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

North Dakota licenses professional employer organizations (PEOs), and its definition reaches most employer of record services. As of November 2026, anyone providing professional employer services must hold a license from the Secretary of State under N.D.C.C. chapter 43-55, "even if the PEO has only one employee in North Dakota," for a $1,000 fee, a $500 annual renewal and a bond of the lesser of $100,000 or 5% of quarterly wages. The client stays close to the payroll: the PEO pays unemployment tax at the client's own rate, workers' compensation comes only from the state fund with the client's experience rate, and the client keeps every employer duty the agreement does not move.

This page is for a company outside North Dakota, or a staffing firm, deciding whether to employ someone in North Dakota 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. The employment agency license, which reaches only agencies that charge job seekers, is covered in staffing agency license in North Dakota, and the full state checklist is in hiring employees in North Dakota. This page adds how the unemployment rate is chosen, how Workforce Safety and Insurance (WSI) treats a PEO client, what the agreement must say and what stays with you.

North Dakota employer of record and PEO rules at a glance

Does North Dakota license employer of record companies or PEOs?

It licenses PEOs, and the label does not matter. N.D.C.C. § 43-55-03(1) says a person "may not provide, advertise, or otherwise hold itself out as providing professional employer services, unless the person is licensed," and must get a license "regardless of its use of the term or conducting business as a 'professional employer organization', 'staff leasing company', 'registered staff leasing company', 'employee leasing company', 'administrative employer', or any other name." Professional employer services are the entering of a "coemployment relationship," defined in § 43-55-01(4) as one "intended to be an ongoing relationship rather than a temporary or project-specific relationship" in which the employer's rights and duties are split between the PEO and the client.

There is no minimum headcount. The Secretary of State's PEO page says anyone providing these services "must be licensed through the Office of the Secretary of State, even if the PEO has only one employee in North Dakota." An EOR that co-employs one permanent North Dakota worker for you is inside the chapter unless one of three exclusions in § 43-55-01(8) fits:

• Temporary help services that recruit and hire their own employees, assign them to supplement a client's workforce for an absence, skill shortage, seasonal workload or special project, and customarily try to reassign them when each assignment ends.
• An independent contractor arrangement in which the provider "assumes responsibility for a product produced or a service performed" and "retains and exercises primary direction and control" over the work. That rarely fits a worker you chose and direct.
• Sharing an employee with a commonly owned company where the provider's principal business is not PEO services and it does not hold itself out as a PEO.

What the license requires

• Application. Form SFN 58619, with business names, every jurisdiction the PEO has operated in for the past five years, owners of 25% or more, senior executives, the bond, and a copy of its latest quarterly contribution and wage report to Job Service North Dakota (§ 43-55-03(2)). The Secretary of State says the PEO must first register as a business and stay in good standing.
• Fees and term. $1,000 on application and $500 on renewal (§ 43-55-04). A license "is valid for one year and may be renewed within sixty days before the expiration" (§ 43-55-03(3)); the Secretary of State says a PEO that misses the expiration date "must apply as a new PEO and pay a $1,000 license fee."
• Bond. A surety bond or irrevocable letter of credit of "the lesser amount of one hundred thousand dollars or five percent of the total wages" on the PEO's last quarterly report to Job Service, or $100,000 if it has not filed one. The bond secures "any tax, wage, benefit, or other entitlement due to or with respect to a covered employee" that the PEO fails to pay (§ 43-55-05). The Secretary of State revokes the license the day after a bond lapses.
• Financial statements. On request of the Secretary of State or Attorney General, an audited statement verified by a CPA (§ 43-55-08(9)).

Section 43-55-03(5) says "The secretary of state shall maintain a list of professional employer organizations licensed under this chapter." We did not find the list published on the PEO page, so ask the provider for its license and confirm it with the Secretary of State's office before the start date.

What must the professional employer agreement say?

Section 43-55-06(2) lists required terms, and they are worth checking line by line against an EOR's standard contract:

• the allocation of rights, duties and obligations;
• that the PEO "shall pay wages to any covered employee and shall withhold, collect, report, and remit payroll-related and unemployment taxes" on those wages, and that the client reports all wages accurately to the PEO, with "wages" defined to include commissions and bonuses;
• that the PEO pays benefits to the extent it has assumed them;
• that both the PEO and the client have the right to hire, discipline and terminate a covered employee; and
• "A statement addressing the responsibility to obtain workers' compensation coverage."

The PEO must also give each covered employee "written notice ... of the general nature of the coemployment relationship" (§ 43-55-06(3)). Both the client and the PEO count as employers for sponsoring retirement and welfare plans, and a health plan that is not fully insured must use an authorized third-party administrator, hold assets in trust and tell participants it is self-insured (§ 43-55-07).

Who pays North Dakota unemployment tax on an EOR or PEO worker?

The PEO files and pays, but at your rate. N.D.C.C. § 43-55-06(6) leaves unemployment to § 52-04-24, which treats PEOs as staffing services providing "long-term employee staffing services." For those, the staffing service must:

• "Report quarterly the wages of all employees furnished to each client company and pay taxes on those wages at the client company's unemployment insurance tax rate";
• keep separate wage records and identify benefit claims for each client;
• give Job Service each client's name and unemployment insurance account number, and a copy of the agreement, within 15 days of the agreement, and notify it within 15 days of termination; and
• share employer responsibilities, including authority to hire, terminate, discipline and reassign. "If the contractual agreement ... is terminated, the employees become the sole employees of the client company."

