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

Virginia does not license "employers of record," but it does make professional employer organizations (PEOs) register. As of October 2026, Va. Code § 65.2-803.1 requires any business that provides professional employer services to register with the Virginia Workers' Compensation Commission before serving a client, report every new or terminated client within 30 days, file an annual report by January 31 and pay a payroll-based assessment; a registered PEO is then deemed an employer of its coemployees. The catch for a single remote hire is the definition: a PEO "initially employs all or a majority of a client company's workforce," so a provider employing one Virginia worker for a company based elsewhere may be a staffing service instead, and Virginia's unemployment law has no PEO rule at all.

This page is for a company outside Virginia, or a staffing firm, deciding whether to employ someone in Virginia 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 state checklist is in hiring employees in Virginia; and the 1996 repeal of employment agency licensing is in staffing agency license in Virginia, which also summarizes the PEO registration from a staffing firm's side. This page adds the client's view: which category your provider is in, who insures and reports what, and what stays with you.

Virginia employer of record and PEO rules at a glance

Does Virginia license or register employer of record companies or PEOs?

It registers PEOs, through the workers' compensation system rather than a licensing board. Section 65.2-803.1(A) says "Any business entity desiring to engage in the business of providing professional employer services shall register with the Commission before any such services may be provided." The Commission's PEO page adds that PEOs "must register themselves and each client prior to servicing them in Virginia," using its online WebFile system. Its PEO FAQ fills in the rest:

• What the application asks for. Contact details, legal status, the approximate number of direct and client employees in Virginia, a designated representative with a Virginia address, and Virginia voluntary market workers' compensation coverage in the PEO's name. A PEO "must complete all registration information and receive registration approval before servicing any client companies in Virginia."
• Fees. "There is no filing fee or registration fee." Instead, § 65.2-803.1(I) assesses each PEO annually, in proportion to the payroll of its coemployees, for the cost of registering and supervising PEOs.
• Financial backing. There is no bond or net worth test in the statute, but the Commission may require a company with a controlling or common ownership interest to guarantee the PEO's obligations, including workers' compensation benefits, on its Parental Guarantee form.
• Annual filings. The annual report is due by 5 p.m. Eastern on January 31, even with zero payroll, and the PEO must list all client companies on registration and each year.
• Enforcement. The Commission can suspend or revoke a registration and ask the Attorney General to seek an injunction, and § 65.2-805(B) sets a civil penalty of $500 to $5,000 for each instance of noncompliance.

The Commission's pages do not include a public list of registered PEOs that we could find. Ask the provider for the PEO Registration Certificate that WebFile generates on approval, and confirm it with the Commission's Insurance Department, which its PEO page lists at (804) 205-3586 and [email protected]. Client lists are confidential under § 65.2-803.1(B), but the Commission "may respond to inquiries as to whether a client company has workers' compensation coverage."

Is a one-worker employer of record a PEO in Virginia?

Often not, on the statute's own words, and that matters more in Virginia than in states with broader definitions. Section 65.2-101 defines professional employer services as an arrangement "whereby the professional employer organization initially employs all or a majority of a client company's workforce and assumes responsibilities as an employer for all coemployees." The same section defines a "staffing service" as "any person, other than a professional employer organization, that hires its own employees and assigns them to a client to support or supplement the client's workforce," including temporary staffing for "special assignments and projects." The Commission's FAQ adds that "Professional Employer Organization" and "Employee Leasing" are "frequently used interchangeably," and tells businesses offering either to check the Code's definition.

For example (a hypothetical), if your company has 40 employees in another state and wants one person in Richmond, a provider that employs that person is unlikely to be employing a majority of your workforce. It may be operating as a staffing service, which does not register as a PEO but is still that worker's employer for workers' compensation and the other accounts below. Neither label is wrong in itself; what you need is the provider's written answer about which one it is, because it decides whether the registration, the client notices and the PEO's "deemed employer" status apply at all.

Who carries workers' compensation in Virginia?

Virginia employers with three or more regular employees must insure; § 65.2-101 exempts employers with "regularly in service less than three employees." For PEOs the Commission's FAQ says a business with "more than two part-time or full-time employees is required to carry workers' compensation coverage. This includes a PEO's own employees plus all coemployees. The requirement for coverage does not change if a client has an individual policy."

• Which policy. Under § 65.2-803.1(D), a registered PEO "may secure and provide all required voluntary market workers' compensation insurance for its coemployees under a master workers' compensation insurance policy in the name of the professional employer organization." The Commission also accepts "an individual client policy with a Virginia endorsement," but "The PEO client's policy cannot cover the PEO." An out-of-state PEO's policy needs Virginia listed in Item 3A.
• Proof. Coverage must be entered in WebFile exactly as filed with NCCI; the FAQ says certificates of insurance "are not accepted as proof of coverage" by the Commission, so a certificate in your file is not the same as a registration in Virginia's system.
• Exclusive remedy. Section 65.2-803.1(G) says that where a PEO "or a staffing service" has obtained the insurance, the Act's remedies "shall be exclusive as to both the client company and the professional employer organization or staffing service."
• Termination. A PEO must give written notice to you and the workers when it ends the agreement, reminding you to secure your own coverage; coverage runs until termination or 15 days after both the Commission and the client receive notice, whichever is later. If its policy is being cancelled or nonrenewed, it must tell clients within seven days.

