
35 of 50 in our review: 14 license PEOs and 21 require registration. 8 more states apply only a narrower rule, such as a bond or a workers’ comp registration, and 8 jurisdictions, DC included, have no PEO law we could find.
How many PEOs are there in the US?
NAPEO counts 502 PEOs at the end of 2025, serving 233,000 client businesses.
How many employees work through a PEO?
5.4 million worksite employees at the end of 2025, according to NAPEO.
How big is the PEO industry?
NAPEO puts worksite employee wages at $386 billion and estimates industry revenue at $446 billion, derived by applying gross markup to those wages.
Which businesses use PEOs most?
Small ones. The average client has 23.2 worksite employees, and 63% of clients have fewer than 20 (our calculation from NAPEO’s size bands).
Does IRS CPEO certification replace state licensing?
No. No state statute we reviewed accepts CPEO certification in place of its own requirements. Several states accept ESAC or a state-approved assurance organization for part of them.
Are PEO headcounts still growing?
Over the long run yes: 7.2% a year from 2008 to 2025. In the latest quarters the picture is mixed. ADP’s average PEO worksite employees rose 2%, Insperity’s fell 2% and TriNet’s fell 11%.
What is the difference between a PEO and an EOR?
A PEO co-employs workers a company already has in the US. An EOR becomes the legal employer of workers a company hires in another country.