Job Service may let the PEO use its own rate only in narrow cases, for example where the client's rate is equal to or lower than the PEO's, or where using the PEO's rate would cut the tax by no more than $500 in the next quarter (§ 52-04-24(3)). "Both a staffing service and client company are considered employers," and both "are jointly liable for delinquent unemployment insurance taxes," which Job Service may collect from either (§ 52-04-24(5)). So plan on having a Job Service account number of your own, and ask for proof each quarter that the PEO filed and paid. If you hire directly, Job Service's employer's guide says you are liable once you have one or more workers in 20 different weeks of a year or pay $1,500 or more in wages in a quarter.

Who carries workers' compensation in North Dakota?

Workforce Safety and Insurance, and nobody else. WSI describes itself as "the sole provider and administrator of the workers' compensation system in North Dakota," so neither the PEO nor the client can buy a private policy for North Dakota work. WSI's coverage page says an out-of-state employer that "hires an employee in North Dakota for work in North Dakota" must purchase coverage with WSI.

N.D.C.C. § 65-01-08 sets the rules for staffing services, which it says "must be broadly construed" to include PEOs, staff leasing companies and employee leasing organizations "regardless of the term used." Any staffing service other than a temporary-only one must:

• report payroll detail for each North Dakota client company as WSI directs, and keep separate records and claims for each client;
• give WSI the client's name, WSI account number and start date within 15 days of the agreement, a copy of the agreement, and notice within 15 days of termination; and
• notify its clients within 15 days if WSI says the staffing service is uninsured for unpaid premiums.

For the client, three points matter. Rate classifications "must be those which would apply as if the work were performed by the employees of the client company," and the client "shall retain the client company's experience rate" and stays eligible for WSI's safety discount and dividend programs. If WSI decides the provider is not a staffing service at all, "the client company shall maintain a workforce safety and insurance account and pay the premium." And both the client and the staffing service are immune from the employee's injury claims to the same extent as any contributing employer, if coverage was secured.

Which North Dakota registrations, reports and notices still apply?

• Income tax withholding. An employer paying wages for services performed in North Dakota that are subject to federal withholding must register for a withholding account on ND TAP, and "North Dakota relies on the federal Form W-4," per the Office of State Tax Commissioner. The agreement makes the PEO responsible for withholding and remitting.
• New-hire reporting. No later than 20 days after the first day the employee performs services, per Health and Human Services. Agree which party files.
• Paid leave programs. We found no North Dakota paid sick leave, paid family leave or disability insurance program that needs a separate employer registration.
• Posters and notices. The items in the North Dakota hiring checklist; agree which party provides them and how a remote worker gets them.
• E-Verify. No state mandate; see E-Verify requirements in North Dakota.

What does the client company still own in North Dakota?

Chapter 43-55 is explicit that the default stays with you. "Except as specifically provided in this chapter or in a professional employer agreement," the client "is entitled to exercise all rights and is obligated to perform all duties and responsibilities otherwise applicable to an employer," and "retains the exclusive right to direct and control any covered employee" (§ 43-55-06(1)). Unless the agreement says otherwise, the client is "solely responsible for directing, supervising, training, and controlling the work" (§ 43-55-06(4)). In practice:

• Licensed workers. A covered employee who must be licensed "is deemed solely an employee of the client" for that license, and the client has "the sole right of direction and control" of licensed activities (§ 43-55-02(3), (5)).
• Restrictive covenants. A PEO agreement may not "Affect, modify, or amend any contractual relationship or restrictive covenant between a covered employee and a client," now or later (§ 43-55-02(2)(b)). North Dakota voids most non-competes anyway; see North Dakota non-compete law.
• Tax credits and incentives. A covered employee "is deemed an employee solely of the client" for employment-based tax credits and incentives, and the PEO must supply the data to support the claim (§ 43-55-02(6)).
• Screening. Ban-the-box applies only to public employers; see ban the box in North Dakota, North Dakota background check laws and North Dakota drug testing laws, where the employer pays for every test.
• Interviews. A party's consent is a defense to recording; see North Dakota recording consent law for interviews.
• Co-employment liability. Wage and discrimination claims can still name both parties; 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 IRS-certified; check the CPEO public listings.

When is registering your own company in North Dakota the better route?

Because North Dakota keeps the client's unemployment rate and WSI experience rate in play, a PEO saves you less paperwork than in states where it reports everything under its own accounts. Registering yourself means a Job Service account once you meet the liability test, a WSI account from the first North Dakota hire, a withholding account on ND TAP and 20-day new-hire reports. That route tends to win when:

• you plan several North Dakota hires and already run multi-state payroll;
• the provider cannot show a current Secretary of State license, which is a class A misdemeanor for it and leaves you without the bond's protection; or
• you mainly wanted the provider's lower unemployment rate, which § 52-04-24 usually does not allow.

A licensed PEO still fits a small team that wants payroll, withholding and WSI reporting handled together. A temporary help firm fits only a genuine temporary need; under § 65-01-08 a temporary arrangement does not include one where most of a client's workforce has been assigned for more than 12 consecutive months.

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

1. Do you hold a current North Dakota PEO license from the Secretary of State, and when does it expire?
2. Is your bond current, and in what amount?
3. Does our agreement contain every term § 43-55-06(2) requires, including the workers' compensation statement?
4. Will you report our wages at our Job Service rate, or have you asked Job Service to authorize your rate under § 52-04-24(3)? Do we need our own account number, and will you send us quarterly proof of filing and payment?
5. Have you given WSI our client details within 15 days, and will our experience rate and safety discounts carry over?
6. Who registers the withholding account on ND TAP and reports the hire within 20 days?
7. How do your wage obligations treat the commissions and bonuses in our offer?
8. Which party sponsors the health plan, and is it fully insured?
9. Are you an IRS-certified PEO, and who is liable for federal employment taxes if a deposit is missed?
10. When the agreement ends and the worker becomes solely our employee, what do you hand over, and is there a fee?

Employer of record rules in other states: Minnesota, Nebraska, Michigan, Washington and Utah.