Every covered employer must also post the Commission's Employer's Workplace Notice (Form 1) "in a conspicuous place at their place of business, or on their website if they do not maintain a physical location." Failing to insure costs up to $250 a day, capped at $50,000, under § 65.2-805(A).

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

Virginia has no PEO-specific unemployment rule that we could find. The PEO statute sits in the workers' compensation title and requires the PEO to give each coemployee a written summary that includes "information concerning filing for workers' compensation and unemployment benefits" (§ 65.2-803.1(C)), but neither the Unemployment Compensation Act in Title 60.2 nor the Virginia Employment Commission's employer pages say whose account a PEO reports under. The Act's general definitions decide instead. One of them, § 60.2-211(B), says that when an employing unit contracts with a person for a service that is part of its usual business, it "shall be deemed to employ all individuals employed by such person for such service" unless that person is available to the public and "engaged in an independently established trade, occupation, profession or business."

In practice, ask the provider which VEC employer account number the wages are reported under and get it in the contract. A provider that employs workers for many clients will normally report under its own account, as a staffing firm does; the VEC's tax filing and registration page covers how an employer registers, online or on Form FC-27. If you also employ anyone in Virginia directly, you need your own account once you meet the liability tests in our Virginia hiring checklist: $1,500 in quarterly payroll or one worker in 20 different weeks.

Which Virginia registrations, reports and notices still apply?

• Income tax withholding. An employer paying Virginia wages registers with Virginia Tax for withholding, which says "Employers must file withholding returns whether or not there is withholding tax owed." Each worker completes Form VA-4. Agree which entity's account the provider uses.
• New-hire reporting. Within 20 days to the Virginia New Hire Reporting Center under § 63.2-1946, which also covers new independent contractors; it falls on whoever is the employer, so name the party in the contract.
• Written summary to the worker. From a PEO, a summary of each party's rights and obligations, including how to file for workers' compensation and unemployment benefits (§ 65.2-803.1(C)).
• Posters. The Workers' Compensation Commission's Form 1, and the non-compete statute or an approved summary, which § 40.1-28.7:8 requires every employer to post.
• E-Verify. Only state agencies and state contractors with more than 50 employees on contracts over $50,000; see E-Verify requirements in Virginia.
• Paid leave programs. We found no Virginia paid family leave or disability insurance program that requires a separate employer registration as of October 2026.

What does the client company still own in Virginia?

Section 65.2-803.1(F) says the arrangement does not exempt you from any license your business needs and that "a coemployee shall be recognized as an employee of the client company for all purposes." Whatever the provider does, these stay with you:

• Job postings and pay questions. Since July 1, 2026, every Virginia posting needs a pay range and pay history questions are barred; see Virginia pay transparency and Virginia's salary history ban. You usually write the posting and run the interviews, so these are yours in practice.
• Interviews and screening. Virginia lets one party record a call (see Virginia recording consent law for interviews), sealed and expunged records have their own rules (see Virginia background check laws), and testing follows Virginia drug testing laws, whoever orders the check.
• Non-competes. Virginia bars non-competes for low-wage and nonexempt workers; check any covenant, and whose name is on it, against Virginia non-compete laws.
• Day-to-day direction and safety. You direct the work and control the worksite, even a home office; agree who trains, who reports injuries and who handles accommodation requests.
• Co-employment exposure. Wage 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 IRS-certified; see the CPEO public listings.

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

Virginia's own-employer setup is light: a Virginia Tax withholding account, a VEC account once you meet the liability tests, workers' compensation from the third regular employee, the new-hire report and Form 1. Registering yourself tends to win when you expect several Virginia hires, already run multi-state payroll, or want hiring, discipline and termination decisions in your own name. A registered PEO fits a company moving most of its workforce onto one platform for payroll, benefits and comp, which is what Virginia's majority definition describes. A staffing service or EOR fits one or two workers for a defined period, as long as it can show its own workers' compensation and VEC account. Registering a foreign entity with the State Corporation Commission and any local business license are covered in our Virginia licensing guide.

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

1. Are you registered with the Virginia Workers' Compensation Commission as a PEO, and can we see the registration certificate? Will you register us as a client in WebFile before the start date?
2. If you are not registered, do you operate as a staffing service under § 65.2-101, and why does that fit a worker we chose and will direct?
3. Whose workers' compensation policy covers the worker, is it entered with NCCI under the right FEIN, and does it list Virginia in Item 3A?
4. Under which VEC account number will the wages be reported, and who answers unemployment claims?
5. Who holds the Virginia Tax withholding account, collects Form VA-4 and files the new-hire report within 20 days?
6. Who gives the worker the written summary of rights, including how to claim workers' compensation and unemployment?
7. Who posts Form 1 and the non-compete notice for a remote worker, and how?
8. Are you an IRS-certified PEO, and who is liable for federal employment taxes if you miss a deposit?
9. How much notice will you give before ending the agreement, and how do we move the worker to our own payroll?

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