Form I-9 for PEO clients: who completes it, who is liable, E-Verify through the PEO, and switching PEOs
On this page
- Who is the employer for Form I-9 when you use a PEO?
- Who completes the form, and who carries the risk?
- Why can't a PEO sign Section 2 from document copies?
- How can a PEO handle remote hires correctly?
- How does E-Verify work through a PEO?
- What happens to Forms I-9 when you join or leave a PEO?
- Which questions should the PEO agreement answer?
- A PEO Form I-9 checklist
- Questions people ask
Federal Form I-9 rules never mention professional employer organizations. The duty belongs to the "employer," which 8 CFR 274a.1(g) defines as whoever engages a worker's services or labor for wages or other remuneration, and in a PEO's co-employment arrangement both the PEO and the client can fit that description. In practice the PEO agreement decides who completes the form. If the PEO completes Section 2 for the client, it acts as the client's authorized representative and the client remains "liable for any violations," and a client that knowingly uses unauthorized workers through a contract is liable anyway. E-Verify through a PEO runs as an employer agent arrangement in which the client signs its own agreement with DHS. That is the position as of November 2026.
How a PEO differs from an employer of record, a staffing agency and a payrolling firm is in what is an employer of record; the temp-agency version of this question is in Form I-9 for staffing agencies.
Not legal advice. This summarizes the Handbook for Employers (M-274), Section 2.0, 4.0 and 8.0; 8 CFR 274a.1, 274a.2 and 274a.5; E-Verify's employer agent materials; a 2015 OCAHO decision and the 2016 Fifth Circuit ruling on it; and Florida's statutes as one state example, with the Form I-9 edition dated 01/20/25, as of November 2026. Your PEO agreement and your state's law decide much of this; have counsel read both.
Who is the employer for Form I-9 when you use a PEO?
Start with the two federal texts. 8 CFR 274a.1(g) says that "in the case of an independent contractor or contract labor or services, the term employer shall mean the independent contractor or contractor and not the person or entity using the contract labor." M-274 Section 2.0 applies that by telling businesses not to complete Form I-9 for people "employed by a contractor providing contract services (such as employee leasing or temporary agencies)" who provide labor to them. If your arrangement really is employee leasing, with the PEO as the workers' employer and your company only receiving their labor, the PEO completes the forms.
Many PEO relationships do not look like that. In a co-employment arrangement the client often keeps hiring and directing its own people, while the PEO handles what the IRS describes as "payroll administration and tax reporting responsibilities." A client in that position may still be an employer under 274a.1(g), which is why the agreement's allocation of the Form I-9 task matters. Two other sources often get mistaken for the answer:
- State PEO laws. Some states label the PEO an employer for state purposes. Florida's statute says "a licensed employee leasing company is the employer of the leased employees" (Fla. Stat. 468.529(1)) and makes it responsible for reemployment assistance taxes and workers' compensation coverage. That is state law; it does not decide the federal Form I-9 question.
- IRS certification. The IRS's certified PEO program under Internal Revenue Code section 7705 is a voluntary federal employment tax program. It does not address Form I-9.
Who completes the form, and who carries the risk?
| Setup | Who completes Form I-9 | Who carries the risk | Source |
|---|---|---|---|
| Client's managers or HR examine documents; the PEO's HR system stores the form | The client | The client | M-274 2.0 |
| PEO onboarding staff, or a representative the PEO arranges, examine documents and sign Section 2 for the client | The PEO as the client's authorized representative | The client, which is liable for its representative's violations, and the PEO if it is also an employer | M-274 2.0 |
| PEO creates E-Verify cases for the client | The client completes Form I-9; the PEO runs the cases as employer agent | The client under its MOU; the PEO under the agent MOU | E-Verify employer agent page; client MOU |
| Employee leasing in which the PEO alone employs the workers and the client receives their labor | The PEO | The PEO; the client is still bound by the knowing-use rule | 8 CFR 274a.1(g), 274a.5 |
| Employer of record hiring a worker in a state where the client has no entity | The employer of record | The employer of record; the client is still bound by the knowing-use rule | 8 CFR 274a.5 |
The knowing-use rule is 8 CFR 274a.5: anyone who "uses a contract, subcontract, or exchange ... to obtain the labor or services of an alien in the United States knowing that the alien is an unauthorized alien" is treated as having hired that person unlawfully. And under 274a.1(l), knowledge can be inferred from facts a reasonable employer would have noticed, not only from actual knowledge. Outsourcing the paperwork does not outsource that.
Why can't a PEO sign Section 2 from document copies?
This is the most common way PEO onboarding goes wrong, and it has been litigated. In United States v. Employer Solutions Staffing Group II, 11 OCAHO no. 1242 (January 20, 2015), a staffing firm's employees in El Paso examined the original documents of temporary workers, copied them and sent the copies to payroll administrators at a Minnesota human resources company described in the record as the workers' actual employer. Those administrators completed and signed Section 2 from the copies. The administrative law judge held the attestations false, said E-Verify does not "excuse a failure to properly complete section 2," and assessed $227,251.75.
The Fifth Circuit vacated the penalties for the 242 forms on August 11, 2016, because the company lacked fair notice, at the time, that this kind of "corporate attestation" was prohibited. The court noted that DHS had since clarified the form's instructions: "The person who examines the documents must be the same person who signs Section 2." That notice now exists: M-274 Section 4.0 says the same person who examined the employee's documents must complete the certification block and sign and date Section 2, and the current instructions say photocopies are not acceptable except certified copies of birth certificates. The defense that won in 2016 would not be available for a form completed today.
How can a PEO handle remote hires correctly?
