What is a Professional Employer Organization?

A Professional Employer Organization (PEO) (Employee Leasing)helps client companies cost-effectively outsource the management of payroll, workers' compensation, human resources and employee benefits. PEOs help clients focus on their core competencies to maintain and grow their bottom line.

Businesses today need help managing increasingly complex employee related matters such as health benefits, workers' compensation claims, payroll, payroll tax compliance, and unemployment insurance claims. Engaging a PEO enables companies to share these responsibilities and provide expertise in human resources management. This allows PEO clients to focus on the operational and revenue-producing side of their business.

PEO companies provide an integrated service to effectively manage human resource responsibilities and employer risks for their clients. A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the client's worksite and by contractually assuming certain employer rights, responsibilities and risk.

PEO Services and Employee Leasing Basics

A PEO is a Professional Employer Organization who contractually allocate and share traditional employer responsibilities and liabilities. A PEO assumes responsibility and liability for the "business of employment," which includes risk management, human resources, improved labor compliance, payroll and employment taxes, and benefits.
A PEO acts as a co-employer undertakes certain employer obligations, and for many purposes is the employer of your worksite employees.
A PEO as a co-employer is responsible for the payment of wages and employment taxes. All payroll taxes are filed under the PEO's federal employer identification number.
All wages are paid through a PEO's bank account.
A PEO secures workers' compensation coverage as the employer of your worksite employees. A PEO manages all workers' compensation claims.
A PEO is the employer for state unemployment tax purposes in most states.
A PEO is subject to compliance with state and federal employment discrimination laws as well as hour laws.
As a client of the PEO you retain the responsibility for the management of employee production, business operations, marketing, sales and service. You have control over all business operations and the work that your employees do, you run the show.

ASO Services and Payroll Processing Basics

A Payroll Service Company can operate as an Administrative Service Organization (ASO) through a Client Service Agreement, and is your payroll processing agent.
The major distinction between a PEO vs ASO, under an ASO arrangement there is no employment relationship between the Payroll Service Company and your employees.
The Payroll Service Company is not the employer; consequently, all payroll taxes are filed under your federal employer identification number.
All wages are paid through your bank account.
Workers' compensation coverage is provided under your policy.
You are subject to compliance with state and federal employment discrimination laws as well as hour laws.
A Payroll Service Company company can provide various services "a la carte."

Small, medium and growing businesses often find themselves in a position where they need assistance managing their employment and administrative functions. Two options available to them are a PEO, Professional Employee Organization and an ASO, Administrative Service Organization. Prior to making that step of choosing which is best, a company needs to understand the differences between these types of organizations to make a wise business decision. The decsion to go with a PEO or an ASO is a complex process. Understanding No two companies are going to have precisely the same needs, APR and its qualified staff will identify which system and services your company needs most. It is very important that as your business partner, the PEO or an ASO stays up to date on all the industry changes that effect the HR Industry.

Let APR, Inc. take a look and see if your current PEO or ASO partner is the right fit for you!