Employer of record in the District of Columbia: PEO rules, payroll registration and what the client still owns (2026)

As of November 2026, the District of Columbia has no law that licenses or registers professional employer organizations (PEOs) or employer of record (EOR) companies. The Professional Employer Organization Registration Act of 2021 (B24-0305) would have had PEOs register with the Department of Insurance, Securities and Banking, but we found no record that it was enacted and no PEO chapter in the D.C. Code, and the District's unemployment law has no PEO or leasing rule. What does apply: workers' compensation for every employer, DC unemployment insurance, and the 0.75% Universal Paid Leave contribution that covered employers pay, whose definition of covered employer reaches companies that employ "through the services of a temporary services or staffing agency or similar entity."

This page is for a company outside the District, or a staffing firm, deciding whether to employ a DC worker through an EOR or PEO or to register itself. The general differences between an EOR, a PEO and payrolling are in what is an employer of record and payrolling services explained. The District's hiring checklist is in hiring employees in the District of Columbia, and the employment agency license, which reaches employer-paid recruiters, is in staffing agency license in the District of Columbia. This page adds what those leave out: how DC's payroll programs treat an arrangement where someone else is the employer on paper, and what stays with you.

District of Columbia employer of record and PEO rules at a glance

Does the District of Columbia license PEOs or employer of record companies?

No. The Council's Committee on Health held a hearing on B24-0305, the "Professional Employer Organization Registration Act of 2021," on March 7, 2022. DISB's written testimony said the bill "would require professional employer organizations (PEOs) to register with DISB so the Commissioner can monitor their provision of health insurance for covered employees." We found no record that it was enacted, and the D.C. Code's insurance and labor titles, in their current tables of contents on the Council's official code site, contain no PEO chapter. Our DC staffing agency license guide reached the same conclusion.

The license that can reach an EOR is DLCP's. D.C. Code § 32-402 bars operating an employment agency, an employment counseling service or an employer-paid personnel service in the District without a license, which DLCP issues as the Employment Services category of the basic business license. An EOR that only puts on its payroll a worker you found is not obviously procuring job seekers for you, but one that also sources candidates may be. The temporary help exemption is narrow: it covers firms that hire and pay people only to furnish temporary help and never offer to place them permanently, as the staffing guide explains.

Who pays DC unemployment tax on an EOR or PEO worker?

The District's unemployment law gives no special answer. The definitions in D.C. Code § 51-101 contain no professional employer organization or employee leasing provision, unlike states that make the PEO, or the client, the employer by statute. So the general rules decide which company is the employer. Ask the provider to confirm in writing whose DOES account will carry the wages, because the answer also decides who owes the paid leave contribution below, and whose experience a DC layoff affects. DOES runs registration, quarterly wage reports and payments through its Employer Self Service Portal.

Who pays DC Paid Family Leave on an EOR worker?

"A covered employer shall contribute an amount equal to 0.75% of the wages of each of its covered employees" (§ 32-541.03(a)). The definition of covered employer in § 32-541.01(4) is written with staffing arrangements in mind: any business "who directly or indirectly or through an agent or any other person, including through the services of a temporary services or staffing agency or similar entity, employs or exercises control over the wages, hours, or working conditions of an employee and is required to pay unemployment insurance" on behalf of its employees.

• Who is covered. An employee who spends more than half of their work time for the employer in the District, or whose job is based in DC and who spends a substantial amount of time there and no more than half elsewhere (§ 32-541.01(3)).
• How it is paid. The Office of Paid Family Leave says benefits are "funded by a quarterly payroll tax based on the immediate past quarter of gross or total wages paid, much like the unemployment insurance tax," with quarterly wage reports and payments submitted through the DOES online portal, per its employer page.
• Notices. Employers post the Paid Family Leave notice and tell workers about the program at hire, every year and when leave is needed.
• What to agree. Because the definition can describe both you and the EOR, the contract should say which company registers and pays, and the EOR should show you the filing.

Who carries workers' compensation in the District of Columbia?