- Use an authorized representative near the worker. The M-274 lets an employer designate anyone, such as a notary, a site manager or a document-check service, to examine the documents in person and sign Section 2. No contract is required, a notary acting this way should not add a seal, and the employer is liable for the representative's errors. See I-9 authorized representatives.
- Or use the DHS remote examination procedure, which USCIS opens only to employers that "participate in E-Verify in good standing" at the hiring sites that use it: examine copies of the documents, hold a live video call in which the worker shows the same documents, check the alternative procedure box in Section 2, and keep clear copies. The employer whose form it is must meet the E-Verify condition. See I-9 remote verification.
- Do not split the steps. Whoever examines the documents, in person or on the video call, signs Section 2. A client manager who "looked at the license" cannot hand off the signature to the PEO.
How does E-Verify work through a PEO?
E-Verify's page on using an E-Verify employer agent says agents "may also handle payroll and other administrative tasks that include managing the Employment Eligibility Verification (Form I-9) process," that the agent "must enroll your company in E-Verify as a client company under its E-Verify employer agent account," and that DHS does not certify agents or regulate their fees. The client signs its own MOU for employers using an E-Verify employer agent, in which it agrees "to comply with current Form I-9 procedures." The client's duties, the posters, and what happens to case records when you change agents are in E-Verify employer agents.
State E-Verify laws can assign the duty too. Florida requires private employers with 25 or more employees to use E-Verify, and its statute says a licensed employee leasing company that has a written agreement placing the primary obligation on the client company "is not required to verify employment eligibility of any new employees of the client company"; without one, the leasing company is responsible, and it "shall, at all times, remain an employer as otherwise defined in federal laws or regulations" (Fla. Stat. 448.095(2)(f)). Check your own state's text before assuming the PEO covers it.
What happens to Forms I-9 when you join or leave a PEO?
USCIS does not say. The continuing-employment rule in 8 CFR 274a.2(b)(1)(viii)(A)(7) covers a "related, successor, or reorganized employer": the same employer at another location, an employer that continues to employ a workforce after a reorganization, merger or sale of stock or assets, and members of a multi-employer association. M-274 Section 8.0 gives acquiring employers a choice between new forms for everyone and keeping the old forms with their errors; see Form I-9 in mergers and acquisitions. Joining or leaving a PEO is not on either list. Decide with counsel, before the PEO start date or the exit date, whether either party will treat the workforce as new hires, and write it into the agreement. Whatever you decide:
- The employer must keep each form for three years after the date of hire or one year after employment ends, whichever is later (274a.2(b)(2)(i)(A)).
- An inspection comes with at least three business days' notice (274a.2(b)(2)(ii)), so forms held in the PEO's system must be retrievable in that window, including after the contract ends.
- On exit, collect every Form I-9, any document copies and your E-Verify case history before your access to the PEO's systems closes.
Which questions should the PEO agreement answer?
- Which party is the employer for Form I-9 purposes, and for which workers?
- Who examines documents and signs Section 2, and is the PEO acting as our authorized representative?
- How are remote hires handled: an in-person representative, or video examination under E-Verify?
- Who runs E-Verify, under whose MOU, and who handles mismatches and posters?
- Who tracks reverification dates and completes Supplement B?
- Where are the forms and document copies stored, and how fast can we retrieve them for an inspection?
- What happens to the forms and E-Verify records when the agreement ends?
- Who pays penalties caused by the other party's errors?
- Which state E-Verify or leasing statutes apply in each state where we have workers, and how does the agreement satisfy them?
A PEO Form I-9 checklist
- The agreement names the Form I-9 employer and the person who signs Section 2.
- Section 2 is signed by the person who examined the original documents, never from copies.
- Video examination only where the employer participates in E-Verify in good standing.
- The client's own E-Verify MOU is signed if the PEO runs cases.
- Reverification dates tracked by a named owner.
- A written plan for forms and E-Verify records at the start and end of the relationship.
Questions people ask
Who completes Form I-9 when a company uses a PEO?
Whoever the PEO agreement assigns, because federal Form I-9 rules do not mention PEOs. Often the client completes the form or the PEO completes Section 2 on the client's behalf. When the PEO acts for the client, USCIS treats it as the client's authorized representative, and the Handbook for Employers says the employer is liable for any violations, including those of its representative.
Is a PEO client still liable for Form I-9 mistakes?
It can be. A client that is the employer is liable for errors made by a PEO acting as its authorized representative, and 8 CFR 274a.5 treats anyone who uses a contract to obtain the labor of a worker it knows is unauthorized as having hired that worker unlawfully. State law can also allocate duties; Florida's E-Verify statute, for example, puts compliance on the employee leasing company unless a written agreement places it on the client.
Can a PEO run E-Verify for its clients?
Yes, as an E-Verify employer agent. The PEO enrolls the client as a client company under its employer agent account, and the client signs its own Memorandum of Understanding for employers using an E-Verify employer agent, in which it agrees to comply with current Form I-9 procedures. DHS does not certify employer agents or regulate their fees.
Can a PEO complete Section 2 from document copies emailed by the client?
No. The current Form I-9 instructions require the employer or its authorized representative to physically examine the original documents, or use the DHS remote examination procedure, which is open only to E-Verify participants in good standing and requires a live video call. USCIS's Handbook says the same person who examined the documents must complete and sign Section 2.
Do employees need new Forms I-9 when a company joins or leaves a PEO?
USCIS does not say. The continuing-employment rules cover the same employer at another location, reorganizations, mergers and sales of stock or assets, and multi-employer associations, but not joining or leaving a PEO. Settle in writing, with counsel, whether either party is treated as a new employer, and make sure the original forms stay available for inspection for the full retention period.