New to a PEO?

Reality:

The main reason for a PEO to be named the “employer of record” in a co- or shared-employment relationship is to enable it to directly manage the payroll, issue Forms W-2, and collect and pay employment taxes. Co- or shared-employment is nothing to fear—it simply describes the relationship between two or more employers in which each has actual and potential legal rights and duties with respect to the same employee or group of employees.

You are further protected because in order to engage a PEO you must first sign a client service agreement (CSA) that outlines the responsibilities and liabilities that you will share with that PEO in the areas of human resources, payroll and taxes, workers compensation, and benefits. With the signing of a CSA, you maintain 100% control of your company and your employees, but you share some of the liabilities for the areas outlined in the agreement. This relationship typically works out to your benefit by reducing your risk and financial obligations.

Reality:

The PEO experts assigned to your business do not work in your office space and therefore a lot of the culture you’ve built around internal relationships will remain intact. However, a PEO brings a plethora of HR assistance and goodwill to a company and can help you enhance your culture by offering employees more affordable benefits, clearly defined processes and procedures, employee and management training opportunities, employee resources, and more.

Reality:

Hiring a PEO to help manage the wide range of administrative details that come with overseeing a workforce can help you reduce the burden on your small or single-person HR team. PEOs are actually ideal in these circumstances because they provide much-needed guidance on employee issues, benefits and payroll administration, and especially taxes and legal compliance mandates. By hiring a PEO, your HR team will have a slew of HR experts with whom to bounce around ideas and get knowledgeable advice.

A good PEO also assists with performance management and can provide your HR team with a number of tools and online guides to aid them as they assist your business leaders and employees with their everyday HR needs.

Reality:

An Administrative Service Organization (ASO) relationship could be a good fit for you. 

Larger businesses that are seeking only supplemental support or services in HR, talent recruitment, benefits administration, or payroll will often benefit most from partnering with an ASO that allows them to choose the service offerings they need most from an à la carte-like menu. The main difference between an ASO and a PEO is that in the case of the ASO, there is no need for a co- or shared-employment relationship.

If you’re simply looking to ease the burden on your current staff and you only need to outsource a few functions such as benefits administration or payroll, an ASO relationship could be the best choice for you.