Professional Employee Organization (PEO) services allow you to outsource all of your Human Resources (HR) needs, by allowing the service to co-employee your employees.
While there is HR software out there to help you manage employees, sometimes it's more cost-effective, at the very least from a time and administrative perspective, to simply outsource the whole darn thing.
This is not least because HR is not just about hiring and firing, wages and taxes, but also employee benefits, legal compliance, insurances, even staff training, and the general administrative headaches this can all amount to.
For smaller businesses the idea of outsourcing HR to a PEO services company can be especially appealing, but even mid-sized and enterprise companies can find it to be an attractive business proposition, especially when you factor in not just salaries as upfront cost for HR staff, but also the premises for them to work in, plus additional legal fees in different states for compliance purposes.
The advantage of a PEO is that they will cover every aspect of employee administration, not least as a co-employer means the PEO becomes the employer of record for tax purposes and responsible for all aspects of payroll. However, the business owner remains in control of the workforce, work culture, and has the final say in all hiring and firing decisions.
Additionally, PEO services can often leverage a benefits package that is more cost-effective and delivers more than your business could ordinarily offer on its own. The result is that you can offer more attractive benefits for employees while also allowing more time for you to be hands-on with your business, so you can focus on growing and expanding that rather than becoming bogged down by the paperwork from running of it.
We've therefore featured below the five best PEO service providers, and provided more information on their services, and what they can offer for your business.
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Best PEO services - at a glance
- ADP TotalSource
- Paychex PEO
- Engage PEO
- XcelHR PEO
The comprehensive PEO service
ADPTotalSource is a full-service PEO solution that aims to provide all aspects of outsourced HR while offering significant benefits and savings. TotalSource can cover most every issue of employment, from recruitment to HR and payroll, and provide guidance and technology to support their aims.
ADP also promises to be able to offer premium benefits, perks, and discounts normally available only to larger companies, not least when it comes to providing medical, dental, vision and 401(k) retirement plan benefits to employees. And because ADP TotalSource is IRS-certified, your business should be able to avoid IRS double-taxation.
Because your business would work with the co-employment model, ADP can provide business insights, as well as provide feedback on performance and career development options for employees. Aside from helping with employee retention, ADP can also advise on work safety issues and also provide liability defense as required.
Altogether, ADP TotalSource is a total PEO solution that aims to save businesses money by reducing their HR administration and management costs, while also adding key employee benefits that might not normally be available. The package is pretty comprehensive, and there are plenty of options to suit.
The PEO with clear price options
Paychex PEO offers two levels of service, Paychex PEO and Paychex PEO+. The normal PEO service covers human resource management, benefits administration and insurance plans (including state unemployment insurance), as well as payroll administration and a Learning Management System (LMS).
The LMS aims to provide in-work training development for employees using an online platform which is mobile-friendly, in order to improve on employee retention. For the normal PEO service you can select courses from the Paychex training library, but with the PEO+ service you can upload your own training materials and courses to the platform.
Paychex PEO also offers upfront pricing with no hidden fees, and detailed invoicing to ensure that costs are clear. There's no contract term, so there are no penalties for cancelling the service at any time. The service is IRS certified, and accredited by the Employer Services Assurance Corporation (ESAC). The Paychex PEO+ service also includes an HR consultant service to provide guidance, as well as Employment Practices Liability Insurance (EPLI).
The PEO for mid-sized businesses
Engage PEO is a PEO service for small and medium-sized businesses, offering a range of possibilities when it comes to HR services, payroll, compliance, and benefits, as well as covering worker compensation and risk management.
The HR services includes recruitment and training, time keeping records, performance management, as well as compliance and job description audits. It also covers payroll tasks including full processing, employee self-service, and of course tax deductions. For compliance it covers a full range of work and employment legislation, not least EPA, ADA, FMLA, ERISSA, FLSHA, and OSHA, as well as legal requirements by state.
Engage can also provide a wide range of benefits and benefits administration services, not least relating to medical insurance, group vision and dental insurance, life and disability insurance, as well as fiduciary services for the direct management of employee 401(k) plans.
Altogether, Engage PEO offers a good range of features and options for mid-sized businesses, and is certified by the IRS and accredited by ESAC.
Outsourced industry expertise
TriNet is another company that offers the range of PEO services, not least payroll, HR expertise, benefit options, and risk management. What TriNet does differently to other PEO companies, though, is that its guidance team is made from specialists to match your industry rather than general advisors.
This means that rather just outsourcing your HR, you're also getting expert advise specific to your business and market segment, which means TriNet can potentially provide more penetrating insights when it comes to all aspects of human resource services, from recruiting and onboarding, to benefits and compliance issues.
Additionally, like other PEO services, TriNet can leverage premium benefits packages for your employees, but because of their experience can help shape these more specifically to your employee needs for staff retention. They also provide compliance on all issues of employment law, from ACA, COBRA, disability and state filings.
The TriNet PEO service also includes a technology platform for desktop or mobile that you and your employees can make use of. Managers can build their own dashboards, and employees can access their payment records as well as book their own vacations and make simple changes such as to marital status as required.
As well as data and analytics being available, TriNet also provides an expenses management platform which can also integrate with Netsuite and Quickbooks.
Making PEO available to small businesses
XcelHR PEO is just one of a number of outsourcing services the company provides, which includes general HR services as well as Administrative Service Organization (ASO).
What makes XcelHR standout is that they are specifically focused on small business needs, and don't demand a minimum number of employees to use their services.
As expected, XcelHR covers a broad spectrum of PEO services, not least human resources management, payroll and tax administration, talent acquisition, benefits administration, retirement services, and risk management.
Applied together they are intended to help make time savings, improve productivity, business compliance, control costs, and enhance business growth. In this regard, XcelHR offers a good all-round PEO service that most small businesses might otherwise struggle to access.
Pricing varies according to the number of employees to be covered, and this can either be a straight monthly cost, or a percentage of your payroll amount.
The one negative is that although XcelHR is a member of the National Association of Professional Employer Organizations (NAPEO) it isn't certified by the IRS or accredited to ESAC.
More PEO company options
While we've featured the companies we think are the best overall, different providers may offer services that are better suited to different companies. This is especially the case as the size of the company, and how established it is, will dictate your HR needs. Start-ups may need to build-in scaleability from the start, while larger businesses may need flexibility to cope with employee churn.
To help you make the right choice, we're therefore listed additional companies that may be worth your while to also check out:
Justworks offers payroll, benefits, HR, and compliance in a single platform to make it easier for you to manage exployees. Justworks provides full service support and HR consulting as and when required on top. The company is also IRS Certified Professional Employer Organization.
InfinitiHR offers a scaleable turnkey solution to cover your HR management, organization, and employment liabilities. The company provides a wide range of information and help for managing private business and government departments, as well as settling all claims and payments as required.
Able HR provides a one-stop for human resources, payroll, taxes, insurances and benefits. The company aims to reduce your costs while maximizing benefit opportunities available to employees. AbelHR is also a Certified Professional Employer Organization.
Acadia HR offers a range of PEO, HRO, and payroll services for companies of all sizes. The company focuses on comprehensive payroll services, full HR delivery, employment policies and procedures, as well as new hire management. The intended result is to not just save you time but also retain your most valuable employees.