Gusto vs Justworks: Payroll Software or a PEO?

Gusto's main product is payroll software: your company stays the only employer, and Gusto files your payroll taxes for you under your company's own tax ID, the number the IRS gives your business. Gusto's terms call this role your reporting agent: it files and pays for you, but it does not become the employer. Justworks' main product is a PEO, a professional employer organization: it becomes a second, official employer of your staff alongside you, and it files payroll taxes under its own tax ID, not yours (Justworks help center).

Both companies now sell across that line. Gusto lists Gusto PEO, open by waitlist to existing Gusto payroll customers in Texas, California and Florida. Justworks sells Justworks Payroll, a payroll-only product with no shared employer role. This page compares Gusto's payroll with Justworks' PEO on public facts only, and picks no winner.

The short version

• With Gusto, you stay the employer. Gusto pays your people and files your taxes in your company's name. Following employment law stays your job.
• With Justworks, you share the employer role. Justworks becomes the employer on paper for payroll taxes and brings its own health plans, workers' comp (insurance that pays when staff are hurt on the job) and insurance against lawsuits from employees, such as claims of wrongful firing. This shared setup is called co-employment.
• The catch, each way. With Gusto, you buy and manage your own health plan and insurance. With Justworks, your team moves onto Justworks' insurance, its client contract is not published, and leaving means replacing that coverage.
• What to do. Get the full yearly cost of each, worked out for your actual employees, and weigh it against the work each one would take off your plate.

The core difference

Gusto: you are. Gusto's help center says that to run payroll in Gusto, "You need your own FEIN and state tax accounts" (Gusto help center). An FEIN, or EIN, is the federal tax ID the IRS gives your company; state tax accounts are the accounts your state opens for your payroll taxes. When you sign up, you appoint Gusto as your "reporting agent" (Gusto Payroll Service Terms). Gusto's terms keep the legal duties with you: "Employer is solely responsible for ensuring Employer's compliance with applicable law and regulation" (Gusto Employer Terms of Service).

Justworks: you share it. Justworks' end-of-year guide tells customers, "we file your Form 941 and NYS-45 under our EIN" (Justworks help center). Form 941 is the quarterly federal payroll tax return; NYS-45 is New York's state version (other states have their own). Justworks' own definition of a PEO says the same: PEOs "process payments, file taxes, and provide certain insurance policies under the PEO's EIN, rather than the customer's own EIN" (Justworks help center). When you join, "your employees become worksite employees of the PEO" (Justworks enrollment FAQ), under a contract Justworks calls a Customer Service Agreement (Justworks Terms of Use). In plain terms, your staff keep working for you day to day, but on paper Justworks is also their employer. Sharing the employer role this way is called co-employment. Our guide to PEOs vs payroll companies covers this line in general.

Gusto at a glance

• Payroll. "We offer payroll in all 50 states" (Gusto payroll FAQ).
• Health benefits. If you buy health insurance through Gusto, it is your company's own small-group plan, meaning a plan sold to your business on its own, not shared with other businesses. Gusto's insurance agency acts as your "broker or agent of record," the agent officially assigned to your plan, and is paid commissions by the insurers (Gusto Health Insurance Terms). Gusto's benefits "require an active Gusto payroll account" (Gusto benefits FAQ).
• Workers' comp. Your company holds its own policy. Gusto can arrange a quote from NEXT Insurance (Gusto Workers' Compensation Terms), which Gusto's help center now calls ERGO NEXT Insurance. Or you can use a policy from another insurer that you manage "outside of Gusto" (Gusto help center).
• Gusto PEO. A separate product, by waitlist, for existing Gusto payroll customers in Texas, California and Florida (Gusto PEO page). Our guide Is Gusto a PEO? covers it.

Justworks at a glance

• The PEO. The company that co-employs your staff is "Justworks Employment Group LLC, a professional employer organization and subsidiary of Justworks, Inc." (Justworks Terms of Use).
• IRS certification. Justworks says it "first obtained CPEO certification from the IRS in 2017" (Justworks help center). A CPEO is a PEO the IRS has certified; certification is what makes the PEO, not you, answerable to the IRS for federal payroll taxes on the wages it pays. The IRS list of certified PEOs shows four related Justworks Employment Group companies: the first certified from January 1, 2017, and three more from July 1, 2025 (version dated August 7, 2026, still the latest on October 17). More in our guide to certified PEOs.
• ESAC accreditation. Justworks appears on all 51 of ESAC's state lists, the 50 states plus Washington, D.C. (checked October 17, 2026). ESAC is an independent body that accredits PEOs after reviewing their finances and tax payments; our ESAC guide explains it.
• Insurance that comes with it. Your employees are covered by Justworks' workers' comp policy, "with some limited exceptions" (Justworks enrollment FAQ). In Ohio, Wyoming, Washington and North Dakota, you buy it "through your state carrier" instead, meaning the state's own workers' comp fund. And "EPLI coverage is included with your Justworks plan" (Justworks help center). EPLI is employment practices liability insurance: it covers claims such as wrongful firing, discrimination or harassment.
• Other products. Justworks also sells Justworks Payroll, a payroll-only product; this page compares the PEO. See our Justworks review, the Justworks directory profile, and how Justworks compares with another PEO.

