How to Ensure You Choose the Right PEO for Your Business

Choosing the right PEO for your business requires a detailed understanding of your company’s HR needs and the services different PEOs offer. A Professional Employer Organization, becomes a co-employer with your company, handling HR tasks such as payroll, benefits, compliance, and employee management. 

The key benefits include access to better benefits packages, compliance expertise, and reduced administrative burdens, allowing your team to focus on core business activities. The right PEO can significantly improve HR operations, especially for small to medium-sized companies that lack internal resources. 

Essential considerations include the PEO’s reputation, the range and quality of services offered, cost structure, and the level of customer service. Additionally, the ability to scale services as your company grows is crucial. A dedicated team and advanced data processing capabilities can further enhance the value a PEO offers. Determining if your business needs a PEO involves assessing internal HR capabilities, compliance risks, and HR service needs. Factors to consider when evaluating PEO providers include their industry experience, service model flexibility, and the comprehensiveness of their HR solutions. 

Key questions to ask potential PEOs cover their experience with companies of your size and industry, specifics about their service offerings, pricing structure, and how they manage sensitive employee data. Implementing a PEO partnership typically involves a detailed contract review, data sharing for payroll and benefits administration, and setting up communication channels between your company and the PEO. Ultimately, the choice should align with your company’s long-term goals and HR needs.

How do you determine if your business needs a PEO?

To determine if your business needs a PEO, assess your HR capabilities, compliance needs, and the complexity of employee benefits. A PEO becomes essential when a business’s internal resources are stretched thin managing HR tasks, payroll, and employee relations. Drucker (2002) highlights that if a business is dedicating excessive time to these areas, partnering with a PEO could significantly benefit, allowing the focus to shift toward strategic planning and core activities.

The 8 factors to consider are listed below. 

1. HR Capabilities: If your business lacks a dedicated HR team or the existing team is overwhelmed by operational demands, a PEO can provide the necessary expertise and support.
2. Compliance Needs: Businesses operating in highly regulated industries or those struggling with keeping up with legal changes may find a PEO’s knowledge invaluable in avoiding penalties.
3. Employee Benefits: Offering a competitive and comprehensive benefits package is key to attracting and retaining top talent. PEOs can negotiate better rates with insurance providers due to their larger pool of employees, enabling small businesses to offer benefits typically reserved for larger corporations.
4. Growth and Scalability: As your workforce expands, the complexity of managing HR responsibilities increases. A PEO can help manage this growth, ensuring your HR capabilities scale with your business.
5. Financial Considerations: Assess the cost-benefit of partnering with a PEO. While there are fees involved, the potential savings in reduced legal risks, improved compliance, and access to better employee benefits can outweigh the costs.
6. Operational Efficiency: Evaluate how much time your team spends on administrative tasks versus core business activities. A PEO can reduce this burden, improving operational efficiency.
7. Technology Needs: Modern PEOs offer advanced HR technology platforms that small businesses might not otherwise afford, streamlining HR processes and improving data management.
8. Employee Relations: A PEO can serve as an intermediary, handling sensitive employee relations issues, which can be particularly beneficial for businesses that lack a dedicated HR professional.

Carefully assessing your business’s specific needs, priorities, and challenges is crucial in determining whether a PEO is the right fit. Partnering with a PEO can offer a range of advantages, from improved HR management and compliance to better employee benefits, ultimately supporting your business’s growth and operational efficiency.

What factors should you consider to evaluate PEO providers?

When evaluating PEO providers, consider factors such as service offerings, reputation, pricing, legal impact, and adaptability to your business. Service offerings should include a comprehensive suite of HR solutions, from payroll to employee benefits and compliance support. 

Reputation is key; a provider’s track record can offer insights into their reliability and quality of service. Pricing structures must align with your budget and business scale, ensuring you’re not overpaying for services you don’t need. The legal impact involves understanding how a PEO partnership will affect your compliance with federal and state labor laws, potentially mitigating risks and costly penalties. Adaptability refers to the PEO’s ability to tailor its services to fit your business’s evolving needs, supporting growth without compromising service quality.

Rudyk, O., Maksymova, J., & Zaletska, I. (2023) highlight the importance of evaluating economic indicators like labor productivity, income, profit, and the effectiveness of training programs in the service sector. This research underscores the need to choose a PEO that not only meets immediate HR and compliance needs but also contributes to long-term business growth and employee development.