The employer does, with no headcount threshold in the security section: "Every employer shall secure the payment of compensation under this chapter," either through a carrier authorized to insure workers' compensation or by proving to the Mayor its financial ability to pay (D.C. Code § 32-1534). The District has no PEO statute that allocates this between you and a provider, so the contract has to. Ask for a certificate that names your company, covers the worker's DC work and tells you if it lapses.

Which DC registrations, reports and notices still apply?

• Tax registration and withholding. New businesses register with OTR on Form FR-500 and file withholding electronically on the FR-900Q through MyTax.DC.gov, and OTR lists Form D-4, the employee withholding allowance certificate, and Form D-4A, the "Certificate of Non-residence in DC," on its withholding forms page. If the worker lives in Maryland or Virginia, ask the EOR to collect the right form and to handle the home-state withholding.
• Written notice at hire. "Every employer ... shall furnish to each employee at the time of hiring" a written notice with the employer's name and trade names, main office address, phone number, rate and basis of pay, tip-sharing policy and regular payday, and an update within 30 days of any change (§ 32-1008(c), (d)). Temporary staffing firms give their own assignment notices under § 32-1008.01.
• New-hire reporting. "Within 20 days of the date an employee begins employment in the District of Columbia, or is rehired," with a civil penalty of $25 for each employee not reported (§ 46-226.06).
• Paid leave notice. The Paid Family Leave notice is updated each November and must be posted by the following February, per the Office of Paid Family Leave. Ask how a remote worker receives it.

What does the client company still own in the District of Columbia?

Most of the District's hiring rules attach to the business that recruits, interviews and decides, which is usually you, and several have headcount thresholds, so ask whose employees are counted:

• Job ads and pay. A pay range in every job listing and a healthcare benefits disclosure before the first interview, and no wage history questions; see DC pay transparency law and DC salary history ban.
• Screening. Employers with more than 10 employees in the District ask about convictions only after a conditional offer, and credit checks are banned for most jobs; see ban the box in DC and DC background check laws. Marijuana testing waits until after a conditional offer; see DC drug testing law.
• Covenants and interviews. Non-competes are banned below the highly compensated threshold (see DC non-compete law), and many candidates sit in Maryland, an all-party consent state (see DC recording consent law for interviews).
• Joint liability for wages. When a temporary staffing firm employs a worker who works for another employer, "both the temporary staffing firm and the employer shall be jointly and severally liable" for wage payment, living wage and sick leave violations (§ 32-1303(6)). More generally, see joint employer liability for staffing agencies.
• Federal payroll taxes. The IRS says a company that outsources payroll "generally remains responsible for paying taxes and filing returns," unless the PEO is certified; see the IRS's CPEO public listings.

When is registering your own company in the District the better route?

Registering yourself means an FR-500 with OTR, a DOES account for unemployment insurance and Paid Family Leave, a workers' compensation policy, D-4 or D-4A forms, the written notice at hire and 20-day new-hire reports. That route tends to win when you expect several DC hires or already run payroll in Maryland and Virginia. An EOR fits a single hire where you want payroll, benefits and comp handled together, provided the contract settles who registers for Paid Family Leave. A temporary staffing firm fits a defined assignment, with the joint wage liability above.

Questions to ask an employer of record or PEO before signing for the District of Columbia

1. Since DC has no PEO registration, what licenses do you hold here: a DLCP basic business license, and an Employment Services license if you also recruit for us?
2. Under whose DOES account will our worker's wages be reported for unemployment insurance?
3. Will you register for and pay the 0.75% Paid Family Leave contribution, and will you show us the filing?
4. Who is the workers' compensation carrier, and will the certificate name us?
5. Will you collect Form D-4 or D-4A and handle Maryland or Virginia withholding if the worker lives there?
6. Who gives the § 32-1008(c) notice at hire, and does it name you as the employer?
7. Are you a temporary staffing firm for our worker, so that § 32-1303(6) joint liability applies?
8. Are you an IRS-certified PEO, and who is liable for federal employment taxes if a deposit is missed?

Employer of record rules in other states: Maryland, Virginia, Pennsylvania, New York, West Virginia, Vermont, Wisconsin and Wyoming.