A Professional Employer Organization (PEO) shares legal employer status with a business. It runs payroll under its own tax accounts and puts the team on its benefit plans and workers’ comp program. The owner still directs the work. Minnesota has 560,428 small businesses employing about 1.3 million people, and most are too small to negotiate group benefits alone.
3 newer state rules have made that kind of help more relevant. Paid Leave premiums of 0.88% of wages started in January 2026, and Secure Choice retirement deadlines run into mid-2028. Every employer also owes paid sick and safe time. Anyone weighing a PEO in Minnesota can also check a registration, since the state records employee leasing firms for workers’ comp purposes.
PEO Minnesota: Why Small Businesses Use One
Minnesota taxes wages at 4 rates, from 5.35% on the first $33,310 to 9.85% above $203,150 for single filers in 2026. The brackets follow inflation. Workers fill out Form W-4MN, the state withholding certificate, and no city adds its own income tax. 2 newer items now ride on every pay run. Paid Leave premiums apply since January 2026, and employers without a retirement plan add Secure Choice deductions once their deadline passes. The state wage floor resets each January, while Minneapolis and St. Paul set their own. Minnesota payroll services earn their fee by keeping every one of these moving parts current.
INSIGHT: What changed for Minnesota payroll in 2026?
Paid Leave premiums began on January 1, 2026, and the first Secure Choice deadline passed in June. Any payroll configured before 2026 deserves a fresh review.
- Paid Leave: 0.88% of wages (0.61% medical, 0.27% family), or 0.66% at qualifying employers with 30 or fewer employees (2026).
- Premium split: employees can be charged up to 0.44%; the first payment was due April 30, 2026.
- Secure Choice: registration deadlines run from June 30, 2026 for 100+ employees to June 30, 2028 for 5 to 9.
- State minimum wage: $11.41 an hour in 2026, rising to $11.87 on January 1, 2027.
Sources:
as of October 2026
Unemployment insurance (UI) is an employer cost, run by the Department of Employment and Economic Development (DEED). It applies to the first $44,000 of each employee’s 2026 wages. New employers pay the average rate for their industry, and every rate includes a 0.40% base tax. A 2026 additional assessment adds 14% to the UI tax due. Wage detail reports and Paid Leave premiums both run on a quarterly cycle. Each new hire goes to the state directory within 20 days. Withholding returns and federal FICA and FUTA complete the list. Handing off payroll services in Minnesota mostly buys a partner that never misses one of these dates.
Injury coverage is usually the first reason owners look past plain payroll. DLI says almost every employer needs workers’ comp, even with a single part-time worker, and a PEO can place staff on its own policy. Earned Sick and Safe Time (ESST) also applies to every business: 1 hour for each 30 worked, for at least 48 hours a year. Benefits come next. PEO services in Minnesota pool small employers into group health, dental, vision, and 401(k) plans. A qualified 401(k) also takes the Secure Choice duty off the table.
INSIGHT: What does a Minnesota employer have to provide?
Sick and safe time and Paid Leave premiums reach even very small firms. A state retirement option now applies to employers with 5 or more people and no plan.
- ESST: 1 hour per 30 worked, at least 48 hours a year; total balances may be capped at 80 hours (2026).
- Workers’ comp: generally required from the first employee, part-time staff included (2026).
- Secure Choice: employers with 5 or more covered employees and no qualified plan (2026).
- Federal health coverage mandate (ACA): applies at 50 or more full-time equivalents.
Owners usually compare 3 models. A Minnesota PEO co-employs your staff and packages payroll, benefits, workers’ comp and HR, while daily decisions stay yours. A payroll vendor handles wages and filings only, and HR outsourcing adds advice without shared employer status. My guide to what a PEO is explains how the contract divides those duties. For a local check, Minn. Stat. § 79.255 requires employee leasing firms to register with the Department of Commerce, a $100 filing that lasts for the life of the company.
Federal certification is tracked on a separate IRS list of Certified PEOs (CPEOs); each one carries federal employment tax liability for the wages it pays. No Minnesota state PEO is run by the government, so every option below is a private company: 5 Minnesota firms and 10 national PEOs. If you also want the national picture, compare my ranking of the best PEO companies.
Top 15 PEO Companies in Minnesota
First, pin down the help you want. Some owners need benefits and workers’ comp folded into payroll, others want only pay runs and filings, and some just need HR advice. Headcount matters next, because the small Paid Leave rate stops at 30 employees and Secure Choice deadlines step down by size.
