PEO Solutions for Businesses in Tennessee

Tennessee has experienced population growth over the past five years, according to data from the U.S. Census Bureau, especially in the region around Nashville that includes Davidson, Sumner, Williamson, Rutherford, Wilson, and Maury counties. And people aren’t just coming for the music scene. More than 900 healthcare companies operate in Middle Tennessee, according to the Nashville Area Chamber of Commerce, with more than half located in Nashville including 18 publicly traded ones, making it the largest industry in the region. Manufacturing and technology have built a solid foothold, as well.

The Volunteer State isn’t just for big businesses, though, with 99.5% of all businesses in the state defined as small businesses, employing 1.2 million people – just under 42% of the state’s total employment.¹ Tennessee saw a slight dip in its year-over-year small business employment growth from last year, but has consistently ranked in the top 10 in 2024 based on Paychex customer data.²

Despite the population and economic growth, Tennessee businesses face the same challenges that employers across the United States are experiencing: a labor shortage that makes finding and hiring good talent difficult.

Employers also must deal with the complexities created by consistently evolving regulatory requirements and often limited time to handle day-to-day operations. Consider this: Nearly two-thirds of businesses said they are spending 11 hours a week – that’s 14 work weeks a year – on HR administration.³

Here’s something else to consider: The average cost savings for clients who use a Professional Employer Organization (PEO) is 27.2%, according to the National Association of Professional Employer Organizations (NAPEO).⁴ A Paychex survey found that some businesses are spending as much as $350,000 on HR administration,⁵ so that’s close to $95,000 in savings.

Let’s look at what else a PEO can do that might help your Tennessee business.

Why Work With a PEO in Tennessee?

A PEO can add value to your business, whether you have an HR team or not, by providing support and additional help with HR administration. In addition to HR administration, a PEO can assist with processing payroll, administering benefits, improving safety in the workplace, and helping keep a business up to date on its compliance requirements. The client employers retain the responsibilities of managing the business and their workforce in a PEO relationship.

Tennessee, especially around the Nashville area, benefits from the leisure and hospitality industry that services tourism. Historically, people working in the industry switch jobs more frequently than in other industries. The state’s labor department reports having more job openings than people to fill them. Mix in the state’s 3.1% unemployment rate as of August 2024 and businesses are left with a tight labor market.⁶ However, those working with a PEO experience 10% to 14% less turnover, according to the NAPEO.⁷

How Can Paychex Help Your Business Gain Efficiencies and Insights?

With the benefit of our all-in-one HR technology platform, the Paychex HR PEO* becomes a powerful tool for your business.

• HR administration: You’ll receive dedicated HR support to assist with hiring, developing employee handbooks, onboarding new employees, conducting training, and so much more.
• Payroll administration: Our automated payroll process can save you time and money, plus payroll taxes will be calculated and timely remitted to give you peace of mind about your compliance requirements.
• Employee benefits: With access to Fortune 500-level offerings in retirement and health insurance, your business can stay competitive for talent. Plus, our PEO vets benefit packages directly with carriers and handles administrative tasks such an enrollment to save you time.
• Risk management: Employers with five or more employees in Tennessee (note: construction businesses and trades with one or more employees) are required to purchase workers’ compensation insurance. The Paychex HR PEO provides the collective buying power to help make it more affordable and you’ll gain access to a safety specialist who provides training that can help reduce risk for your employees.
• Compliance: Do you know if you have obligations to utilize E-Verify under Tennessee’s Lawful Employment Act? We can help keep you up to date on such compliance matters, as well as on any new regulations or guidance coming from TOSHA on workplace safety. With our PEO, you also get access to a dedicated HR Professional who receives support from our compliance team to proactively identify potential risks and can offer actionable HR advice.
• HR technology: Make things simpler with a self-service platform with access for employers and employees to update information on payroll, benefits, and personal data. Your business could save time and improve communication.