A Guide to PEO in Missouri

Missouri employers face complex labor and employment regulations, making compliance a significant challenge. Professional employer organizations (PEOs) offer a solution by handling many HR and payroll tasks, freeing employers to focus on core business operations.

Read on to unpack the process and benefits of using a PEO in Missouri.

The benefits of partnering with a PEO in Missouri

A PEO is a third-party organization that your business can outsource many of its employee management tasks to, leading to the following advantages:

Increased efficiency and reduced costs in HR

Outsourcing tasks to a PEO can streamline your organization’s HR operations by improving efficiency and cost-effectiveness. PEOs often reduce costly labor hours with platforms that automate and simplify payroll processing, track payroll spending, and deliver real-time analytics. This gives your team time back to focus on strategic planning and analysis. A PEO also offers a predictable pricing model.

Access localized expertise

Small businesses and startups are often unable to afford in-house payroll and HR expertise that covers every state. With a PEO, they gain access to extensive local knowledge and resources, including support with:

• Compliance with state and federal laws and regulations
• Payroll and tax withholding and filing
• Benefits administration
• Reporting
• Recruitment and hiring
• Onboarding employees
• Worker classification
• Unemployment claims
• Workplace policies
• Data privacy

Affordable employee benefits plans

Attractive benefits packages support your acquisition and retention of top talent. Because PEOs co-employ many employees, they can offer client companies competitive rates on benefits. This includes health, life, and disability insurance, and retirement plans. PEOs help Missouri companies of all sizes compete with the comprehensive employee benefits packages and perks that larger corporations offer.

PEO services also allow you to continue working with your existing benefit providers while offloading many of the compliance and administrative tasks.

Stronger compliance and protection from legal liabilities

When you partner with a PEO, you enter into a co-employment relationship. You remain responsible for the day-to-day management of your workforce. Meanwhile, you offload legal liabilities and compliance risk to the PEO for payroll, employment tax, labor laws, and more.

A PEO assumes responsibility for ensuring compliance with many federal requirements and state-specific legislation. This protects your organization from the potential financial, reputational, and legal repercussions of non-compliance with payroll, employment, and labor laws in Missouri.

Payroll, employment, and labor laws in Missouri

Employers in Missouri must comply with the federal employment regulations and contributions stipulated in the Fair Labor Standards Act (FLSA). This includes federal unemployment tax, unemployment insurance, social security taxes, Medicare taxes, and more. Additionally, Missouri has specific regulations about leave and paid time off, union rights, and other labor laws.

A PEO can streamline your organization’s compliance with the following legislation, and more:

Payroll and benefits laws

Income tax

Missouri’s income tax rates range from 0% to 4.95% based on income brackets. The state also adheres to a graduated income tax system.

Paydays and pay periods

Employers in Missouri must pay employees at least semi-monthly. The law allows employers 16 days after the pay period ends to pay their workers.

Final paychecks

When an employee is terminated, Missouri law requires that all wages owed be paid upon dismissal. If payment is not made, employees can request wages in writing. Employers then have seven days to comply or face penalties.

Pay transparency laws

There are no specific pay transparency laws in Missouri that mandate employers to disclose pay information unless it pertains to non-discrimination standards.

Sick leave

Missouri law does not require employers to offer paid sick leave. The Family and Medical Leave Act (FMLA), a federal law, governs unpaid leave and job protections for eligible employees.

Workers’ compensation

Missouri requires workers’ compensation insurance for most employers. Benefits include medical coverage and wage replacement for injuries sustained during employment. In certain cases, enhanced benefits are provided for occupational diseases like mesothelioma.

Minimum wage

The basic minimum hourly wage in Missouri in 2024 is $12.30 per hour. The rate is adjusted each year based on a set formula.

In the case of tipped employees, employers can use a tip credit towards their wage obligations. As such, they're allowed to pay tipped employees a lower cash wage of at least $6.15 per hour, equivalent to half the state minimum wage. If the cash wage and tips equate to less than $12.30 per hour, the employer should apply a supplementary tip credit of up to $6.15 per hour.

Overtime

Overtime compensation for non-exempt employees is mandatory in Missouri after 40 hours of work per week as standard, or after 52 hours of work per week for employees of seasonal amusement or recreation businesses. The applicable overtime premium rate is 1.5 times the employee's regular rate.

