How a team of only 10 engineers built Rippling’s PEO from scratch

Clients prefer to join a PEO for two reasons:

1. They don’t have to worry about keeping track of the myriad local, city, state, and federal compliance rules when hiring and managing employees in a remote-first world.

2. The PEO can provide high-quality, affordable health coverage on behalf of our worksite employees.

PEOs can also solve an extremely messy problem for the government. To ensure compliance and accurate tax collection for small businesses, the government holds one PEO responsible, instead of thousands of smaller companies. Such consolidation saves the government time and money.

PEOs, by nature, create an unusual and complex multi-tenancy problem. How do we ensure that the data of one company is not accessed by another company? How do we ensure that our existing SaaS product suite, which is built for one company, can still be used for PEO clients where employees belong to multiple companies? 

The solution starts with Rippling’s SaaS suite architecture.

Rippling’s hub and spoke backend architecture

The Rippling backend is set up as a “hub and spokes” model. The hub corresponds to core Rippling features like Rippling accounts, company and user information, and onboarding/offboarding flows. The spokes are individual services like payroll, benefits, or user provisioning in third-party apps.

Since a PEO requires us to file for taxes across all PEO clients under a single PEO company, we needed to modify the multi-tenant nature of the above hub and spoke architecture to support combined tax filings for PEO. However, this became more complex as the PEO filings requirement is not uniform across all states.

Source: https://www.napeo.org

The above image shows the tax reporting requirement across all US states as of 2019. Without getting into technicalities, you can imagine all grey and white-striped states as PEO reporting states and every other as a client reporting state.We were tasked with building a platform with the following requirements:

1. An employee can belong to 2 companies (client and PEO company)

2. A PEO company should act like a parent company of the client companies but employees should not be directly tied to the PEO company

3. For PEO reporting states, taxes will be paid to PEO company’s state account after the switch

4. For client reporting states, taxes will be paid to the same client’s state account even after switching to PEO

5. Maintain data consistency of company and employees before and after the client joins the PEO

To create a robust and scalable multi-tenant architecture to support the following needs, we had to first understand Rippling’s existing tax filings architecture.

Rippling’s tax filings: under the hood

Payroll and filings are the most important and complex functionalities for a company. A PEO can make them even more complicated. Here’s how payroll and filings are handled in Rippling.