Employer of record in New Jersey: employee leasing registration, payroll accounts and what the client still owns (2026)

New Jersey does not use the term "employer of record," but it regulates the PEO model in detail. As of October 2026, the Employee Leasing Company law (N.J.S.A. 34:8-67 et seq.) requires an employee leasing company or professional employer organization to register with the Department of Labor and Workforce Development, list its New Jersey clients every January 31, show positive working capital in an audited financial statement, and certify each quarter that payroll taxes were paid. A registered leasing company and its client are co-employers: the leasing company reports unemployment, disability and family leave contributions under its own state tax number and must provide workers' compensation, but the Department says both parties are ultimately jointly liable for the contributions, and temporary help service firms are a separate category outside the law.

This page is for a company outside New Jersey, or a staffing firm, deciding whether to employ someone in New Jersey through an employer of record (EOR) or PEO, or to register itself. How an EOR, a PEO, a staffing agency and payrolling differ is in what is an employer of record and payrolling services explained; the full New Jersey checklist is in hiring employees in New Jersey; and employment agency licensing and temporary help firm certification are in staffing agency license in New Jersey. This page adds the leasing registration, the contribution accounts, workers' compensation and what stays with you.

New Jersey employer of record and PEO rules at a glance

Does New Jersey license or register employer of record companies or PEOs?

It registers employee leasing companies, which is what the law calls PEOs. The definitions in N.J.S.A. 34:8-67, as amended in 2011, treat "employee leasing company" and "professional employer organization" as the same thing: a business that "devotes a substantial portion of its business to providing the services of employees pursuant to one or more employee leasing agreements" and takes on employer responsibilities. An employee leasing agreement is a written arrangement in which the leasing company and client "co-employ covered employees" and that is "ongoing rather than temporary in nature, and not aimed at temporarily supplementing the client company's work force."

Under N.J.S.A. 34:8-70, a leasing company "shall register with the commissioner" and list its New Jersey client companies on registration and "annually by January 31st," with each client's name, location, activity, state tax number, the percent of its workforce leased, the agreement's dates, a copy of the standard agreement, proof of the written rate disclosure given to clients, and proof of workers' compensation coverage. The money test is in N.J.S.A. 34:8-71: an audited financial statement showing "a positive working capital," or, failing that, a bond, letter of credit or securities worth the shortfall "plus up to $100,000," and a CPA's certification within 60 days after each quarter that "all applicable federal and state payroll taxes for covered employees in this State have been paid on a timely basis." If that certification is late, the Department notifies the leasing company's clients.

An out-of-state leasing company with no New Jersey office or solicitation and no more than 50 covered employees in the state can take a limited registration without the audited statement. Commonly owned companies can register as a group. The Department's PEO page lists the forms (PEO-1 for the initial registration of client companies, PEO-A for the annual one) and, for anyone who wants to know whether a leasing company is compliant, a phone line (609-633-6400, ext. 2209) and an email address ([email protected]). We found no public list of registered companies.

Is an EOR that employs one new hire an employee leasing company in New Jersey?

The statute was written for a client moving existing staff onto a leasing company. Every agreement must provide that the leasing company, "except for newly established business entities," will "hire its initial employee complement from among employees of the client company," keep their terms, and hand them back as the client's employees when the agreement ends (N.J.S.A. 34:8-68(a)(6)). It must also reserve to the leasing company the "authority to hire, terminate, discipline, and reassign" covered employees, while the client may accept or cancel an assignment.

Temporary help service firms are expressly outside the law: N.J.S.A. 34:8-75 says it "shall not apply to temporary help service firms," which are regulated as employment agencies and, for covered temporary workers, under the Temporary Workers' Bill of Rights described in our New Jersey licensing guide. So a provider that employs one person you recruited, for an open-ended role, should be able to tell you which it is: a registered leasing company co-employing that person under a leasing agreement, or a temporary help firm with its own certification. A provider that is neither leaves the question of who employs the worker open.

Who pays New Jersey unemployment, disability and family leave contributions?

The leasing company, under its own number. N.J.S.A. 34:8-72(c) says it "shall file reports prescribed under the 'unemployment compensation law' ... on behalf of its covered employees using the State tax identification number of the employee leasing company," and § 34:8-72(b) lets it make contributions to the Unemployment Compensation and State Disability Benefits Funds on their behalf. The Department's PEO page describes the leasing company as reporting wage information and paying "appropriate TDI/UI/WD contributions and assessments," and then adds the line every client should read: "As co-employers, both the PEO and client company are ultimately jointly liable for reporting wages and paying contributions on time."

The rate rules in N.J.S.A. 34:8-73 follow the workers:

• Total workforce leased: wages are reported at the leasing company's benefit experience; the client's history does not transfer.
• Part of the workforce leased: the leasing company reports the leased portion at its rate, and the client "shall continue to report wages and pay contributions for the workforce not acquired" at its own rate. This is the usual case when a company outside New Jersey already has a New Jersey account.
• On termination: how the client's rate is rebuilt depends on whether the lease lasted at least two full calendar years, and a client moving straight to another leasing company reports at the new company's rate.