To compare PEO pricing structures, investigate whether they offer a bundled service package or a la carte options, and assess how these models fit your current and future needs. Understanding PEO contracts is crucial; carefully review terms regarding service scope, duration, termination clauses, and any hidden fees to prevent surprises. Legal and tax impacts involve how the PEO handles compliance with employment laws and manages payroll taxes, which can significantly protect your company from liabilities. Employee benefits handling should ensure the PEO provides a robust range of options that meet your employees’ needs and align with your company culture. Key certifications, such as ESAC accreditation or IRS certification, indicate a PEO’s commitment to industry standards and financial reliability.

Choosing a PEO that adapts to change quickly is also essential to ensure compliance. This includes choosing a PEO that is technologically advanced and offers benefits such as enhanced data security. There are also industry-specific considerations to look for because not all PEOs cater to niche industries. There are some key performance indicators like cost savings, management, compliance, and efficiency that can be tracked and measured.

How do you compare PEO pricing structures?

To compare PEO pricing structures, you should analyze the cost models used by different providers, including administrative fees, bundled services, and additional costs. PEO pricing typically falls into two main models: a flat fee per employee or a percentage of the total payroll. 

The flat fee model offers predictable costs, making budgeting easier for businesses with stable employee numbers. It’s particularly suited for companies with a high payroll, as the cost doesn’t fluctuate with payroll increases. Conversely, the percentage model’s costs vary with payroll size, better accommodating businesses with variable payrolls or fluctuating workforce sizes.

Administrative fees cover essential HR services like payroll processing, tax filing, and compliance management. It’s vital to check what’s included in these fees, as some PEOs offer more comprehensive services than others. Understanding the specifics can help you avoid hidden costs and ensure the services align with your HR needs.

Bundled services in PEO offerings typically include HR support, employee benefits administration, workers’ compensation, and risk management. While bundling can save money compared to purchasing these services separately, it’s important to assess the value and relevance of each included service to your business. Pay attention to any additional charges for services outside the standard bundle, as these can significantly impact the overall cost.

Additional costs may include setup fees, training fees, and charges for special reports or compliance issues. These can vary widely between providers and should be considered when comparing pricing structures.

What should you know about PEO contracts and agreements to choose between providers?

When choosing between PEO providers, understanding the terms of their contracts and agreements is critical to ensuring that services align with your business needs.

Here are the 10 key elements to focus on.

1. Services and Scope: Contracts should clearly outline the range of services provided, such as payroll processing, HR management, employee benefits administration, and compliance with labor laws. Understanding the scope helps manage expectations and ensures the PEO can handle your specific needs.
2. Fees and Costs: Look for detailed sections on fees, including how they’re calculated (percentage of payroll vs. per employee), and any additional costs for services outside the standard package. This clarity helps avoid surprises and manage the budget effectively.
3. Employer and PEO Responsibilities: Contracts must specify each party’s responsibilities. This division of labor is essential for compliance, risk management, and smooth operation. It protects your business by clearly defining who handles aspects like tax filings, employment law compliance, and insurance claims.
4. Termination Clauses: Understanding how to terminate the agreement, notice periods required, and any associated costs or penalties is vital. This section sets expectations for both parties and outlines the process for ending the relationship.
5. Liability and Insurance: Agreements should detail the PEO’s liability insurance coverage, including workers’ compensation, professional liability, and employment practices liability insurance. This section helps mitigate risk and ensures adequate protection for your business.
6. Performance and Service Levels: Contracts often include service level agreements (SLAs) that specify performance expectations, response times, and reporting requirements. SLAs help maintain a high level of service and provide recourse if the PEO doesn’t meet agreed-upon standards.
7. Compliance and Legal Aspects: Contracts should outline the PEO’s role in maintaining compliance and how updates or changes in law are managed. This reduces legal risks and ensures your business stays compliant.
8. Employee Benefits: If the PEO offers employee benefits, the contract should detail the types of benefits available, eligibility requirements, and the process for enrolling employees. Clear terms help manage employee expectations and ensure smooth administration of benefits.
9. Data Security and Privacy: With PEOs handling sensitive employee data, contracts must address data security measures, privacy policies, and compliance with relevant laws (e.g., GDPR for European employees). This section protects your employees’ information and reduces data breach risks.
10. Dispute Resolution: Contracts should include mechanisms for resolving disputes, such as arbitration or mediation. This framework helps resolve issues efficiently and can prevent costly legal battles.