The 50-employee federal health mandate is the other line worth knowing. After that, choose between a Minnesota firm that knows city wage rules firsthand and a national PEO with a larger benefits pool. The right answer depends on your trade, your growth plans and how much HR work you want to hand over.
Every provider faced the same checklist: Paid Leave and UI handling, Secure Choice or 401(k) support, ESST tracking and city wage awareness. I also looked at the workers’ comp setup and the quality and price of health plans. CPEO status or accreditation where claimed counted too, along with clear pricing.
All 15 providers appear in A-to-Z order. The sequence says nothing about quality, preference, or ranking.
ADP TotalSource
Provider Type:
National US PEO serving Minnesota
Company Description:
ADP TotalSource brings ADP’s co-employment model to small and midsize employers. Each client works with an assigned HR business partner, while ADP negotiates and runs the benefit plans. ADP describes it as ESAC-accredited, and the IRS has listed its entities since 2017.
Key Specialty Area:
Large-scale benefits for growing Twin Cities firms
Service Cost:
Quoted after a review of headcount and plan choices
Top Advantages:
- Assigned HR partner for policy and staffing questions
- Plan negotiation and enrollment handled by ADP
- Workers’ comp and compliance under one agreement
Scope of Services:
- Payroll processing and employment tax filing
- Benefits administration and enrollment
- HR guidance and workers’ compensation
Our Verdict
Suits a 70-person Bloomington employer that prefers a household payroll name and a broad benefits menu.
Engage PEO
Provider Type:
National US PEO serving Minnesota
Company Description:
Engage PEO offers co-employment to small and mid-sized companies across the US, with payroll, HR compliance, benefits and workers’ comp in one contract. It has maintained continuous ESAC accreditation since 2012, and Engage PEO, LLC is on the IRS CPEO roster.
Key Specialty Area:
Multi-state help for small Minnesota employers
Service Cost:
Custom quote tied to staff count and benefits
Top Advantages:
- Guidance for teams spread over several states
- Benefits from large national insurance carriers
- Integrated platform for payroll and enrollment
Scope of Services:
- Payroll and tax administration
- HR consulting and compliance support
- Risk management and workers’ comp
Our Verdict
A sound fit for a Rochester firm with staff in Minnesota, Iowa and Wisconsin.
ExtensisHR
Provider Type:
National US PEO serving Minnesota
Company Description:
ExtensisHR has worked in HR and co-employment for more than 30 years and serves small and mid-sized firms nationwide. Clients choose its standard PEO or PEO Premier, which pairs them with a Premier Account Manager. Several Extensis entities appear on the IRS CPEO roster.
Key Specialty Area:
Hands-on account management for complex employers
Service Cost:
Quoted for each tier after a discovery call
Top Advantages:
- Premier Account Manager with a small client load
- Mobile platform for payroll and HR tasks
- Recruiting tools available on the Premier tier
Scope of Services:
- Payroll and tax administration
- Employee benefits and enrollment support
- HR compliance and recruiting support
Our Verdict
Fits a fast-growing St. Paul company that wants one senior contact for HR, pay and benefits.
FrankCrum
Provider Type:
National US PEO serving Minnesota
Company Description:
FrankCrum has been family-owned since its founding in 1981. It says more than 4,700 businesses rely on it for payroll, HR, benefits and workers’ comp. Its enterprise includes Frank Winston Crum Insurance, a national carrier, which supports its injury coverage.
Key Specialty Area:
Insurance-backed workers’ comp for trades
Service Cost:
Proposal after an introductory call
Top Advantages:
- Workers’ comp written through its own insurance group
- Clients in construction, trades, medical offices and franchises
- MyFrankCrum portal for onboarding and benefits
Scope of Services:
- Payroll and tax compliance
- Workers’ compensation and claims handling
- HR support and retirement plans
Our Verdict
Worth a quote for a St. Cloud contractor whose biggest cost question is injury coverage.
G&A Partners
Provider Type:
National US PEO serving Minnesota
Company Description:
G&A Partners grew out of a Houston accounting practice and has offered HR services since 1995. It supports businesses in all 50 states with packages matched to company size. The IRS roster lists its G&A Outsourcing VII entity as certified.