Vacation time

Missouri employers are not obligated to offer vacation pay, holiday pay, or severance pay unless they've agreed to do so in a contract. These benefits are typically discretionary.

Labor laws

Worker safety regulations

Missouri adheres to federal Occupational Safety and Health Administration (OSHA) guidelines, and the state offers on-site safety consultations to employers through the Division of Labor Standards.

Right to work

Missouri is a right-to-work state, meaning employees are not required to join a union or pay dues as a condition of employment.

Meal breaks and rest periods

Missouri employers are not required to provide paid or unpaid meal or rest breaks for adult employees. The decision to offer breaks is at the employer’s discretion and may depend on company policy, employment contracts, or agreements between the employer and employee.

Employment laws

At-will employment

Missouri follows the at-will employment doctrine, but it doesn't override protections against discrimination and other statutory protections.

Worker classification

Misclassification of workers, such as treating employees as independent contractors, is a violation of state law, and employers face penalties.

Discrimination

Missouri law prohibits discrimination in employment based on race, color, religion, sex, national origin, ancestry, age, or disability. These laws are enforced by the Missouri Commission on Human Rights.

Non-compete agreements

Missouri courts enforce non-compete agreements if they are reasonable in scope and duration. They must protect legitimate business interests like trade secrets.

Equal pay

Missouri's Equal Pay Law prohibits employers from paying women less than men for the same work. This law ensures equal compensation for equal work, regardless of gender. However, variations in pay are allowed if they are based on factors other than sex, such as seniority, experience, and duties performed.

A PEO can compliantly navigate complex Missouri regulations on your organization’s behalf.

Choosing the right PEO for your organization

The following steps will help you select the PEO that best aligns with your business needs and goals.

1. Define your business needs

Begin by conducting a thorough analysis of your current and projected HR-related expenditures, identifying areas where a PEO could offer savings or efficiencies. This includes understanding your needs for payroll management, benefits administration, HR compliance, and risk management, as well as considering how these services can scale with your company’s growth.

2. Research PEOs with Missouri expertise

Focus your search on PEOs that have a strong presence and a proven track record in Missouri. Look for case studies, client testimonials, and examples of their success in navigating the state’s complex labor laws and business environment.

3. Evaluate the range of services and quality of benefits

Examine the PEO’s offerings to ensure they meet your company’s specific needs. Assess the quality and cost-effectiveness of the benefits packages provided and whether the PEO offers customizable solutions that can adapt to your company’s changing requirements.

4. Assess compliance and risk management capabilities

Understand the PEO’s approach to managing continuous compliance with Missouri’s labor laws and their capacity to mitigate risks related to employment practices and workplace safety. This step is crucial for reducing potential liabilities and ensuring regulatory compliance.

5. Check customer service and support

Evaluate the PEO’s reputation for customer service and support. Consider their responsiveness, the availability of dedicated support teams, and the quality of HR technology platforms they use for managing employee services. High-quality, responsive customer service is essential for a smooth partnership.

6. Review and negotiate the contract

Carefully review the PEO contract to understand all terms, conditions, fees, and exit clauses, with the help of legal advisors if necessary. Compare its pricing structure with other PEOs, whether you pay a fixed monthly fee per employee or a percentage of the overall payroll. It’s important to negotiate terms that serve your company’s interests, ensuring flexibility, transparency, and a clear understanding of responsibilities.

7. Plan for implementation and transition

Prepare for the transition to the PEO by communicating changes to your employees, integrating systems, and setting up processes for ongoing collaboration. Effective planning and communication are vital to minimize disruption and ensure a successful partnership.

See also: How to Choose a PEO or US Payroll Provider: 9 Questions to Answer

Manage your Missouri, US, and global workers with Deel

Deel makes payroll and HR management easy, whether you’re hiring in one state, across the country, or around the world.

As your PEO, Deel takes care of payroll, HR, and benefits administration while ensuring state tax compliance and handling sensitive issues. We provide:

• Expert payroll administration
• Access to benefit plans from leading carriers and benefits administration
• Robust HRIS with free IT, Finance, and PTO management
• State-specific trainings, HR policies, and on-demand HR support
• Advanced tax and benefits compliance
• And more

Book a demo to learn more about using Deel’s PEO in Missouri.

*Provided by Deel PEO US, LLC, Deel Employment Services, LLC, or through Deel's partnership with licensed providers where required.