What is a Professional Employer Organization
by Luke Van Every
The Professional Employer Organization, or PEO, has been around for more than 30 years. But, what is it?
A PEO helps employers with Payroll, Employee Benefits, Workers’ Comp, Risk Management, and HR support – all through their Human Resource Management System (HRIS).
Not Just Payroll
A PEO is different than a traditional payroll company. The PEO works on a co-employment model, which means it puts your employees under its FEIN, so your employees look like the PEOs employees – but only for administrative purposes. The client remains the worksite employer and continues to direct the employees’ day-to-day activities.
As the administrative Employer of Record (EoR), the PEO processes payroll under its FEIN, so employers don’t have to worry about tax filings, state registrations (in most states), and unemployment claims (in-most states). The PEO will also protect you from fraudulent unemployment claims.
For Workers’ Comp, the employer adopts the PEO’s Workers’ Comp carrier and policy, and the PEO becomes responsible for all claims and audits (in-most states). The PEO pays the Workers’ Comp premium on a pay-as-you-go model. The employer no longer has to worry about upfront payments or audit adjustments at renewal because the PEO pays the Workers’ Comp premium every pay period.
Through the co-employment model, the PEO has some skin in the game when it comes to compliance. Depending on which PEO you choose, and where you are in your company life cycle, HR Support can vary. If you choose a full-service PEO, the PEO can serve as your HR department. This is typical for founders wearing multiple hats and need more resources to focus on what they do best – running and growing their business. However, let’s say you have an HR department.
Those individuals are crucial to your success. In this situation, the PEO would be there to support them in their daily responsibilities, offering local, state, and federal updates as well as best practices to keep your company in compliance. The PEO can also provide additional support updating, maintaining, and creating company policies and employee handbooks.
PEOs are always innovating, especially when it comes to their HR Management Systems (HRIS). The PEO’s HRIS platform is where you will run payroll and manage your employees and access the PEO’s cloud products, such as Time and Attendance, Electronic Employee Onboarding, Applicant Tracking, Performance Tracking, and more. If you like your current cloud products, great! In most circumstances, you can work with the PEO to integrate those products into their system.
Most employers choose to work with a PEO for the employee benefits. Our PEO partners can have hundreds of thousands of worksite employees under their FEIN, making their buying power much stronger than a small or medium-sized business. Tapping into the PEOs economy of scale will help you hire and retain top talent by offering a robust benefit option. From Health, Dental, Vision, Long Term Disability, Short Term Disability, ADAD, all the way down to pet insurance, the PEO has you covered.
The PEO model is an excellent way for you to streamline your processes, hire and retain top talent, strengthen your company culture, and save you time and money to focus on growing your business.
True Compare PEO
True Compare PEO was built on the values of Trust, Integrity, Transparency, and Giving Back.
Over the years, our CEO, Luke Van Every, realized that there is not one Professional Employer Organization that fits the needs of every company, but there is a Professional Employer Organization that can fit the needs of every client’s company.
With Hundreds of Professional Employer Organizations to choose from, True Compare PEO is focused on helping our clients select the provider that is right for them. Our brand is founded on integrity and we are dedicated to serving as trusted counsel, ensuring our clients’ best interest is always our top priority.
To learn more, contact us today: EMAIL, 202-949-8228