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

Kansas does not license "employers of record" as such, but it does regulate professional employer organizations (PEOs): as of November 2026, the Professional Employer Organization Registration Act, K.S.A. 44-1701 to 44-1711, requires anyone providing PEO services, where all or a majority of a client's employees are covered employees, to register with the Kansas Secretary of State, whatever it calls itself. The Secretary of State took over from the Department of Labor on July 1, 2025, charges $250 and requires registration by October 15 every year. The act also bars co-employing less than a majority of a client's Kansas workforce, makes the PEO handle wages and payroll taxes, requires its workers' compensation to be fully insured by a Kansas-admitted carrier, and leaves the client with every employer duty the agreement does not move.

This page is for a company outside Kansas, or a staffing firm, deciding whether to employ someone in Kansas through an employer of record (EOR) or PEO, or to register itself. The general difference between an EOR, a PEO, a staffing agency and payrolling is in what is an employer of record and payrolling services explained. Kansas's $25 license for agencies that charge job seekers, the 2025 move of PEO registration and the health care staffing registration are in staffing agency license in Kansas, and the full state checklist is in hiring employees in Kansas. This page adds the majority rule, the out-of-state client rule, who insures the worker, what the agreement must say and what stays with you.

Kansas employer of record and PEO rules at a glance

Does Kansas license employer of record companies or PEOs?

It registers PEOs. Under K.S.A. 44-1702(g), a person in the business of providing professional employer services "shall be considered a 'professional employer organization' regardless of such person's use of the term staff leasing company, administrative employer, employee leasing company or any name other than professional employer organization." Under K.S.A. 44-1704(a), a person providing those services "pursuant to co-employment relationships in which all or a majority of the employees of a client are covered employees shall be registered," and an unregistered person "shall not offer or provide professional employer services in this state." A 2024 amendment (L. 2024, ch. 50) made the Secretary of State the registering office, and its PEO page says PEOs "are required to register with the Kansas Secretary of State as of July 1, 2025."

• What to file. Every name used in the past five years, anyone owning or controlling 15% or more, the senior executive, and an audit no older than 13 months, then a new audit no older than 12 months with each renewal (K.S.A. 44-1704(c), (h)).
• Fees. The Secretary of State says "The cost of registration is $250" and "Registration is due by October 15 every year." The statute caps fees at $1,000 initial, $500 renewal and $500 limited (K.S.A. 44-1705).
• Expiry. A registration "shall automatically expire on October 15 following the issuance," and registrations issued on or after January 1, 2025 expired on October 15, 2026 (K.S.A. 44-1704(e)), so every provider should show a 2026 renewal.
• Limited registration. For a PEO domiciled outside Kansas and licensed or registered in another state, with no Kansas office, no direct solicitation of Kansas clients and "not more than 50 covered employees employed or domiciled in this state on any given day." It lasts one year and the working capital rule does not apply (K.S.A. 44-1704(g)).
• Money behind the payroll. Positive working capital, or a bond equal to the shortfall "plus $100,000," held to secure taxes, wages and benefits owed to covered employees (K.S.A. 44-1706).

To check a provider, use the Secretary of State's listing of active professional employer organizations, which shows each PEO's latest registration and next registration due date; the entries we checked in November 2026 showed next due dates of October 15, 2027.

What if the provider calls itself an employer of record but is not a registered PEO?

Kansas defines the activity, not the label, and two rules matter most for a single remote hire:

1. Ongoing co-employment is the test. A co-employment relationship is one "intended to be an ongoing relationship rather than a temporary or project specific relationship," with employer rights and duties allocated under a written professional employer agreement (K.S.A. 44-1702(c), (f)). A genuine temporary help service, which hires its own employees, assigns them to supplement a client's workforce or cover absences, skill shortages, seasonal workloads or projects, and "customarily" reassigns them, is excluded (K.S.A. 44-1702(g)(2), (l)). An EOR that employs your permanent Kansas employee under a contract that splits employer duties with you looks like the first, not the second.
2. The out-of-state client rule. If an unregistered PEO "becomes aware that an existing client, not based in this state, has employees and operations in this state," it must either decline to serve those employees or notify the Secretary "within five business days" and apply for a limited registration, or a full one if the client has more than 50 covered employees. The Secretary may issue an interim operating permit while the application is pending (K.S.A. 44-1704(d)).

