PEO in Virginia [2024]

Many small and medium-sized businesses can streamline and automate employment-related tasks, like benefits administration, workers’ compensation insurance, and payroll services, with the help of a professional employer organization (PEO). PEOs work with businesses to help them save time and money on administrative HR demands, while also providing access to better, more affordable benefits—empowering HR teams to focus on higher-level strategic work.  

Virginia-based businesses can benefit from using a PEO service for several reasons, not least of which is the high cost of living and doing business in the Old Dominion state. With a PEO, Virginia business owners can save money on employee benefits while still giving workers access to high-quality packages and plans.

Ready to select a PEO? Before you make a choice, carefully evaluate the available options. This article will help guide you through the process of choosing a PEO that’s right for you. For instance, Rippling PEO offers services like remote laptop management and automatic state tax registration, making it simple to hire and onboard employees in the Commonwealth of Virginia and across the US.

Benefits of using a PEO in Virginia

According to the National Association of Professional Employer Organizations (NAPEO), companies that use a PEO reap many benefits, including a higher employee satisfaction rate and significant cost savings—over $1,700 per worker on average. Below, we’ll explore some major benefits of using a PEO in Virginia.

Offload administrative HR work

PEO companies co-employ your workers. In a co-employment arrangement, your company splits employer responsibilities with the PEO. You become the worksite employer, retaining authority over workplace management choices like hiring and business strategy—including which benefits to offer, how much to pay your employees, and day-to-day business operations.

For its part, the PEO becomes the administrative employer. They employ your workers under their federal tax identification number (EIN), so they can handle employment-related human resources work like benefits management, payroll, HR compliance, etc.

The PEO handles all HR administration with a combination of technology, expertise, and proven processes. By offloading the time-consuming, manual tasks that make up HR work, your team frees up their time to focus on business-critical objectives like driving growth. 

Better employee benefits, at a lower price

In today’s highly competitive job market, offering a strong employee benefits package helps small businesses stand out to attract and retain top talent. And under the Affordable Care Act (ACA), Virginia businesses with 50 or more full-time employees are required to provide them with health insurance. Through PEOs, Virginia employers can offer access to health insurance, retirement plans, commuter benefits, life and disability insurance, mental health support services, dependent care, and more—and the benefits a PEO can access are often better and cheaper than what a smaller or mid-sized business can offer on its own.  

How do they do it? Professional employer organizations in the United States co-employ a whopping total of 4.5 million workers at 200,000 businesses. Because they have so many “employees,” PEOs have a lot of bargaining power that they use to negotiate lower costs with insurance companies.

Worry-free compliance with Virginia laws

In addition to ensuring you comply with federal laws like the ACA, a PEO also helps you comply with the Commonwealth of Virginia's state and local laws. Virginia has seen many changes to state laws over the last few years; among other things, Virginia legislators recently enacted a pay transparency law prohibiting employers from retaliating against employees discussing their pay with their coworkers. Another example is the minimum wage: Under Virginia law, as of January 1, 2023, employers must now pay a basic minimum wage of $12.00 per hour. And this rate will continue to increase until it reaches $16 per hour on January 1, 2026. 

Keeping up with these changes can be challenging for employers, especially if they have workers in multiple states with different minimum wages. A PEO like Rippling will ensure you remain compliant and avoid penalties by automatically alerting you to minimum wage violations based on employees’ locations.

PEOs can provide legal and compliance support for much more than just minimum wage regulations. They can also help with:

• Labor laws: A PEO will ensure you follow Equal Employment Opportunity (EEO) laws and that you display state-required labor posters; they’ll also provide workers’ comp coverage to your employees
• Payroll regulations: PEOs can help you classify employees and contractors correctly. They’ll also report, collect, and deposit payroll taxes with the right authorities by the proper deadlines, issue and file tax forms, and make sure you’re compliant with overtime and other wage laws. 
• Benefits laws: A PEO will ensure you remain compliant with the ACA and Virginia’s paid sick leave laws, among other benefits-related regulations.

According to the IRS, 40% of small businesses pay payroll penalties each year. Partnering with a PEO service can help you avoid becoming one of them.

Dedicated support team

By joining a PEO, you’ll benefit from the wisdom and support their team of HR experts provides. This especially benefits smaller businesses and startups who may not have the same resources internally. PEO experts can help you save time and money and offer guidance on benefits administration, training managers more efficiently, creating an employee handbook, and more.

What to consider when evaluating a PEO service in Virginia

There are many Virginia PEO service providers to choose from. To find the one that’s right for you, keep the following criteria in mind when evaluating candidates:

• Your business needs. Think about which services you need a PEO to provide. Some common ones include:
• Payroll processing
• Time and attendance tracking
• Regulatory compliance
• Benefits administration
• Recruiting and onboarding
• Tax filing and compliance
• Safety compliance and risk management
• HR outsourcing
• Your budget. PEOs tend to use one of two pricing structures: They either charge a percentage of each payroll run or a fee per employee per month. Remember to factor in your future plans to scale; you’ll need to be sure you can still afford the PEO as you hire more employees.
• Experience and reputation. Online reviews are a great place to start when evaluating a PEO’s experience and reputation. Look for information like whether the company is highly regarded, how long it’s been in business, and whether it has experience with other Virginia businesses. 
• Benefits. Access to lower-cost, high-quality benefits is a big reason small businesses work with PEOs. Make sure the services you’re considering offer access to benefits that align with what your employees want and need.
• Benefits renewal rates. Some PEOs lure businesses in with initially low benefits rates, only to raise them unexpectedly after the first year. This makes transparency a crucial quality when considering a PEO. A good PEO will be clear about how its rates change so business owners can predict potential increases.

