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

As of October 2026, a professional employer organization (PEO) that co-employs workers in Nebraska must register with the Nebraska Department of Labor (NDOL) under the Professional Employer Organization Registration Act, whatever it calls itself, and unless it qualifies for a limited registration it must show $100,000 in working capital or an equivalent bond or letter of credit. Nebraska law does not use the term "employer of record": an EOR that co-employs workers with the client is a PEO under the act, and one that supplies its own temporary workers is a temporary help service, which the act excludes. For unemployment insurance, the PEO reports Nebraska wages under the client's own account and tax rate, and the client stays liable for unpaid tax.

This page is for a company outside Nebraska, or a staffing firm, deciding whether to employ a Nebraska worker through an EOR or PEO or to register itself. The general difference between an EOR, a PEO and payrolling is in what is an employer of record and payrolling services explained; the full state checklist is in hiring employees in Nebraska, and the 2020 repeal of agency licensing and the coming health care staffing registration are in staffing agency license in Nebraska.

Nebraska employer of record and PEO rules at a glance

Does Nebraska register PEOs or employer of record companies?

Nebraska registers PEOs. Under § 48-2704, a person providing professional employer services in 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 may not offer the services or use names such as PEO, staff leasing company, employee leasing company or administrative employer. Section 48-2702 applies the act regardless of the name a provider uses and excludes temporary help services, independent contractor arrangements and employee sharing within a commonly owned group. A provider selling "employer of record" services should be able to tell you which side of that line it is on.

• What registration takes. Names used in the last five years, owners of 25 percent or more, senior management, and an audited financial statement no older than 13 months, then a new audit each year within 180 days of the fiscal year end (§ 48-2704(3)).
• Financial assurance. Positive working capital of at least $100,000, or a bond, certificate of deposit, escrow account or irrevocable letter of credit of at least $100,000, plus any working capital deficit (§ 48-2705).
• Limited registration. For a PEO domiciled outside Nebraska, licensed or registered in another state, with no Nebraska office or direct solicitation and no more than 50 covered employees in Nebraska on any day; the $100,000 test does not apply. An unregistered PEO that learns an existing out-of-state client has Nebraska employees must decline to cover them or notify NDOL within five business days and file.
• Fees. Section 48-2710 lets NDOL set fees up to $2,500 for an initial registration, $1,500 for a renewal and $1,000 for a limited registration. NDOL's registration form updated January 5, 2026 lists those maximums, but the September 3, 2025 version still linked from NDOL's guidance documents page lists $250, $150 and $100. Confirm the current amount with NDOL Labor Standards before filing.
• Penalties. Knowingly operating unregistered is a Class I misdemeanor, and NDOL can deny, revoke or restrict a registration and impose up to $1,000 per material violation (§ 48-2711).

To check a provider, ask for its NDOL registration. Section 48-2704(8) requires NDOL to keep a list of registered PEOs "readily available to the public," but we could not find it published on NDOL's site as of October 2026, so request it from Labor Standards, whose contact details are on the registration form.

The majority rule: why a PEO may not fit one Nebraska hire

Section 48-2706(1) says no person shall knowingly enter 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 one-half of the payroll of the client in this state is attributable to covered employees." For a company with no other Nebraska staff, one co-employed worker is all of them, so the test is met. For a company that already employs people in Nebraska and wants a PEO for just one or two more, it is not, and the arrangement would have to be ordinary employment, temporary help or payrolling instead.

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

Under § 48-648(5), "The professional employer organization shall report and pay combined tax, penalties, and interest owed for wages earned by worksite employees under the client's employer account number using the client's combined tax rate." The same subsection makes the client liable for unpaid combined tax, penalties and interest and treats the worksite employees as the client's employees for the Employment Security Law. In practice the client needs its own NDOL account once it crosses the liability test in NDOL's Unemployment Tax Fact Sheet, $1,500 in gross wages in a quarter or a worker in 20 weeks, and the PEO files under it.

Who carries workers' compensation in Nebraska?