Gusto vs Justworks, side by side

Every cell below comes from the company's own help center, its terms, or a public list.

Which fits your company?

Each fits a different kind of company, for reasons both state on their own pages.

Gusto fits when:

1. You want to stay the only employer on paper. Your tax ID and state accounts are your own (Gusto help center), so they stay with you if you change payroll software. A health plan bought through Gusto is your own policy too, though Gusto benefits "require an active Gusto payroll account" (Gusto benefits FAQ); ask how it would move if you left.
2. You want to keep what you already have. "Keep your current broker and rates," Gusto says (Gusto help center), and an outside workers' comp policy can stay, managed by you.
3. You are an owner paying only yourself. Gusto's pricing page has a "Pay Myself" option (Gusto pricing). Justworks' PEO needs "a minimum of two individuals" on payroll, "though one can be classified as an unpaid owner" (Justworks enrollment FAQ). Our guide to the minimum employees for a PEO covers other PEOs.

Justworks fits when:

1. You want someone else to be answerable to the IRS for federal payroll taxes. Justworks says it "has sole statutory liability for federal payroll taxes on wages that are processed on our platform" once you sign IRS Form 8973, the form that tells the IRS a certified PEO runs your payroll. Federal law treats a certified PEO as the employer "(and no other person shall be treated as the employer)" for wages it pays (26 U.S.C. 3511).
2. You want a chance at a large-group health plan, the kind usually sold to big employers. Justworks says PEOs like it "allow smaller companies access to large group health insurance plans on our master policies", meaning one policy, sponsored by Justworks, covering many businesses (Justworks help center). See our guide to PEO health insurance.
3. You would rather have workers' comp and lawsuit insurance come with the service. "Workers' comp, statutory disability and EPLI coverage is automatically included with your Justworks Plan" (Justworks help center). Statutory disability is a short-term disability benefit some states require. More on PEO workers' comp.

If you already run Gusto payroll in Texas, California or Florida, Gusto PEO may be a third path. It is by waitlist, and Gusto says joining "is not a guarantee of eligibility" (Gusto PEO page).

The downsides of each

What you take on with Gusto:

• If a federal payroll tax payment goes wrong, the IRS looks to your company, even though Gusto files for you.
• Following employment law is your job ("Employer is solely responsible").
• You buy and renew your own health plan, workers' comp and any lawsuit insurance.

What you give up or accept with Justworks:

• Its client contract is not published, and to cancel you "contact us" (Justworks help center).
• On a large-group plan, your health rates still depend on your own staff's makeup and past claims (see below).
• You need at least two people on payroll, and medical plans need "at least two active benefits-eligible employees" (staff who qualify for health benefits) from different households (Justworks enrollment FAQ).
• Leaving means replacing workers' comp, lawsuit insurance and the health plan, and a move back to Gusto can only start at the beginning of a year.

How to compare them fairly

A payroll subscription and a PEO fee buy different things, so compare the total yearly cost of each, worked out for your actual employees.

1. Add up the full yearly cost, both ways. On the Gusto side: the Gusto subscription, your health premiums, your workers' comp premium and any lawsuit insurance you buy. On the Justworks side: Justworks' fee, the health plan your team would join, and the insurance the fee includes. Across the industry, PEOs typically charge $40 to $160 per employee per month, or 2% to 12% of payroll; that is a general range, not a Justworks figure. See how PEO fees and pricing models work, or try the PEO cost calculator.
2. Ask Justworks which health plan you would be on. It may be one of its own large-group policies or a plan bought on the regular market, depending on your state and size (Justworks help center). Ask how your rate is set, too: Justworks says large-group rates take into account "your company's specific demographics as well as past health insurance utilization", meaning who is on your staff and what they claimed before. Regular-market plans are priced differently, so ask which way yours is priced.
3. Get the contract terms in writing. Justworks' client contract is not on its legal page. Before you sign, ask how much notice you must give to leave, and what else the exit terms say. See PEO contract terms and questions to ask a PEO.
4. On Gusto, check your insurer's rules. For a group health plan, most insurers want at least one regular payroll employee besides the owner (Gusto benefits FAQ).