How do different PEOs impact your business’s legal and tax work?

Different PEOs can impact your business’s legal and tax work based on the co-employment model, tax liabilities, and compliance responsibilities. Partnering with a PEO means entering a co-employment agreement where the PEO shares certain employer responsibilities. This structure significantly affects how a business handles legal and tax obligations.

PEOs assume a portion of the employer’s tax and legal burdens. They’re responsible for payroll taxes, ensuring accurate withholding and timely filing with the IRS. This simplifies tax administration for businesses, potentially reducing exposure to penalties if the PEO fails to comply. However, the employer remains liable for unpaid taxes or legal claims that arise.

Tax liabilities shift with the PEO partnership. PEOs often offer better SUTA rates due to their large employee pools, lowering unemployment tax costs. Yet, businesses must carefully choose a certified PEO to ensure these benefits, as certification holds the PEO to higher compliance standards.

Compliance responsibilities are crucial. PEOs help businesses adhere to federal and state employment laws, reducing the risk of non-compliance issues. They manage labor law compliance, employee benefits administration, and workers’ compensation claims, which can significantly reduce the administrative workload on businesses.

Different PEOs impact your business’s legal and tax work by affecting the efficient allocation of resources, cooperation with other fields of regulation, and vertical competition between senior legislators, as noted by Schön, W. (2005) in “Playing Different Games? Regulatory Competition in Tax and Company Law Compared”. This highlights the importance of selecting a PEO that aligns with your business’s specific needs, as the choice can affect overall financial health and compliance posture.

The key is to carefully assess potential PEO partners, and understand their impact on tax liabilities, legal responsibilities, and administrative burdens. This careful selection can lead to significant benefits, including reduced costs, improved compliance, and a more efficient allocation of resources.

Why does the way PEOs handle employee benefits and insurance when choosing one?

The way PEOs handle employee benefits and insurance is crucial because it directly affects employee satisfaction, retention, and compliance with legal requirements. PEO offer businesses the power to provide comprehensive benefits packages that are typically reserved for larger companies. This ability allows small and medium-sized businesses to attract and retain top talent by offering competitive health, life, disability, and even pet insurance options.

PEOs leverage collective bargaining to negotiate with insurance providers, resulting in more affordable premium rates for their client companies. This collective power opens access to a wider range of insurance plans, including those with advanced features and additional coverage options. By managing the complex administrative tasks associated with these benefits, such as compliance with the Affordable Care Act (ACA) and COBRA, PEOs significantly reduce the burden on businesses, allowing them to focus on their core operations.

Furthermore, PEOs typically offer online platforms or apps that make it easy for employees to manage their benefits, enhancing the overall employee experience. These platforms often include tools for comparing different insurance plans, understanding coverage options, and accessing care. The availability of such advanced tools and resources is key to improving employee satisfaction and retention.

What certifications and accreditations should you look for in a PEO?

Look for certifications such as IRS certification and accreditation by organizations like the Employer Services Assurance Corporation (ESAC) when choosing a PEO. IRS certification signifies a PEO’s compliance with federal tax obligations, ensuring they meet strict financial, tax reporting, and performance standards. ESAC accreditation acts as a gold standard in the PEO industry, indicating adherence to key operational and financial practices, which provides an additional layer of security and assurance.

Also consider the Certified Professional Employer Organization (CPEO) designation, which requires PEOs to pass rigorous IRS audits, confirming their ability to properly manage employment taxes and assume sole liability for the payment of federal employment taxes on wages paid to employees. This certification protects businesses by ensuring the PEO meets high standards for tax compliance and financial integrity.

Look for PEOs with SOC 1 and SOC 2 certifications, which indicate strong internal controls over financial reporting and data security, respectively. These certifications are crucial for businesses that prioritize the protection of sensitive information and want to ensure their PEO manages data responsibly and efficiently.

State licensure or accreditation should also be considered, as it confirms the PEO’s compliance with local regulations and standards, providing greater assurance of their ability to effectively manage employer obligations at the state level.

Finally, check for PEOs that hold surety bonds or have additional insurance coverages, which protect against potential financial risks associated with employee wages, benefits, and insurance premiums. These bonds and insurances offer a critical safety net, ensuring the PEO has the financial stability and capacity to cover these obligations.

Why is a PEO that adapts well to changing business needs important?

