PEO in Minnesota [2024]

A professional employer organization (PEO) can make life easier for businesses in Minnesota by helping them streamline and automate their human resources tasks like payroll services, benefits administration, compliance management, and workers’ compensation insurance. Plus, partnering with a PEO allows businesses to access better employee benefits without breaking the bank.

With many employment and labor laws that protect workers, Minnesota has been called “the best state for workers and their families.” But as a business owner, it can be challenging to keep up with complex and frequently changing state and local laws. PEOs can help businesses ensure they stay compliant with all necessary regulations.

But you don’t want to pick just any PEO. This article will help you better understand your options and choose the right one. Rippling PEO, for instance, handles tasks like state tax registration and remote laptop management, making onboarding in the state of Minnesota—and all over the US—a breeze.

Benefits of using a PEO in Minnesota

Partnering with a Minnesota PEO can mean reducing your HR workload, providing your employees with access to more affordable benefits, ensuring regulatory compliance, and more.

Offload administrative HR work

When you team up with a Minnesota PEO, you enter into a co-employment relationship. Here's how it works: you stay in charge of hiring, firing, wages, and overall business strategy as the worksite employer. The PEO takes on the role of administrative employer, meaning they employ your workers under their federal tax identification number (EIN), which allows them to handle employment-related HR tasks like payroll, benefits, and compliance.

Thanks to a combination of technology, established processes, and industry know-how, PEOs can streamline all your HR processes. And without all that manual work to do, your HR team gets time back for the important work that really moves your business forward. 

Better employee benefits, at a lower price

According to the National Association of Professional Employer Organizations (NAPEO), over 500 PEOs in the US co-employ 4.5 million workers at over 200,000 businesses. Because PEOs co-employ so many workers from different companies, they can negotiate with insurance providers to help you access better and more cost-effective employee benefits. 

While PEOs don’t sell benefits directly, they do provide access to a range of top-notch benefits via third-party providers, often including health insurance, life and disability coverage, mental health support, retirement plans, and more. 

The Affordable Care Act (ACA) requires all businesses across the US with 50 or more full-time employees to offer health care benefits. Minnesota businesses must also comply with the state’s paid leave laws for Family and Medical Leave and other leave types like parental leave, safety leave, caregiving leave, and deployment-related leave. A PEO will ensure you meet all these benefits requirements—and can help you offer extra perks—often while cutting costs.

Worry-free compliance with Minnesota laws

A PEO doesn't just handle federal labor and employment laws like the ACA; it also tackles the intricate and ever-changing state and local Minnesota laws. For example, Minnesota’s minimum wage is $10.85 per hour for large employers (with business earnings of more than $500,000 per year) and $8.85 per hour for small employers (with business earnings of less than $500,000 per year). What’s more, some cities and counties in Minnesota have their own higher minimums:

Staying on top of minimum wages is no doubt challenging—especially with remote employees scattered across different locations in Minnesota and the US. But with a PEO like Rippling, you get automatic alerts for minimum wage violations based on your employees' locations, ensuring you always adhere to local laws.

And PEOs go beyond just minimum wage—they provide legal and compliance support in areas such as:

• Payroll regulations, classifying employees and contractors correctly, handling tax forms, reporting and depositing payroll taxes, and adhering to wage laws like overtime requirements
• Benefits laws, helping you follow Minnesota’s paid sick leave laws, as well as federal regulations like ACA, COBRA, FSA, HSA, and other benefits-related rules
• Labor laws, providing workers' compensation insurance, helping with Equal Employment Opportunity (EEO) laws, and displaying the required state labor posters

Breaking these laws can lead to hefty fines—the IRS estimates that 40% of small businesses face payroll penalties annually. That's where PEOs can help, offering crucial compliance support to keep your business in the clear.

Dedicated support team

Simply put, PEOs are HR pros. When you join one, you tap into their expertise, which is especially beneficial for small businesses and startups without similar in-house HR resources. Your PEO not only saves you time and money but can also guide you through tasks like crafting an employee handbook, training managers, checking your safety protocols, and any other HR challenges you might encounter.