Knowingly offering PEO services, or using names like "staff leasing" or "employee leasing," without registering is a violation under K.S.A. 44-1709, and the Secretary may impose "a civil fine in an amount not to exceed $10,000 for each material violation" or order the provider to cease and desist. Federal payroll taxes follow their own rule: the IRS says a business that outsources payroll "generally remains responsible" for employment taxes unless the provider is a certified PEO; see the IRS's CPEO public listings.

Can a PEO employ only some of your Kansas workers?

No, and this is the Kansas rule most likely to surprise a client. K.S.A. 44-1707(a) says "No person shall knowingly enter into a co-employment relationship in which less than a majority of the employees of the client in this state are covered employees, or in which less than half of the payroll of the client in this state is attributable to covered employees." If your first and only Kansas hire goes through the PEO, the test is met. If you already employ Kansas workers on your own payroll and want a PEO to take one more, it is not, and you would need to move most of your Kansas workforce to the PEO, register yourself for the new hire, or use a genuinely temporary staffing arrangement.

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

The PEO handles it, but the statutes we found do not say whose account and rate carry the wages. Every Kansas professional employer agreement must provide "that the professional employer organization shall have the responsibility to pay wages to covered employees, to withhold, collect, report and remit payroll-related and unemployment taxes" (K.S.A. 44-1707(c)(2)). Kansas's employment security law defines a "lessor employing unit" as a business "providing leased employees to a client lessee" and the client lessee as the business leasing them (K.S.A. 44-703(ff), (gg)), and it treats as an employer any employing unit that paid $1,500 or more in wages in a calendar quarter or had at least one worker in each of 20 weeks (K.S.A. 44-703(h)(2)). We found no Kansas statute, and could not open the Department of Labor's guidance, that says whether a PEO reports covered employees under its own account or under the client's. So:

• ask the provider which Kansas unemployment account number will carry your worker's wages, and whose experience your claims will affect;
• ask it to confirm that position with the Kansas Department of Labor in writing; and
• check that your contract covers what happens to the account and rate when the agreement ends.

The PEO must also provide, and you must post at your worksite, the state's unemployment and minimum wage notices together with a notice of the co-employment relationship (K.S.A. 44-1707(e)).

Who carries workers' compensation in Kansas?

Every covered employer must insure, and a PEO's plan has extra conditions. K.S.A. 44-532(b) says "Every employer shall secure the payment of compensation to the employer's employees" by insuring with "an insurance carrier authorized to transact the business of workers compensation insurance in the state of Kansas," by qualifying as a self-insurer, or through a qualified group-funded pool. A knowing and intentional failure is a class A misdemeanor, and the civil penalty is "twice the annual premium the employer would have paid had such employer been insured or $25,000, whichever amount is greater" (K.S.A. 44-532(c), (d)). The act does not apply to an employer whose total gross annual payroll was, and is expected to stay, $20,000 or less (K.S.A. 44-505(a)(2)); ask whose payroll the provider counts.

• Fully insured only. A PEO "shall sponsor health and workers' compensation plans for its covered employees only on a fully insured basis from an insurance carrier admitted to do business in this state" (K.S.A. 44-1707(f)(7)).
• Seven-day warning. If that health or workers' compensation policy is canceled or not renewed, the PEO must notify every affected client within seven days that its employees are no longer covered (same section).
• No shared exclusive remedy in the act. Unlike PEO acts in states such as Indiana and Alabama, the Kansas act does not say that both the client and the PEO are the employer for workers' compensation or share its exclusive remedy, so ask counsel how a claim against you would be treated.

Which Kansas registrations, reports and notices still apply?