A PEO that adapts well to changing business needs is important because your company’s HR requirements can evolve over time, requiring flexibility in service provision. This adaptability ensures the organization remains competitive and compliant with regulatory changes, crucial for operational efficiency and legal integrity. As businesses grow or scale down, a PEO’s ability to adjust its offerings accordingly helps maintain a smoother operational flow, reducing disruptions that can arise from sudden market changes or workforce fluctuations.

An agile PEO supports companies in navigating the complexities of employment regulations that are constantly evolving, helping to avoid penalties and ensuring the workforce stays informed and compliant. This responsiveness to legal and regulatory shifts is essential for maintaining an attractive employer brand, and crucial for attracting and retaining top talent in a competitive job market.

Moreover, a PEO that can seamlessly adapt to new technological advancements enhances overall business resilience. By embracing the latest HR software and tools, it can facilitate smoother transitions during periods of expansion or contraction, enhancing the efficiency of HR operations. This ability to implement rapid adjustments in response to global economic events, such as pandemics, ensures business continuity and operational stability.

Choosing a PEO that offers flexible and responsive services in line with current and future business needs helps companies effectively manage HR tasks, from payroll to employee benefits, offering packages that are appealing to prospective employees. This adaptability in the face of changing business landscapes ensures that companies can quickly respond to new trends, maintain compliance, and offer competitive benefits, all of which are crucial for long-term success and growth.

Is a technologically advanced PEO important?

Yes, a technologically advanced PEO is important because it can streamline HR processes, improve data security, and offer better employee self-service tools. This type of PEO enables businesses to automate routine administrative tasks, significantly reducing the time and effort required to manage payroll, benefits, and compliance. This automation not only enhances efficiency but also ensures accuracy and compliance with changing labor laws, helping businesses remain proactive against potential legal issues.

A technologically advanced PEO provides robust data security measures, crucial for protecting sensitive employee information. By utilizing sophisticated systems, these PEOs safeguard against data breaches, ensuring employee trust and safeguarding the company’s reputation.

Moreover, these PEOs offer customizable reporting and analytics tools, enabling businesses to make informed decisions based on accurate and up-to-date information. This capability is key for strategic planning and performance management, allowing companies to focus on growth initiatives rather than being bogged down by administrative burdens.

Employee self-service platforms offered by advanced PEOs enhance employee engagement and satisfaction. Employees can easily access and manage their pay, benefits, and personal information, offering them control and convenience. This approach not only improves the overall employee experience but also reduces the workload on HR teams, allowing them to concentrate on more strategic tasks.

Are there industry-specific considerations when choosing a PEO?

Yes, there are industry-specific considerations when choosing a PEO, such as compliance with sector regulations and specialized benefit offerings. Different industries face unique challenges and regulatory requirements, making it essential to select a PEO familiar with these nuances. 

For instance, the healthcare sector must adhere to HIPAA regulations, requiring a PEO that can ensure compliance and manage related risks. Manufacturing industries, on the other hand, prioritize safety and may benefit from a PEO offering dedicated training programs and safety management services.

The ability of a PEO to provide tailored HR solutions is crucial. Industries such as finance and technology, subject to stringent legal and regulatory landscapes, need a PEO that understands these complexities and can navigate them effectively, reducing the risk of costly non-compliance. Additionally, the competitive nature of these sectors underscores the importance of attracting and retaining top talent. A PEO that offers comprehensive benefits packages, including health, retirement, and wellness programs, can be particularly attractive.

Operational support is another key consideration. Industries with a diverse or large workforce require advanced HR software and technology platforms that can streamline processes and improve efficiency. The chosen PEO should have the capability to scale services in line with business growth and offer support in managing the complexities of workforce expansion.

The quality of service and the PEO’s experience in specific markets are critical factors. A provider with a strong track record in a given industry is likely to offer more effective solutions and be better equipped to manage industry-specific challenges. This includes offering competitive benefits that cater specifically to the needs of the industry’s workforce, and leveraging collective buying power to provide more attractive packages.

Finally, the availability of additional services, such as international HR support for businesses operating globally, can be a decisive factor for certain sectors. Choosing a PEO with a comprehensive service offering that aligns with the industry’s specific needs and challenges is essential for ensuring regulatory compliance, operational efficiency, and the overall well-being of employees.

What are the key performance indicators to monitor in a PEO partnership?

Key performance indicators to monitor in a PEO partnership include employee satisfaction, compliance rates, benefits management efficiency, and cost savings. 