If you would like help comparing PEOs against what you have now, we can connect you with our independent broker. Request a Consultation through our PEO quotes page. It takes several business days, because the broker gathers quotes on your actual employee list. The consultation is free to you. If you sign through the broker, he shares part of his fee with us.

Common questions

Is Justworks a PEO?

Yes. Justworks' PEO is run by Justworks Employment Group LLC, which its terms call "a professional employer organization" (Justworks Terms of Use). Justworks also sells Justworks Payroll, a payroll-only product.

Is Gusto a PEO?

Gusto's payroll product is not; you stay the employer. Gusto PEO is a separate waitlist product in three states. See Is Gusto a PEO?

Does Justworks offer payroll without the PEO?

Yes, Justworks Payroll. With a payroll provider, Justworks explains, "the payments and taxes are filed under the company's own EIN and tax account" (Justworks help center).

Can I move from Gusto to Justworks in the middle of the year?

You can. Social Security and federal unemployment taxes stop each year once an employee earns past a set amount. Because Justworks is IRS-certified, federal law lets wages you already paid this year count toward those limits, instead of starting again at zero, which would mean paying those taxes again. For state unemployment tax, whether this year's wages carry over depends on the state; see certified vs non-certified PEOs.

Going back has a timing rule. Gusto says, "We only support CPEO transitions at the start of the year" (Gusto help center). CPEO means certified PEO, so a move from Justworks to Gusto can only start at the beginning of a year.

Which one is cheaper?

We don't publish provider prices, and the two charge for different things. Compare two written, all-in yearly numbers for your own staff. Some businesses come out ahead with a PEO and some don't.

What happens to our insurance if we leave Justworks?

Justworks says that after you cancel, "you'll need to secure your own workers' comp coverage, statutory disability (New York only), and Employer Practices Liability Insurance" (Justworks help center). The last one is the EPLI lawsuit cover. Your team also comes off Justworks' health plan, so line up a new plan first. Our guide to leaving a PEO covers the steps.

Sources

• Gusto, "Gusto PEO" (waitlist page), opened October 17, 2026
• Gusto Help Center, "Gusto onboarding guide for employers", section "Switch to Gusto from a PEO or CPEO"
• Gusto, Payroll Service Terms (last updated Aug 18, 2025), section 11
• Gusto, Employer Terms of Service (last updated Aug 1, 2025), section 17
• Gusto, Workers' Compensation Insurance Terms (last updated June 17, 2025)
• Gusto, Health Insurance Benefits Service Terms (last updated Sept 26, 2017)
• Gusto Help Center, "Manage benefits with Gusto"
• Gusto Help Center, "Manage your company's Workers' Compensation with ERGO NEXT Insurance"
• Gusto Help Center, "Broker integration: Connect existing insurance plans to Gusto"
• Gusto, Benefits page, FAQ
• Gusto, Payroll page, FAQ "Do you offer payroll in my state?"
• Gusto, Pricing page ("No contracts" sentence and "Pay Myself" option only)
• Justworks, Terms of Use (updated Aug 28, 2026)
• Justworks Help Center, "Justworks PEO Company Enrollment and Onboarding FAQs" (updated July 10, 2026)
• Justworks Help Center, "Preparing for End of Year" (updated Feb 19, 2026)
• Justworks Help Center, "IRS Form 8973" (updated July 27, 2026)
• Justworks Help Center, "Large Group vs. Small Group Health Insurance" (updated Sept 3, 2026)
• Justworks Help Center, "Managing Company Account Settings", section "Canceling your Justworks account" (updated June 15, 2026)
• Justworks Help Center, "Employment Insurance: Workers' Comp, EPLI, and Disability" (updated Aug 26, 2025)
• Justworks Help Center, "Justworks Payroll: Moving From a PEO to a Payroll Provider" (updated Mar 3, 2026)
• Justworks, Legal Agreements page
• IRS, Active CPEO list (report dated Aug 7, 2026), checked October 17, 2026
• IRS, CPEO public listings (updated Nov 26, 2025)
• 26 U.S.C. 3511, Certified professional employer organizations (Cornell Legal Information Institute)
• ESAC, Find an Accredited PEO (all 51 state lists checked October 17, 2026)