PEO companies in Washington: costs, ESD reporting and L&I coverage

L&I and the PEO master policy problem

In other states a PEO may cover clients under its own master workers' comp policy from a private insurer; Paychex, for example, assigns a safety specialist to clients on its PEO master policy. Private carriers do not sell workers' comp in a monopolistic state. Washington covers all employment through L&I with no headcount threshold, apart from exclusions in RCW 51.12.020 such as sole proprietors and partners, certain corporate officers and LLC members, and private-home domestic workers where fewer than two work 40 or more hours a week.

What to ask:

• Will our L&I premiums be reported under your account or ours?
• If your national quote "includes" workers' comp, as ADP says TotalSource does, how is the Washington part priced?
• Who handles L&I claims and audits?

Bundling causes surprises. An ADP customer on Trustpilot (October 1, 2026) wrote that ADP was "bundling their fees in admin fee and in the worker compensation fee," followed by a large audit bill.

ESD registration and client reports

Under RCW 50.12.300, both the PEO and each client register with ESD. The PEO must report each new or ended client within 30 days and file quarterly reports for each client. There is no public list of PEOs. Ask the PEO to confirm it has filed your client report, and keep the date.

New Washington employers get an ESD account by listing employees on their business license application with the Business Licensing Service; ESD then mails account details within two business days. Our Washington payroll tax guide has the links.

Cost of a Washington PEO for 10 employees

Washington does not give new employers a flat UI rate. You get the average rate for your industry, so the table shows the cost per rate point. Assumptions: 10 people on $50,000.

Two exemptions help small firms. Employers with fewer than 50 employees owe no employer share of Paid Family and Medical Leave (1.13% total in 2026, capped at $184,500 of wages), though employees still pay their 71.43% share. WA Cares long-term care premiums of 0.58% are employee-paid, with exemptions ESD approves. For premiums and fees on top, see how PEOs price their services.

Scores for PEOs serving Washington

Justworks (67), TriNet (50) and ADP TotalSource (44) rank highest. BBSI (26) scores lower largely because it publishes little and was not found on the IRS active CPEO list, though it may certify under another name; its best-for note is businesses with higher workers' comp exposure.

See the BBSI review and the Justworks review, plus all PEO scores.

Pay rules that apply in Washington

• Minimum wage: $17.13 in 2026 and $17.73 from January 1, 2027 ($15.07 for ages 14 and 15). No tip credit.
• Paydays: at least monthly.
• Final pay: at the end of the established pay period, whether the employee quits or is fired (RCW 49.48.010).
• Income tax: none on wages.

Questions for a Washington PEO

1. Have you filed our ESD client report, and on what date?
2. Whose L&I account covers our employees, and what are the risk class rates?
3. Which industry average UI rate will ESD assign us?
4. Do you withhold PFML and WA Cares correctly for employees with an approved exemption?
5. Is your entity on the IRS CPEO list? (Compare against our CPEO list.)
6. When we leave, how do you notify ESD and L&I?

If the L&I setup makes a PEO less useful to you, weigh PEO against a payroll service.