Employee satisfaction, measured through regular surveys, indicates PEO’s effectiveness in meeting employees’ needs, contributing to lower turnover rates. High satisfaction levels often correlate with improved performance and growth, making it a critical KPI.

Compliance rates are essential to assess the PEO’s ability to maintain adherence to local and federal employment laws, reducing the risk of penalties. Effective PEO partnerships ensure higher compliance rates, indicative of the PEO’s expertise and reliability in handling HR responsibilities.

Benefits management efficiency, evaluated by tracking enrollment times, participation rates, and employee inquiries response times, reflects the PEO’s capability to offer attractive benefits and manage them effectively. Faster processing and quick resolution of inquiries demonstrate the PEO’s commitment to high-quality service, impacting overall employee satisfaction.

Cost savings, calculated by comparing HR administrative costs before and after partnering with a PEO, indicate the financial impact of the partnership. According to NAPEO, businesses often experience reduced administrative costs, approximately saving an average of 27.2% on HR administration per year. This metric helps businesses assess the value received from the PEO partnership, ensuring alignment with business goals.

Monitoring these KPIs enables businesses to evaluate the PEO partnership’s effectiveness, ensuring it meets their HR needs and contributes to their overall success. Regular assessment helps identify areas for improvement, ensuring the partnership delivers maximum value and supports the organization’s growth and development.

What questions should you ask potential PEOs?

When considering potential PEOs, ask about their pricing models, services, legal responsibilities, compliance history, and customer support. Inquire if they offer flat-rate pricing or if fees are percentage-based, ensuring clarity on any hidden costs. It’s crucial to understand the range of services provided, including payroll, HR, benefits administration, and compliance with local and federal laws. Ask how they handle legal disputes and employment issues, emphasizing their approach to maintaining compliance and managing workplace conflicts.

Determine their experience with businesses similar to yours in size and industry, as this can enhance efficiency and ensure a better alignment of services to your specific needs. Ask about their technology platforms and how these can facilitate communication, data management, and employee self-service, enhancing overall HR processes.

Question their ability to offer advanced services like employee training programs, performance management, and assistance with workplace safety. To understand their approach to employee benefits, ask about the types of health, retirement, and additional perks they can manage, ensuring these align with your workforce’s needs and expectations.

Ask for references from current or past clients, particularly those in similar industries or with a similar workforce size. This can provide valuable insights into the PEO’s performance, customer support quality, and ability to meet the specific needs of businesses like yours.

Clarify the level of customer support available, including whether you’ll have a dedicated account manager and their responsiveness to inquiries or issues. This is key to maintaining smooth operations and facilitating effective communication.

Finally, assess their certifications and accreditations to demonstrate their commitment to industry standards, legal compliance, and professional excellence. This can help ensure you’re partnering with a reputable and capable PEO who can effectively support and enhance your business operations.

What are the steps to implement a PEO partnership?

To implement a PEO partnership, businesses must follow a series of steps including evaluating the business’s needs, choosing the right PEO, negotiating contracts, and onboarding employees. A PEO is not right for every business; the decision should be based on the company’s size, industry, and specific HR needs. Implementing a professional employer organization partnership involves substantial actor effort, organizational learning, and activating moral capital like tolerance, patience, mutual respect, reciprocity, and trust, as discussed by Casey, C., & Delaney, H. (2019).

Assess your business’s specific HR, payroll, compliance, and employee benefits needs to determine what services the PEO should provide. Research potential PEOs focusing on industry experience, certifications, and client reviews. Choose a PEO that aligns with your business values and needs. 

Next, negotiate the service agreement, paying close attention to pricing, services offered, and termination clauses. Finalize the contract that outlines the partnership’s scope and expectations. Develop a clear, structured onboarding plan for employees to ensure a smooth transition, including training sessions on new processes and regular communication updates. 

Streamline the transfer of employee records, payroll, and compliance reporting to the PEO, ensuring data is clean, accurate, and in the specified format. Designate individuals responsible for overseeing the transition and collaborate closely with the PEO to coordinate all aspects of the transfer. Communicate regularly with employees throughout the process to address concerns and adjust the onboarding schedule as necessary. 

Ensuring a successful relationship with a PEO requires regular, effective communication, clear objectives, and shared metrics for assessing progress. Alternatives to a PEO include HR software solutions, in-house HR departments, and administrative services organizations (ASOs). A PEO offers a co-employment arrangement so you need to analyze what your business is getting into. 