Key Specialty Area:
HR packages that scale with headcount
Service Cost:
Package price quoted by company size
Top Advantages:
- Several HR packages instead of one fixed bundle
- Accounting roots that show in its reporting
- HR technology included with each package
Scope of Services:
- Payroll and HR management
- Employee benefits administration and enrollment
- HR technology and compliance help
Our Verdict
Good for a Duluth firm that wants to choose its service level instead of buying everything at once.
Insperity
Provider Type:
National US PEO with a Bloomington office
Company Description:
Insperity is based in Kingwood, Texas, and runs its Minneapolis sales office at 8500 Normandale Lake Boulevard in Bloomington. Its co-employment service combines payroll, benefits and HR with its own technology, and Insperity PEO Services is on the IRS CPEO roster.
Key Specialty Area:
Deep HR team for midsize metro companies
Service Cost:
Priced after a study of the workforce
Top Advantages:
- Local sales office in Bloomington
- Proprietary software covering payroll, benefits and HR
- Certified PEO status on the IRS roster
Scope of Services:
- Payroll and employment taxes
- Benefits and retirement plans
- HR support, training and technology
Our Verdict
Suits a 90-person Twin Cities company ready to invest in a large HR team and polished software.
Nextep
Provider Type:
National US PEO serving Minnesota
Company Description:
Nextep has served growing companies nationwide from Norman, Oklahoma, for nearly 30 years. Its co-employment covers payroll, tax filings, health benefits and HR. The company reports ESAC accreditation and a SOC 1 Type II audit, and the IRS lists its entities as certified.
Key Specialty Area:
Named success manager for each client
Service Cost:
Monthly per-employee fee, set during a scoping call
Top Advantages:
- Dedicated Client Success Manager on every account
- Benefits, payroll and HR on one platform
- Accreditation and IRS certification both claimed
Scope of Services:
- Payroll and tax filings
- Health benefits and claims help
- HR policies, reporting and compliance
Our Verdict
Worth comparing for a Mankato services firm that likes per-employee pricing and one named contact.
North Star Advisory
Provider Type:
Minneapolis PEO advisory firm
Company Description:
North Star Advisory is an independent advisory firm in Minneapolis that helps owners compare PEO, ASO and HR outsourcing options. It does not run payroll or sponsor plans itself. It builds side-by-side comparisons and supports the switch, and says it has worked with 3,800+ businesses.
Key Specialty Area:
Vendor-neutral comparisons before you sign
Service Cost:
Not published; ask how the advisory work is paid
Top Advantages:
- Side-by-side comparison of several PEO offers
- Support with implementation after the choice
- Focus on firms with 10 to 500+ employees
Scope of Services:
- PEO and ASO evaluation and comparison
- Payroll and benefits review
- Workers’ comp and risk analysis
Our Verdict
My pick for a Minneapolis owner who wants help comparing co-employers before committing to one.
Paymasters
Provider Type:
Minnesota-based PEO and payroll provider
Company Description:
Paymasters is based in Detroit Lakes and serves small and middle-sized employers in its region and beyond. It offers both co-employment and ASO payroll, which keeps the client as the sole employer, plus HR support, workers’ comp, 401(k), and health benefits.
Key Specialty Area:
Payroll-first support for Lakes Country employers
Service Cost:
Quote after a conversation; no rates posted
Top Advantages:
- Choice between PEO and ASO payroll models
- Garnishments and wage verifications handled for you
- Quarterly and annual payroll returns filed
Scope of Services:
- Checks, direct deposit and tax deposits
- Workers’ comp, 401(k) and health benefits
- HR support and safety services
Our Verdict
A natural first call for Becker County employers comparing payroll services, Minnesota-based and nearby.
PEO Group Inc.
Provider Type:
PEO broker serving Minnesota employers
Company Description:
PEO Group Inc. is a PEO broker. It submits a single application to several PEO providers and helps small and medium-sized businesses reach group insurance rates. It also offers property and casualty coverage, workers’ comp, and loss control, and lists a central Minnesota phone number.
Key Specialty Area:
One application to several co-employers
Service Cost:
Depends on the PEO selected; no broker fee posted
Top Advantages:
- Access to several PEOs through 1 application
- Property and casualty insurance alongside PEO options
- Loss control help to manage claims
Scope of Services:
- PEO matching and placement
- Workers’ comp and loss control
- Property and casualty insurance
Our Verdict
Useful for a central Minnesota owner who wants quotes from several PEOs without repeating the paperwork.