Nebraska requires coverage from the first employee in the employer's regular business (§ 48-106). Section 48-2709 requires the PEO agreement to allocate the duty to the client, the PEO or both. If the PEO takes it on, it must give the client the insurer's name, the policy number and claim instructions within ten days after enrollment. If the PEO's policy covers only co-employees, the client must buy a second policy for everyone else, and the PEO reports the arrangement to the administrator of the Workers' Compensation Court. Under § 48-2706(3)(d), the client "shall not be relieved" of its own coverage duty if the PEO fails to obtain the insurance it promised, so get the certificate before the start date.

Which Nebraska registrations, reports and notices still apply?

• Withholding. The Department of Revenue requires a Form 20 withholding number "prior to withholding state income taxes," and a Form W-4N with every federal W-4; without one, withholding is at the single rate with no allowances.
• New-hire reporting. Within 20 days to DHHS through the Nebraska New Hire Reporting website.
• Co-employment notices. The PEO gives each covered employee written notice of the arrangement, and the client posts at its worksite a notice of the co-employment relationship and the state's unemployment and minimum wage notices (§ 48-2706(4)).
• Paid sick time. Employers with 11 or more employees give written notice "at the commencement of employment" and display NDOL's poster, or send it electronically to remote workers (§ 48-3806). Ask the provider how it counts employees for the threshold.
• E-Verify. Required only of public employers and public contractors (§ 4-114); see E-Verify requirements in Nebraska.

What does the client company still own in Nebraska?

The act is explicit. Unless the agreement says otherwise, the client keeps "the exclusive right to direct and control the covered employees" and is "solely responsible" for directing, supervising, training and controlling their work and for their acts while under its direction (§ 48-2706(2)(c) and (5)(b)). A covered employee who needs a professional license is "deemed solely an employee of the client" for that license (§ 48-2703). In practice that leaves you with:

• Hiring rules. Nebraska's ban-the-box statute binds public employers only (see ban-the-box in Nebraska), and we found no state pay transparency or salary history law, but remote postings can pick up other states' rules; see pay transparency laws by state.
• Drug testing and interviews. Employers with six or more employees must confirm a positive screen before acting on it, and Nebraska is one-party consent for recording; both are in the Nebraska hiring checklist and Nebraska recording consent law for interviews.
• Safety and conduct. Workplace safety, harassment complaints and discipline follow the company that directs the work, and agencies can treat both companies as joint employers; see joint employer liability for staffing agencies.
• Federal payroll taxes. The IRS says the client "generally remains responsible" for employment taxes unless the PEO is certified; check the IRS's CPEO public listings.

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

Because the PEO files unemployment tax under the client's own NDOL account, using one does not spare you that registration. Registering yourself means adding a Form 20 withholding number, W-4N collection, a new-hire report, workers' compensation and, at 11 employees, the paid sick time notice. It tends to be the better route when you already employ people in Nebraska (the majority rule may rule a PEO out), when you expect several hires, or when you run multi-state payroll already. A PEO or EOR fits when you want benefits and payroll handled for a small Nebraska team, and a temporary help firm fits a short assignment.

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

1. Are you registered with NDOL under the PEO Registration Act, fully or with a limited registration, or do you operate as a temporary help service? Send the registration.
2. Will this arrangement cover a majority of our Nebraska employees and payroll, as § 48-2706(1) requires?
3. Do we need our own NDOL account number, and will you report under it at our rate?
4. Who carries workers' compensation, does your policy cover only co-employees, and will you send insurer, policy number and claim instructions within ten days?
5. Who files Form 20, collects the W-4N and reports the hire to DHHS within 20 days?
6. How will you deliver the co-employment notice and the paid sick time notice to a remote worker?
7. Are you an IRS-certified PEO, and who is liable for federal employment taxes if you miss a payment?
8. Who handles terminations, final pay and unemployment claims, and what records do we get if we end the agreement?

Employer of record rules in other states: Arkansas, California, Florida, Hawaii, Mississippi, New York, Rhode Island, South Carolina and Texas.