Professional Employer Organizations

Military Service Members, Veterans, and Spouses - For more information about obtaining a TDLR license or renewing a TDLR license that expired while serving on active duty, please go to the Military Outreach home page.

PEO Review - The Texas Department of Licensing and Regulation (Department) files this notice of intent to review and consider for re-adoption, revision, or repeal, Title 16, Texas Administrative Code, Chapter 72, Professional Employer Organization. This review and consideration is being conducted in accordance with the requirements of Texas Government Code, §2001.039.

An assessment will be made by the Department as to whether the reasons for adopting or readopting these rules continue to exist. Each rule will be reviewed to determine whether it is obsolete, whether the rule reflects current legal and policy considerations, and whether the rule reflects current procedures of the Department.

Any questions or written comments pertaining to this rule review may be submitted by mail to Neta Lamas, Legal Assistant, General Counsel's Office, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas, 78711, or by facsimile to (512) 475-3032, or electronically to Please include 'PEO' in the subject line. The deadline for comments is 30 days after publication in the Texas Register.

Any proposed changes to these rules as a result of the rule review will be published in the Proposed Rule Section of the Texas Register. The proposed rules will be open for public comment prior to final adoption or repeal by the Department in accordance with the requirements of the Administrative Procedure Act, Texas Government Code, Chapter 2001.

72.1 Authority
§72.10 Definitions
§72.20 License Requirements - Full License
§72.21 License Renewal Requirements - Full License
§72.22 License Requirements - Limited License
§72.23 License Renewal Requirements - Limited License
§72.24 Approval of Assurance Organization
§72.25 Use of Assurance Organization by Applicant or License Holder
§72.40 Proof of Positive Working Capital
§72.70 Responsibilities of Licensee - General
§72.71 Responsibility of Licensee - Records
§72.73 Self-funded Health Benefits Plans
§72.80 Fees
§72.90 Sanctions - Administrative Sanctions/Penalties
§72.91 Enforcement Authority
§72.100 Electronic Filing and Compliance

Issued in Austin, Texas on November 7, 2016

Brian E. Francis
Executive Director
Texas Department of Licensing and Regulation

Changes to the Professional Employer Organization law - House Bill 3150 passed by the 84th Texas Legislature, amended Labor Code, Chapter 91, relating to the calculation of taxable wages paid by a professional employer organization for purposes of the Texas Unemployment Compensation Act. House Bill 3150 and the changes to Chapter 91 became effective September 1, 2015. TDLR encourages all persons interested in the Professional Employer Organization program to review the updated Labor Code, Chapter 91.

TDLR amended the Professional Employer Organization (PEO) administrative rules on November 21, 2013, to implement changes in the PEO law created by Senate Bill 1286, authored by Senator Tommy Williams and enacted in 2013 by the 83rd Texas Legislature. The amended PEO rules took effect January 1, 2014.

Because the statute regulating PEO’s (formerly known as Staff Leasing Services) was more than 15 years old, the language no longer accurately reflected current business models. S.B. 1286 modernized the statute to bring business terms and language in line with the state of the industry. S.B. 1286 also clarified health benefit plan and worker’s compensation insurance options for PEO’s and their clients.

The amendments to the law include:

  • replacing the outdated term “staff leasing services company” with “professional employer organization”;
  • replacing related terms, such as “assigned employee” with “covered employee”;
  • adding new terms “coemployer” and “coemployer relationship”;
  • authorizing a client company to purchase workers’ compensation insurance for covered employees;
  • authorizing a professional employer organization to offer a self-funded health insurance plan, provided the plan is approved by the Texas Department of Insurance;
  • clarifying new notice requirements in S.B. 1286 relating to providing notice to covered employees of the coemployment relationship between a PEO and a client;
  • clarifying that a PEO is responsible for providing to TDLR which party in the coemployment relationship (if any) carries workers’ compensation insurance;
  • adding definitions that clarify some new terms used in S.B. 1286, and define ‘offer to perform’ consistent with other programs regulated by TDLR;

For more information about the TDLR PEO program,contact TDLR at or 800-803-9202. Also, you can sign up to receive TDLR Email Updates to be notified about any further changes or updates to the PEO program.

On November 21, 2013, the Texas Commission of Licensing and Regulation approved a reduction in the initial license and renewal fees for the Professional Employer Organizations program (formerly Staff Leasing Services). TDLR estimates this fee reduction will result in a savings for licensees of $66,575 annually, with an estimated 5 year savings of $332,875.

The following fee reductions take effect January 1, 2014 for initial applications and February 1, 2014 for renewals (note: license fees do not include non-refundable $150 application fee)

PEO Company with 0 - 249 assigned employees:

  • Current Initial or Renewal License Fee: $250
  • NEW Initial or Renewal License Fee: $150
  • Savings: 40%

PEO Company with 250 - 749 assigned employees:

  • Current Initial or Renewal License Fee: $500
  • NEW Initial or Renewal License Fee: $300
  • Savings: 40%

PEO Company with 750 or more assigned employees:

  • Current Initial or Renewal License Fee: $750
  • NEW Initial or Renewal License Fee: $550
  • Savings: 26.7%

Limited License:

  • Current Initial or Renewal License Fee: $750
  • NEW Initial or Renewal License Fee: $150
  • Savings: 80%

Senate Bill 1286, passed in the 83rd Legislative Session, is effective September 1, 2013. This bill made changes to the program formerly known as Staff Leasing. The program is now called Professional Employer Organizations (PEO). All of our forms, Frequently Asked Questions (FAQs), and rules will be updated to reflect this change. Additionally, changes were made in the new law regarding who can sponsor insurance programs and workers' compensation insurance for covered employees. We will be periodically updating our FAQs so please check our web site and sign up for email notifications.