What to consider when evaluating a PEO service in Minnesota

Choosing the right PEO in Minnesota is crucial for your business. Here are some key factors to consider:

• Your business and HR needs: Identify what you need from a PEO. Common PEO services include:
• Payroll services and processing
• Tax filing and compliance
• Benefits administration
• Recruiting and onboarding
• Safety compliance and risk mitigation
• Time and attendance tracking
• Regulatory compliance
• HR outsourcing
• Your budget: Different PEOs have different pricing structures, like per-employee per-month fees or a percentage of each payroll run. Consider whether the PEO will stay affordable as your business grows.
• Experience and reputation: Check if the PEO has experience working with businesses in Minnesota and if it's well-regarded. Review sites like G2 and Capterra can provide insights from past and current clients.
• Benefits: Examine the quality, scope, and cost of benefits plans that the PEO provides access to and ensure they align with your employees' preferences.
• Benefits renewal rates: Does the PEO disclose its cost increases for benefits plans after the first year? Some PEOs surprise businesses with high renewal rates, which you’ll want to avoid. 
• Integrations: Make sure the PEO can integrate with your existing systems, tools, and technology.

• Does the PEO have expertise in certain industries? You may want to seek out a PEO that has experience in your field if you operate in a niche industry.
• Does the PEO have expertise in specific legal or compliance matters? If your business has specific legal challenges or needs to meet certain federal or state regulatory requirements, you may want to find a PEO with that specialized experience.
• Exit strategy: If you ever want to switch PEO providers or move your HR processes in-house, some PEOs unfortunately make it challenging to leave. Find a PEO that allows for a smoother transition when you decide to part ways.

Why Rippling PEO is the right choice for your Minnesota business

Rippling PEO is the first PEO to integrate HR, IT, and Finance into one platform, making your everyday HR tasks straightforward and efficient. From 90-second onboarding to remote IT management, Rippling's modern and user-friendly software is a game-changer compared to most PEOs still running on outdated 1980s software.

With Rippling, you get: 

• HR, IT, and Finance systems in one platform
• Customized and comprehensive employee metrics reporting 
• Administrative tools for remote teams, including app and device management, state and local tax registration, and paperless onboarding
• Affordable access to high-quality benefits plans, along with the assurance of below-average, predictable renewal rates 
• Automated flagging and recommended remedies for compliance violations at the federal, state, and local levels 
• Risk management and compliance automation, including digital labor law poster distribution, ACA and COBRA administration, and anti-harassment training for your employees
• Access to Rippling’s extensive library of HR resources, guides, and templates

And if you ever decide to transition HR in-house, Rippling makes it painless to switch off the PEO and move to our comprehensive workforce management platform. Your HR, payroll, and employee data stay in your account, integrations remain intact, and your employees can continue using Rippling seamlessly. It's a win-win for simplicity and flexibility.

FAQs about PEOs in Minnesota

What is a PEO, and how does it work?

A PEO partners with companies to offer comprehensive HR solutions, covering payroll, benefits administration, HR management, and compliance assistance. They typically adopt a co-employment model, legally becoming the employer of the company's workforce for tax purposes.

How does a PEO arrangement affect control over my employees?

Your company will maintain full control over day-to-day operations and management, while the PEO will take care of HR functions and employment-related tasks.

What is a Certified PEO?

A Certified PEO (CPEO) meets specific IRS criteria regarding background, expertise, finances, and reporting. Certification is voluntary, indicating the PEO has passed certain assessments. While CPEO status once provided tax benefits, today, the primary advantages are largely obsolete.

What size company can benefit from a PEO?

PEOs work with businesses of all sizes, but small to mid-sized businesses often benefit the most. PEOs help cut administrative costs, freeing up HR teams for strategic work and providing access to high-quality benefits.

How does a PEO charge for its services?

PEO costs vary based on services and employee count. PEOs may charge a flat fee per employee or a percentage of total payroll. 

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

After a PEO collects your employee data (like contact information and tax records), they’ll set up systems for HR, payroll, and benefits. The PEO will often integrate their platforms to allow for streamlined management and may conduct training to help onboard your employees. The implementation process can take anywhere from a few weeks to a couple of months, depending on your business size and the complexity of services you need.

Are PEOs regulated?

Yes, PEOs adhere to federal and state regulations, with many opting for industry accreditation.

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

Yes, all PEOs in Minnesota must complete an application process and register with the Minnesota Department of Commerce's Employee Leasing Company Registration Unit.

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

Most PEOs require a complex, often disruptive process to remove their systems. But Rippling PEO simplifies the transition—you can switch it off and seamlessly move to our workforce management platform, preserving your systems, data, and integrations.

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.