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What is a PEO?

PEOs (Professional Employer Organizations) partner with companies to provide comprehensive HR outsourcing to help manage a company’s human resources, employee benefits, payroll, and regulatory compliance. A PEO works through a co-employment arrangement, which means the PEO contractually shares certain employer responsibilities with the company.

What are the benefits of a PEO?

By partnering with a PEO, companies are able to:

Benefits

Provide employees
access to high-quality,
comprehensive benefits

Regulations

Minimize risk and stay
on top of regulations

HR Tasks

Minimize administrative
HR tasks

HR Support

Gain HR support
without increasing headcount

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Did you know?

Businesses that use PEOs for at least 4 quarters are approximately 50% less likely to go out of business.*

Source: “Professional Employer Organizations: Keeping Turnover Low and Survival High,” NAPEO, 2014

*Year-over-year comparison between similar companies and populations

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Annual employee turnover is 10–14% less for companies that use a PEO.*

Source: “Professional Employer Organizations: Keeping Turnover Low and Survival High,” NAPEO, 2014

*Companies using a PEO for at least 4 quarters compared to other companies

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Who uses a PEO?

Millions of workers in the U.S. are currently co-employed through PEOs. This model is generally appropriate for small and mid-sized businesses.

PEOs are a good fit for almost all industries, including (but not limited to):

  • Real estate and property management
  • Computer services
  • Securities brokers and dealers
  • Engineering services
  • Health services
  • Legal services
  • Management consulting services
  • Business services
  • Accounting, auditing, and bookkeeping
  • Manufacturing
  • Plumbing/HVAC
  • Electrical
  • Insurance
  • Wholesale
  • Not-for-profits
  • Technology

Is a PEO right for your business?

Take this simple quiz to see if a PEO can help with your HR Challenges.

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 Frequently Asked Questions

What is co-employment?

What is co-employment?

The contract between a client and the PEO establishes the co-employment relationship. The PEO assumes certain aspects of employer responsibilities. Your employees become co-employed by both you and the PEO, thereby giving you access to the PEO’s built-in HR, compliance, benefit, payroll and tax infrastructure.

Does partnering with a PEO mean losing control of my business?

Does partnering with a PEO mean losing control of my business?

No. It is important to note that every PEO is a little different. ADP’s PEO is responsible for processing your employees payroll, withholding and paying payroll taxes, maintaining workers’ compensation coverage, providing employee benefit and career development programs, providing human resources guidance, and providing worksite safety guidance. However, you continue to operate your business as you did prior to the PEO relationship. You do not lose any of your management or supervisory rights.

In fact, because PEOs help you manage HR and minimize risk, you actually have greater control of your business because you can focus on your priorities—and not HR.

Does partnering with a PEO affect my company culture?

Does partnering with a PEO affect my company culture?

No. In fact, with ADP’s PEO, we learn your challenges and aspirations, and recommend strategies to help you achieve your goals. You are able to leverage the best of both worlds: the flexibility and control of owning your own business, and the benefits and expertise of a large organization.

Will a PEO help me stay in compliance with the Affordable Care Act (ACA) and other government regulations?

Will a PEO help me stay in compliance with the Affordable Care Act (ACA) and other government regulations?

Yes, but not all PEOs offer the same support. There are many financial and administrative burdens associated with ACA regulations, and even more changes are coming. A PEO, like ADP TotalSource, will provide you with comprehensive ACA support to help you stay on top of all the new regulations, and manage annual reporting for you.

A PEO will also help you comply with other complex employer requirements.

By partnering with a PEO, do I also become a co-employer of other companies’ employees?

By partnering with a PEO, do I also become a co-employer of other companies’ employees?

No. The relationship between you and the PEO is distinct from the PEO’s relationship with other companies. No contractual relationship is ever created between all of the PEO clients. You are not responsible for any employees other than your own.

What is the difference between a PEO and HR outsourcing?

What is the difference between a PEO and HR outsourcing?

In a co-employment relationship, you share certain employer responsibilities with the PEO that cannot be achieved through typical HR outsourcing. For instance, with ADP’s PEO you gain access to robust benefits offerings and employee perks typically only provided by large organizations, and you may get additional protection for your business should you face an employee lawsuit.

Are all PEOs the same?

Are all PEOs the same?

No. While the co-employment model is a part of every PEO, there are a few key ways in which providers differ from one another:

  • Flexibility: Some PEO providers offer a one-size-fits-all PEO, where others scale to your unique needs.
  • Partnership: With some PEOs, you get choices but are still left with the heavy lifting of making tough decisions on your own. With others, like ADP, your dedicated specialists are by your side to help you figure out what’s best for your business, your employees and your bottom line. You’ll want to consider the level of partnership and guidance you need when evaluating your options.
  • Dependability: Since the PEO helps manage critical aspects of running your company, you’ll want to consider the provider’s financial stability and track-record.
  • Location: Some PEO providers work nation-wide, while others are limited to a state or region. Even if you plan to stay local, you’ll want to consider which provides the most opportunities for your business.
  • Services: Different PEO offer different ranges of service. Because all PEOs are not created equal, you’ll want to clearly understand the scope of each PEO you’re evaluating to ensure you’re getting the full value.

What makes ADP TotalSource different?

What makes ADP TotalSource different?

With over 60 years of experience and unmatched expertise, ADP is uniquely positioned to help businesses that want to adapt faster to shifting business challenges and flourish. Through its best-in-class PEO, ADP TotalSource, clients are provided with:

  • A comprehensive range of services across HR, talent, benefits, and compliance
  • Fortune 500® caliber benefits
  • Guidance from HR specialists who are dedicated to your business
  • HR strategies and programs that are customized to your unique needs and goals
  • Powerful technology that creates administrative efficiencies and provides insights on your business and the competition
  • Nationwide capabilities

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