PrestigePEO
Provider Type:
National US PEO serving Minnesota
Company Description:
PrestigePEO is a Melville, New York firm that has worked with small and mid-sized employers since 1998. Its service spans pay runs, benefits, retirement plans, injury coverage, HR and compliance. The company calls itself ESAC-accredited, and Prestige PEO III is on the IRS CPEO roster.
Key Specialty Area:
Benefits-focused PEO for professional offices
Service Cost:
Proposal after a payroll and benefits review
Top Advantages:
- Health and retirement plans in one package
- Workers’ comp administered with payroll
- Certified entity listed by the IRS
Scope of Services:
- Payroll administration and tax filing
- Benefits and retirement plans
- HR, compliance and risk support
Our Verdict
Suits an Edina professional practice that wants stronger benefits without hiring an HR manager.
PRO Resources
Provider Type:
Minnesota-based PEO with offices in 3 states
Company Description:
PRO Resources is a PEO with its main office on Highway 10 in Detroit Lakes. It also has offices in North Dakota and South Dakota. Co-founded by CEO Mike Brodsho, it handles payroll, onboarding, workers’ comp, and safety, health, and 401(k) benefits.
Key Specialty Area:
Regional PEO for the Upper Midwest
Service Cost:
Percentage of payroll, set after an HR audit
Top Advantages:
- Dedicated point of contact instead of a hotline
- Free 30-minute intro meeting and cost audit
- Safety consultants alongside workers’ comp coverage
Scope of Services:
- Payroll processing and compliance
- Workers’ comp, safety and wellness programs
- Health, supplemental and 401(k) benefits
Our Verdict
My pick for a Fargo-Moorhead area business with staff on both sides of the Red River.
Procare HR
Provider Type:
Minnesota-based PEO for care providers
Company Description:
Procare HR is a Minnetonka PEO built for senior living, home care, skilled nursing, assisted living, disability services and hospice operators. It handles payroll, benefits, compliance, workers’ comp and recruiting, and says 25,000+ client employees rely on it.
Key Specialty Area:
HR and staffing tools for senior care operators
Service Cost:
Quoted per operation after a consultation
Top Advantages:
- Workers’ comp program built for care settings
- Labor management tools to curb overtime costs
- Works alongside an existing HR director
Scope of Services:
- Payroll and benefits administration
- HR consulting, risk and compliance
- Talent acquisition and labor management
Our Verdict
The obvious first call for a Minnesota assisted living or home care operator.
Questco
Provider Type:
National US PEO serving Minnesota
Company Description:
Questco has offered HR outsourcing since 1989 from metro Houston and serves small to mid-sized businesses across the US. Its co-employment model bundles payroll, benefits and HR, and Questco HR LLC is on the IRS CPEO roster.
Key Specialty Area:
Long-running PEO for small to midsize firms
Service Cost:
Priced individually once Questco reviews your HR needs
Top Advantages:
- More than 35 years in HR outsourcing
- One service team for pay, plans and HR questions
- Certified PEO entity on the IRS roster
Scope of Services:
- Payroll and employee benefits
- HR services and compliance
- Risk management and workers’ comp
Our Verdict
Worth a look for a Winona or Red Wing employer that wants a seasoned national PEO.
VensureHR
Provider Type:
National US PEO with a Minnesota service page
Company Description:
VensureHR is a national PEO whose Minnesota page names Minneapolis, St. Paul, Rochester and Duluth. It offers HR consulting, payroll and tax, benefits procurement, workers’ comp and safety training. No Vensure entity shows up among the IRS-certified PEOs.
Key Specialty Area:
Statewide reach from the metro to Duluth
Service Cost:
Custom quote after a consultation
Top Advantages:
- Service promised from the metro to the Iron Range
- Plans for firms of up to 10 or 100 staff
- Safety and compliance training included
Scope of Services:
- Payroll and tax management
- Benefits procurement and administration
- Workers’ comp and risk management
Our Verdict
A fit for a Duluth manufacturer that wants a national co-employer with a Minnesota-specific team.
How Much PEO and Payroll Services Cost in Minnesota
Co-employers bill either a flat monthly charge per worker or a share of total payroll. PRO Resources, for example, bills a percentage of payroll set after its audit. Nearly every provider quotes, and none of the 15 lists a PEO price online. Payroll-only vendors charge far less, per run or per worker, but leave out benefits and workers’ comp.