How can you ensure a successful relationship with your chosen PEO?

To ensure a successful relationship with your chosen PEO, maintain clear communication, regularly review service performance, and adapt the partnership as your business evolves. Define specific goals and communicate expectations clearly to align both parties’ objectives. Assign individuals within your organization to facilitate communication and ensure everyone knows who to reach out to with questions or concerns. This fosters transparency and keeps all parties informed.

Regularly discuss service performance and address any areas needing improvement. Establish key performance indicators (KPIs) to measure the quality of services provided and review these metrics frequently. Engage in strategic planning sessions with your PEO to tap into their expertise in HR practices, compliance, and industry trends. 

Ensure your PEO provides comprehensive onboarding for your employees, reducing anxiety and fostering a productive relationship from the start. This involves explaining the benefits and resources available through the PEO and coordinating educational and training sessions to build a more engaged and informed workforce. Regularly review and adapt the resources and support provided as your business grows and changes. This may involve introducing new services or adjusting existing ones to better meet your evolving needs. 

What are the alternatives to using a PEO?

Alternatives to using a PEO include in-house HR departments, HR outsourcing (HRO), and working with consultants for specific HR tasks. In-house HR allows companies to maintain complete control over their HR functions, fostering a strong company culture and direct communication. This model is beneficial for businesses with unique or complex HR needs that require a dedicated team. However, it’s typically more expensive due to the costs associated with hiring, training, and maintaining a full HR staff.

HR outsourcing (HRO) offers a middle ground, allowing businesses to delegate certain HR tasks while retaining control over others. HROs provide a suite of services that can be customized depending on the company’s specific needs, offering flexibility and scalability. This model is especially beneficial for companies that need expert support for certain functions like payroll, compliance, or benefits administration but prefer to manage other aspects of HR internally.

Working with consultants or freelance HR professionals for specific HR tasks is another alternative. This approach allows companies to access specialized expertise on an as-needed basis, making it a cost-effective solution for managing complex or one-off HR projects. Consultants can offer targeted support, from developing HR strategies to navigating regulatory compliance, without the need for a long-term commitment.

Is a PEO right for every business?

No, a PEO is not right for every business, especially for companies with strong internal HR departments or those that prefer more control over HR operations. Businesses with fewer employees or those in specialized industries might find the costs associated with PEO services outweigh the benefits. Companies that already have robust internal HR teams may see minimal additional benefit from a PEO partnership, as they can already manage HR tasks effectively. 

What is a PEO exactly?

A PEO is a third-party service provider that enters into a co-employment relationship with businesses to manage HR functions. This arrangement allows businesses, especially small and medium-sized, to outsource complex HR tasks, including payroll, benefits administration, compliance with local and federal employment laws, and risk management.

In managing payroll, a PEO assumes responsibility for processing employee paychecks, withholding and filing taxes, and ensuring accurate record-keeping. For benefits, PEOs leverage the pooling of employees from multiple client businesses to negotiate better rates for health insurance, retirement plans, and other employee benefits. They stay abreast of changing employment laws and regulations to ensure that client businesses adhere to these rules, thereby reducing the risk of non-compliance penalties.

In risk management, PEOs work to improve workplace safety and manage workers’ compensation claims. By developing comprehensive risk management strategies, they help lower the overall risk and associated costs for client businesses. This co-employment model provides businesses with a dedicated team of HR professionals who specialize in various areas, offering a comprehensive solution that saves time, reduces costs, 

What is the difference between a PEO and other HR outsourcing options?

The difference between a PEO and other HR outsourcing options is that a PEO assumes a co-employment role, while others, like HROs, handle only specific HR functions without shared employment responsibilities. The key difference lies in the level of involvement and responsibility assumed. PEOs engage in a deeper, more integrated partnership with client companies, and in contrast, other HR outsourcing options offer flexibility without the co-employment arrangement.

Can you switch PEOs if you’re not satisfied?

Yes, you can switch PEOs if you’re unsatisfied, though it requires careful planning to ensure continuity in payroll, benefits, and compliance management. When considering a switch, businesses should notify the current PEO of the intent to terminate the contract, following any notice requirements. Inform employees about the change and how it will benefit them and develop a transition plan that covers timelines for notifying the current PEO, transferring employee data, and ensuring compliance with state and federal laws.