Question 1

Is PEO licensing required in Texas?

Accepted Answer

Yes. Texas requires PEOs to hold a license from the Texas Department of Licensing and Regulation (TDLR) under Labor Code Chapter 91. Two license tiers exist: a full PEO license and a limited license for out-of-state companies with 50 or fewer assigned employees in Texas.

Question 2

What are the financial security requirements for Texas PEOs?

Accepted Answer

Texas uses a tiered working capital requirement based on covered employee count: $50,000 for fewer than 250 employees, $75,000 for 250 to 750 employees, and $100,000 for more than 750 employees. Any deficiency must be secured by a surety bond, letter of credit, or guaranty.

Question 3

How often must a Texas PEO license be renewed?

Accepted Answer

Texas PEO licenses must be renewed annually. Renewal fees range from $300 to $700 depending on the number of covered employees. Late renewals are accepted for up to 18 months with increased fees.

Question 4

What background checks are required for Texas PEO licensees?

Accepted Answer

Texas requires fingerprints and criminal-history background checks on each applicant and controlling person as part of the licensing process. Licenses cannot be transferred, and a separate license is required for each business name.

Question 5

What is the SUI taxable wage base in Texas?

Accepted Answer

The 2026 SUI taxable wage base in Texas is $9,000. New employers pay a rate of 2.70%.

Question 6

Is workers' compensation mandatory in Texas?

Accepted Answer

No. Workers' compensation insurance is optional for most private employers in Texas. The state has a competitive private market, and Texas Mutual serves as the insurer of last resort.

Texas PEO FAQs: Licensing, Working Capital, and Annual Renewal

Frequently Asked Questions