• What the PEO must take on, and what it need not. Wages, payroll taxes and unemployment taxes, as above. Wages "do not include" bonuses, commissions, severance, deferred compensation, profit sharing or paid time off "unless the professional employer organization has expressly agreed to assume liability for such payments" (K.S.A. 44-1707(d)), so those stay with you by default.
• Notice to the worker. The PEO gives each covered employee written notice of the agreement, and a person is a covered employee only after receiving it (K.S.A. 44-1702(d), 44-1707(e)).
• Withholding. The Department of Revenue says employees with Kansas-source wages complete the Kansas K-4 "on or before the date of employment," and if an employee does not, "the employer must withhold wages at the single rate with no allowances."
• New-hire reporting. Within 20 business days of the hire, rehire or return to work, or of the first pay, under K.S.A. 75-5743.
• Benefits and per-employee charges. A client and a PEO "shall each be deemed an employer" for sponsoring retirement and welfare plans (K.S.A. 44-1708), and any state or local tax or assessment charged per employee is assessed "against the client for covered employees" (K.S.A. 44-1707(f)(8)(C)).
• E-Verify. No state mandate; see E-Verify requirements in Kansas.

What does the client company still own in Kansas?

By statute, nearly everything except payroll. Unless the agreement says otherwise, the client "shall be entitled to exercise all rights and shall be obligated to perform all duties and responsibilities otherwise applicable to an employer," keeps "the exclusive right to direct and control the covered employees," and is "solely responsible for directing, supervising, training and controlling" their work (K.S.A. 44-1707(b), (f)). The act does not diminish a client's obligations to covered employees, "including, but not limited to, rights and obligations arising from civil rights laws guaranteeing nondiscrimination in employment practices" (K.S.A. 44-1703(a)(2)). Hiring rules follow whoever recruits and decides, which is usually you:

• Pay questions. No salary history ban and no pay range posting law, but the Kansas City, Missouri ordinance and Colorado's posting law can reach some roles; see Kansas salary history ban and Kansas pay transparency law.
• Screening. No private-employer ban-the-box law (see ban the box in Kansas), and the state's own consumer reporting law with its seven-year limit in Kansas background check laws.
• Non-competes. Existing covenants between you and the worker are untouched, and the PEO has no liability for them unless it agreed in writing (K.S.A. 44-1703(a)(3)); the Weber test and the non-solicitation safe harbors are in Kansas non-compete law.
• Licensed workers. A covered employee who must be licensed "shall be deemed to be an employee solely of the client" for that license (K.S.A. 44-1703(b)(2)).
• Interviews and testing. See Kansas recording consent law for interviews and Kansas drug testing law.
• Co-employment liability. See joint employer liability for staffing agencies.

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

Registering yourself means a Kansas unemployment account, a withholding registration with the Department of Revenue, a workers' compensation policy once payroll passes $20,000 a year, the K-4 and new-hire reports. That route tends to win when you already employ Kansas workers directly, because the majority rule stops a PEO from co-employing just one of them, and when you expect several Kansas hires. A registered PEO fits a company whose first Kansas worker, or whole Kansas team, it will employ, especially if you want benefits handled; check whether its registration is limited, because a limited registrant may not have more than 50 Kansas covered employees on any day. A temporary help service fits a genuinely temporary assignment.

Questions to ask an employer of record or PEO before signing for Kansas

1. Are you on the Secretary of State's listing of active PEOs, is your registration full or limited, and when is it next due?
2. If you are not registered, why are you not a PEO under K.S.A. 44-1702, and have you notified the Secretary under K.S.A. 44-1704(d)?
3. Does our arrangement meet the majority rule in K.S.A. 44-1707(a), given any Kansas employees we already have?
4. Under whose Kansas unemployment account will our worker's wages be reported, and has the Department of Labor confirmed that?
5. Is your workers' compensation plan fully insured by a Kansas-admitted carrier, and how will you give us the seven-day notice if it lapses?
6. Which pay items have you expressly agreed to cover: bonuses, commissions, severance, paid time off?
7. Who files the new-hire report within 20 business days, and who provides the notices we must post?
8. Do you meet the working capital rule, or have you posted a bond?
9. 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: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.