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Tennessee PEO Laws: Registration, Bonding and Payroll Requirements

Tennessee requires PEOs to register with the Department of Commerce and Insurance under Tenn. Code 62-43 (biennial renewal, $100,000 capital or bond security). TDLWD adds an Aggregate State Number plus per-client accounts. SUI wage base $7,000; new employer rate 2.7%; minimum wage $7.25 (federal).

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Tennessee: PEO regulatory and payroll facts. Each populated field links to the statute, agency page or filing it came from.
PEO registration or licensing requiredYes — PEOs must register with the Tennessee Department of Commerce and Insurance under the Professional Employer Organization Act (Tenn. Code 62-43); separate SUI registration with TDLWD is also required. source (opens in new window)
Regulating agencyTennessee Department of Commerce and Insurance (TDCI) for PEO licensure (62-43-102(7)); Tennessee Department of Labor and Workforce Development (TDLWD) handles unemployment insurance tax accounts. source (opens in new window)
Bond or security requirementLicensure: positive working capital or, for the deficiency, a surety bond, irrevocable letter of credit, or securities (62-43-106). SUI: a $100,000 corporate surety bond posted with TDLWD relieves clients of joint and several UI premium liability (62-43-109(f)); bond may drop to $35,000 after three full years of timely payment. source (opens in new window)
Registration renewal cycleEvery two years — registration is valid for two years from issuance under Tenn. Code 62-43-106. source (opens in new window)
SUI taxable wage base$7,000 (2026) source (opens in new window)
New-employer SUI rate2.7% (2026) source (opens in new window)
State workers' comp fundFalse source (opens in new window)
State paid leave mandateNot verified
State minimum wage$7.25 per hour (federal; Tennessee has no state minimum wage above the federal rate) source (opens in new window)
PEO SUI reporting basisPEOs are deemed employers of covered employees (62-43-109(a)); each PEO registers with TDLWD, receives an Aggregate State Number, and opens a separate account for each client, filing separate quarterly wage and premium reports per client at the PEO's aggregate premium rate; clients are jointly and severally liable unless the PEO posts a $100,000 surety bond. source (opens in new window)

Sources

What we know about Tennessee

Tennessee regulates professional employer organizations under the Professional Employer Organization Act, codified at Title 62, Chapter 43 of the Tennessee Code. The act defines the "department" with supervisory authority as the Department of Commerce and Insurance, which makes Tennessee's PEO registration a TDCI program rather than a labor-department program. A person or entity may not operate as a PEO in the state without a registration issued under section 62-43-106, and that registration is valid for two years from the date of issuance under section 62-43-106(d), making the renewal cycle biennial. Financial responsibility is a core requirement: an applicant must show positive working capital, and if working capital is insufficient the applicant may supply a surety bond, irrevocable letter of credit, or securities covering the deficiency. The PEO Act also requires each PEO to provide a bond with a $100,000 face amount if it wants to shield its clients from joint and several unemployment premium liability, and that SUI bond can be reduced to $35,000 after three consecutive years of timely premium payment under section 62-43-109(f). Tennessee's unemployment insurance agency is the Department of Labor and Workforce Development, which treats PEOs as employers under the Tennessee Employment Security Law. TDLWD explains on its unemployment insurance tax page that every PEO co-employing one or more workers with a Tennessee client must complete an online PEO registration, after which it is assigned an Aggregate State Number; the PEO must then register each Tennessee client from its customer account and file separate quarterly wage reports for each client under its client number. TDLWD's Handbook for Employers describes the mechanics: the PEO must ensure that an Application for Client Number (form LB-0910) is filed for each client with co-employed workers in Tennessee, providing the PEO's aggregate number, the client's identifying information, and a description of the client's business activity, and wage and premium reports are then filed quarterly for each client under its Client Number, manually or through bulk filing in Employer e-Services. Each client's premium rate is the rate of the PEO's Aggregate State Number, and the PEO must keep separate records for every client. For 2026 the taxable wage base is $7,000 per employee and the new employer premium rate is 2.7 percent, with new employers holding that rate until they earn an experience rating. Tennessee has no state minimum wage law, so the federal minimum wage of $7.25 per hour applies under the Fair Labor Standards Act. Workers' compensation is provided through a competitive private market, not a state fund: roughly three hundred to four hundred licensed carriers write policies, and employers refused coverage by two carriers can obtain insurance through the National Council on Compensation Insurance assigned risk plan. Tennessee does not mandate paid family or medical leave for private-sector employers, so leave policy remains a matter of employer choice and any federal requirements.

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