What the fee buys is usually the same mix: pay runs and returns, benefit and injury coverage administration, and an HR adviser. Health premiums, injury premiums, 401(k) charges and onboarding fees are billed on top. Statutory costs sit outside the fee as well. They start with UI on the first $44,000 of wages, including the 2026 assessment. Then add at least the employer’s share of Paid Leave premiums, plus FICA and FUTA. Judge each offer on its full yearly cost per employee.
INSIGHT: Which Minnesota payroll tasks should a provider own?
2026 added new state programs to every pay run, so ask each provider how it handles all of them.
- UI wage base: $44,000 per employee, with a 14% additional assessment (2026).
- Paid Leave: 0.88%, or 0.66% at qualifying small employers (2026).
- Income tax withholding: brackets from 5.35% to 9.85% (2026).
- ESST: 1 hour of paid leave for every 30 hours worked (2026).
Sources:
as of October 2026
Many Minnesota owners head south for the winter, and some keep staff in Florida year-round. Payroll there has no state income tax, but benefits still need a plan. For a team near Fort Myers or Naples, start with the PEO companies in Florida I reviewed separately.
Medical device and software firms from the Twin Cities often add engineers in California. That brings state disability deductions and daily overtime rules. Before a first hire there, compare my list of PEO companies in California.
FAQs on PEO and Payroll Services in Minnesota
What does a PEO do for a small business in Minnesota?
When a provider co-employs your staff, it becomes a second employer for tax and insurance purposes, but hiring, firing and supervision stay with you. Wages, state and federal payroll taxes, and often workers’ comp then run through the provider’s accounts. It can also offer group health and retirement plans and keep track of every employee’s sick and safe time. The service agreement outlines the provider’s responsibilities. Read it closely before you sign, and ask how Paid Leave premiums will be split.
How much is the Minnesota Paid Leave premium in 2026?
The premium is 0.88% of taxable wages, made up of 0.61% for medical leave and 0.27% for family leave. Employers with 30 or fewer employees and average wages at or below 150% of the statewide average pay a reduced 0.66% instead for 2026. Employees can be charged up to 0.44%, and employers may choose to cover the whole premium. The program began on January 1, 2026, and the first payment was due on April 30, 2026, with quarterly payments after that.
Do Minnesota employers have to offer a retirement plan?
No private plan is required, but the state now steps in where employers offer none. Employers with 5 or more covered employees and no qualified plan must register for Minnesota Secure Choice, a state payroll-deduction IRA. Registration deadlines run by size, from June 30, 2026 for 100 or more employees to June 30, 2028 for 5 to 9. Offering a qualified 401(k), including one sponsored through a co-employment provider, meets the exemption and keeps you out of the state program.
Is paid sick time required in Minnesota?
Yes, under Earned Sick and Safe Time, anyone expected to work 80 hours a year earns 1 paid hour per 30 worked. They can build up at least 48 hours a year, and employers may cap the total balance at 80 hours unless they agree to more. Minneapolis and St. Paul run their own ordinances that can differ from the state rules. Instead of tracking accrual hour by hour, an employer may frontload the full allowance at the start of the year.
How much does a PEO cost in Minnesota?
Providers typically charge a monthly fee for each worker or a percentage of total wages, and most share figures only in a quote. The final number depends heavily on headcount, industry, claims history, and which benefit plans you pick for your team. Health and injury insurance premiums, along with retirement plan fees, usually appear as separate lines on each invoice. Before choosing, add up what each worker costs over a year, including UI tax and your share of Paid Leave premiums.
What is the minimum wage in Minnesota for 2026?
The statewide rate is $11.41 an hour for employers of every size, rising to $11.87 on January 1, 2027. Minnesota does not allow a tip credit, so tipped staff earn the full rate before tips. Workers under 20 may receive a $9.31 training wage for 90 days, while Minneapolis requires $16.37, and St. Paul sets $16.37 for most employers and $14.25 for micro businesses. Under federal law, most employers pay overtime after 40 hours a week at 1.5 times the regular rate.
Helen is Anywherer’s Market Analyst & Content Researcher, with extensive experience in analyzing global employment markets and HR technology trends. She is skilled at turning complex market data into clear, well-researched insights that inform every piece of content. With a strong grasp of the EOR, PEO, and international hiring space, Helen plays a key role in keeping Anywherer’s research accurate, up to date, and genuinely useful for readers.
