PEO Compliance & Regulatory Review
Compliance protection is one of the primary reasons companies use a PEO. But not all PEOs provide the same level of coverage — and gaps you don't know about can become expensive problems.
What This Audit Covers
The co-employment relationship with a PEO is supposed to provide a shared compliance umbrella — reducing your exposure to employment law violations, wage and hour claims, and regulatory penalties. But the scope of that umbrella varies significantly between PEOs, and most business owners assume they're covered without verifying what's actually included.
Our compliance review evaluates your actual exposure across the areas where PEOs most commonly fall short: state-specific law compliance, wage and hour classification, leave law administration, and ACA reporting obligations. We identify where your current PEO's coverage ends and where your liability begins.
Request your free audit →State-specific employment law compliance
We assess whether your PEO is actively monitoring and applying employment law requirements for every state where you have employees.
Wage & hour classification review
We evaluate exempt/non-exempt classifications and independent contractor designations for FLSA compliance risk.
ACA compliance & reporting
We review your ACA eligibility tracking, affordability calculations, and 1094/1095 reporting obligations and their current status.
Leave law administration
We assess FMLA, state-specific paid leave, and other leave law obligations and how your PEO is handling administration.
I-9 & E-Verify compliance
We review your I-9 administration processes and E-Verify enrollment and usage against federal requirements.
Employee handbook & policy compliance
We evaluate whether your existing employee handbook and policies are current with applicable federal and state requirements.
What We Typically Uncover
Every business and every PEO relationship is different. These are the most common issues we identify in this area — most clients recognize at least two or three immediately.
State law non-compliance
Employees in specific states are not covered by state-specific employment law requirements that differ from federal standards.
FLSA misclassification risk
Employees classified as exempt or as independent contractors in ways that create material FLSA or IRS exposure.
ACA reporting gaps
Incomplete or inaccurate ACA eligibility tracking or 1095-C reporting that could trigger IRS penalties.
Leave law administration failures
FMLA or state paid leave not being properly administered, tracked, or communicated to employees.
Outdated employee policies
Employee handbooks or policies that haven't been updated to reflect recent changes in federal or state employment law.
I-9 process gaps
I-9 forms that are incomplete, improperly completed, or not retained according to federal requirements.
Our Audit Process for This Area
Scope identification
We identify every state and locality where you have employees and map the applicable compliance obligations for each.
PEO coverage assessment
We review your PEO agreement and service documentation to determine which compliance areas are covered and which are not.
Gap analysis
We compare your obligations against your actual coverage to identify specific areas of unmitigated risk.
Priority ranking
We rank identified gaps by severity — distinguishing between technical gaps and those with material financial or legal exposure.
Findings report & remediation guidance
We deliver a report with identified gaps, risk assessment, and recommended remediation steps for each finding.
Questions About This Audit Area
No. The co-employment relationship shares certain responsibilities, but your business retains liability in many areas. The scope of what your PEO covers is defined by your specific agreement — and it varies significantly.
Depending on the issue and your agreement, liability may rest with the PEO, with you, or be shared. Our audit clarifies which areas are covered and which remain your responsibility.
Significantly. Multi-state employers face a much more complex compliance landscape. PEOs vary widely in their ability to administer state-specific requirements, and gaps are more common and more consequential for multi-state companies.
Our audit methodology is updated regularly to reflect changes in federal and state employment law. We flag areas where law has recently changed and assess whether your PEO's practices have kept pace.
Ready to Start Your Free PEO Audit?
Free for qualifying companies with 10–150 employees. No obligation, no sales pressure — just honest answers.