Professional Employer Organizations

 

Welcome to the homepage for the Montana Professional Employer (PEO) Program, which enforces standards for the operation, regulation, and licensing of individual and group, restricted and unrestricted licenses.

Fall 2025 Update:

As of October 1, 2025, background check requirements for controlling persons are no longer required for initial applications and license renewals. The Department is working to update various forms, policies, and procedures in conjunction with the change. Please contact program staff with questions regarding current requirements and qualifications.

A Professional Employer Organization (PEO) is a business that leases employees to other businesses. The PEO becomes the employer of record, handling responsibilities such as paying employee wages, workers’ compensation premiums, payroll-related taxes, and providing employee benefits from its own accounts. The client company pays the PEO for these services, typically through a combination of employee costs and an administrative fee.

In Montana, there are two recognized models for employee leasing:
• Professional employer arrangement – employees are 100% sourced and managed by the PEO.
• Employee leasing arrangement – employees are shared between the client company and the PEO.

In both arrangements, the PEO has authority over hiring, firing, discipline, and reassignment of employees, while the client company directs daily operations. The rights and responsibilities of both parties are governed by statute and must be outlined in a written contract.

The Department of Labor & Industry does not provide legal advice, counseling, or recommendations about whether a business should use a PEO or how to evaluate a specific arrangement. However, businesses considering employee leasing are encouraged to:

Verify that a PEO is licensed and in good standing.
• Review references from other clients.
• Carefully review any proposed contract to understand responsibilities and liabilities.
• Request and retain copies of relevant payroll, tax, and insurance filings for leased employees.

Use of a PEO does not eliminate a business’s legal liabilities; client companies may be liable for any unmet obligations by the PEO.

Should you not find a PEO or have questions, please contact Jazmyn Smith - jazmyn.smith@mt.gov