• Does the PEO specialize in certain legal or compliance issues? If your business has specific legal or compliance issues it needs to address, look for a PEO that has specialized experience in those areas. 
• Integrations. A PEO that integrates with your existing technology and tools will be easier to work with. After all, you don’t want to implement a PEO service only to have to change your entire tech stack. 
• Does the PEO specialize in certain industries? Small businesses in niche industries can look for PEOs specializing in those fields. 
• Your exit strategy. Even though you’re just starting the search, it’s important to think ahead: Your relationship with a PEO may eventually come to an end. Some PEOs make it hard for their clients to leave, requiring them to rip and replace their systems and start anew. Figuring out how hard it might be to move on from a PEO before you join one is a good call. 

Why Rippling PEO is the right choice for your Virginia business

Most PEOs run on software built over 30 years ago—but that’s not the case with Rippling. Rippling PEO offers a modern solution and is the first PEO that integrates HR, Finance, and IT in one easy-to-use platform. All your busy work will be automated and streamlined, from 90-second onboarding to remote IT management.

We provide access to Fortune 500-quality benefits at affordable, transparent rates and take care of all your critical compliance tasks, from setting up state and local tax accounts to automatically flagging minimum wage violations.

With Rippling, you get:

• HR, IT, and Finance in one platform
• Powerful, customizable reporting on any employee data
• Access to superior-quality benefits plans, along with below-average, predictable renewal rates
• Automatic flagging for federal, state, and local compliance infractions, as well as recommendations to help you fix each one
• Tools for managing your remote employees, including paperless onboarding, device management, and state and local tax registration
• Automated risk management processes, including ACA and COBRA administration, anti-harassment training, and digital labor law posters that are automatically sent to your employees
• Access to a plethora of HR resources, guides, and templates, plus ongoing support

If you ever decide you want to transition your HR in-house, it’s easy to make changes with Rippling PEO. Whereas other PEOs make switching a painful, drawn-out process, with Rippling, you can move seamlessly to our all-in-one workforce management platform. You won’t lose your HR, payroll, and employee data when switching either: It stays stored in your account. Your integrations with other systems remain intact, and your employees keep the same logins—so they can keep using Rippling the same way.

FAQs about PEOs in Virginia

What is a PEO, and how does it work?

A PEO partners with a business to provide automated, streamlined HR services, including benefits administration, HR management, payroll services, and compliance assistance. They operate on a co-employment model for tax reasons; in other words, they legally become the employer of the business’s workers.

What is a Certified PEO?

In the past, satisfying certain IRS criteria related to finances, expertise, background, and so on meant tax benefits for businesses. With the certification, Certified PEOs (CPEOs) could show they had passed certain assessments. While getting the certification has always been voluntary, it’s not as popular today since the major advantages are mostly obsolete.

How does a PEO arrangement affect control over my employees?

In a PEO arrangement, PEOs take on employment-related HR work and management functions. Business owners retain authority over daily operations, business strategy decisions, and employee hiring and management.

What size company can benefit from a PEO?

Professional employer organizations work with businesses of all sizes. But they tend to offer the most benefits to small and medium-sized companies because they provide access to high-quality, lower-cost benefits plans they might not have been able to access on their own. They also help them save money on administrative costs by outsourcing manual HR tasks. 

Are PEOs regulated?

Yes, PEOs must comply with both federal and state regulations.

How does a PEO charge for its services?

Most PEOs charge either a monthly per-employee fee or a percentage of the total payroll. The final cost you pay will depend on the services the company provides and the number of employees you have.

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

Once you join a PEO, they’ll start by getting information from you about your workforce. This will include asking for payroll data, benefits information, and employment records. They’ll also prepare their systems to handle your HR administration work, which may require them to integrate their technology with your existing tech stack. They may also spend time training your employees on using their systems and onboarding your workers.

Typically, this entire process can take anywhere from a couple of weeks to months, depending on your business size and the complexity of the services you require.

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

Yes. In Virginia, professional employer organizations must register with the government of the Commonwealth before they can do business. 

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

Let’s say that, after a few years, your business can handle HR administration on its own, and you decide to move the tasks in-house. Most PEOs will require you to remove their systems, which is a process that’s both disruptive and inefficient. Replacing those systems can be painful and time-consuming.

With Rippling PEO, moving off the PEO is simple. You just switch it off and transition to our all-in-one workforce management platform, leaving all your systems, data, and integrations intact.

In what states is Rippling PEO available?

Rippling PEO is available in all US states.

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.