The leasing company must give you a written explanation of these rate rules when you sign (N.J.S.A. 34:8-74), and the Department's forms include a reporting option selection, Form PEO-RO, with "Entity Level" and "Client Level" boxes. Ask which one the provider uses for your account. If the Department rescinds a leasing company's registration, its clients "shall file reports and make contributions separately" (N.J.S.A. 34:8-76).

Who carries workers' compensation in New Jersey?

The leasing company provides it, and both parties are on the hook. Every leasing agreement must provide that the leasing company "Shall provide workers' compensation insurance for their covered employees" (N.J.S.A. 34:8-68(a)(8)), and N.J.S.A. 34:8-72(a) makes the registered leasing company and the client "co-employers" for wages, benefits and the obligation to insure "through policies issued by an insurance carrier licensed in the State of New Jersey." The policy "shall state the name of the employee leasing company as the labor contractor for each client company, by name," so ask to see your company's name on it. The workers' compensation exclusive remedy applies to both the leasing company and the client, and stops applying to the leasing company if its registration is rescinded.

The agreement must also give both parties a right of direction over "safety, risk and hazard control at the work site," including inspections, safety policies and claims management. New Jersey requires coverage from the first worker; see the Department's employer requirements.

Which New Jersey registrations, reports and notices still apply?

• Gross income tax withholding. The leasing company is the W-2 reporting employer, as N.J.S.A. 54:54-1 assumes, so it registers through Form NJ-REG and collects Form NJ-W4. If you also have direct New Jersey employees, you file your own NJ-REG; see the New Jersey hiring checklist.
• New-hire reporting. Within 20 days, including independent contractors; agree which party files.
• Notices at hire. The earned sick leave notice for every new hire, the gender equity notice at 50 or more employees, the leasing company's written notice of the relationship (N.J.S.A. 34:8-68(a)(5)), and the Department's employer poster packet. Ask how a remote worker receives them.
• E-Verify. No state mandate as of October 2026; see E-Verify requirements in New Jersey.
• Benefits credit. A benefit you must provide that the leasing company provides "shall be credited against the client company's obligation" (N.J.S.A. 34:8-68(g)), and state employment incentives and tax credits stay with the client (N.J.S.A. 54:54-1, 54:54-6).

What does the client company still own in New Jersey?

The 2011 amendments spell it out. Unless the agreement says otherwise, the client "shall be solely responsible for the quality, adequacy or safety of the goods or services," for "directing, supervising, training and controlling the work of the covered employees," and for their acts in that work (N.J.S.A. 34:8-68.1). The law also leaves untouched any restrictive covenant between you and the worker, and the leasing company has no liability for it unless it agrees in writing (N.J.S.A. 34:8-68(d)(2)). In practice you also keep:

• The hiring process. Pay ranges in postings at 10 or more employees (New Jersey pay transparency), no salary history screening (salary history ban), and no criminal history questions before the first interview (Opportunity to Compete Act).
• Screening and interviews. Cannabis and testing limits in New Jersey drug testing laws, record rules in New Jersey background check laws, and one-party recording consent in New Jersey recording consent law.
• Non-competes. Enforceability follows New Jersey non-compete law, whoever runs payroll.
• Co-employment exposure. Wage, leave and discrimination claims can name both parties; see joint employer liability for staffing agencies.
• Federal payroll taxes. The IRS says a client using a PEO "generally remains responsible" for employment taxes unless the PEO is certified; see the CPEO public listings.

When is registering your own company in New Jersey the better route?

A leasing arrangement does not take you out of New Jersey's system: you stay jointly liable for contributions and keep reporting any unleased workforce. Registering yourself means NJ-REG, unemployment, disability and family leave contributions, workers' compensation from the first employee, NJ-W4s, the new-hire report and the notices at hire. That route tends to win when you expect several New Jersey hires, want hiring and firing decisions in your own name (a leasing agreement must reserve them to the leasing company), or the role is project work that a certified temporary help firm can staff more simply. A registered leasing company fits a company that wants payroll, benefits and workers' compensation for its New Jersey staff handled together.

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

1. Are you registered with the Department of Labor and Workforce Development as an employee leasing company, with a full or limited registration? Can we confirm it with the Division of Employer Accounts?
2. If you are not, are you a certified temporary help service firm, and why does that fit an ongoing role?
3. Will you report our worker's wages at entity level or client level, and what rate disclosure will you give us under N.J.S.A. 34:8-74?
4. Can we see your latest quarterly CPA certification that payroll taxes were paid on time?
5. Does your workers' compensation policy, from a New Jersey-licensed carrier, name you as labor contractor for our company by name?
6. Who files NJ-REG, collects NJ-W4, reports the hire within 20 days and delivers the sick leave notice?
7. How will hiring, discipline and termination work, given that the agreement must reserve them to you?
8. Are you an IRS-certified PEO, and who is liable for federal employment taxes if you miss a deposit?
9. What happens to our contribution rate and the worker's employment when the agreement ends?

Employer of record rules in other states: Arizona, Arkansas, California, Colorado, Florida, Hawaii, Massachusetts, Mississippi, Nebraska, New York, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and Washington.