Faced with a tight labor market, businesses are increasingly turning to the services of professional employment and staffing agencies and professional employer organizations (PEO).

If you’re in this business or getting started, it’s important that you follow the laws of the state in which you operate. Many states require professional employment and staffing companies to be licensed before they can legally operate in a jurisdiction. These laws are designed to protect workers and reassure clients that they are working with properly licensed agencies.

Let’s look at the licensing requirements for professional employment and staffing service agencies.

Requirements by state

Looking for employment and staffing requirements in a particular jurisdiction? The following chart summarizes employment and staffing services licensing requirements. Click on a state for the licensing information specific to that state.

Professional employment and staffing services definitions

For licensing purposes, it’s important to distinguish between employment agencies, staffing agencies, and professional employer organizations (PEOs).

• Employment agencies seek to place individuals in long-term positions in return for a fee from the applicant or from the prospective employer. Employment agencies do not hire employees themselves or pay the people they place.
• Staffing agencies (or employee-leasing firms) mainly place temporary employees. Staffing agencies hire their employees, and they, not the client...

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