Professional Employer Organization (PEO)

Real savings. Increased efficiency. Greater peace of mind. Find out how you can benefit from a co-employment relationship with a PEO.

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98% of PEO clients would recommend a PEO to a small or midsized business colleague

Source: PEOs: Good for Businesses and Their Employees, National Association of Professional Employer Organizations, September 2017.

See how PEO benefits add up

Save time and money, protect your business, move forward with confidence and offer employees access to Fortune 500®-caliber benefits. With a PEO from ADP®, your small (1-49 employees) or midsized (50-999 employees) business gets dedicated guidance and all-in-one technology to help you manage your HR, talent, benefits and risks, and achieve concrete results.

What is a PEO?

With a PEO, both you and ADP have a co-employment relationship with your employees. ADP assumes certain employer responsibilities such as payroll processing and tax filing. You maintain control of your business and all of the management responsibilities. It works hand-in-hand with your business to focus on the services that you need most:

  • Employee benefits, such as healthcare coverage and a 401(k) retirement plan
  • Payroll and payroll tax administration
  • Attracting, developing, engaging and keeping great talent
  • Workers' compensation
  • Regulatory compliance assistance
  • Support with employee relations and employment issues
  • Access to technology to manage HR

Why partner with a PEO?

More for your money

Most companies that invest in a PEO find savings, although where they find it may fluctuate from year to year. Many discover that they can offer a richer overall benefits package than they could afford to offer on their own — and at a competitive price.

Companies who invest in a PEO may also find that they uncover savings when they:

  • Access benefit packages including health care and 401(k)
  • Improve turnover
  • Reduce workplace injuries and employees missing work
  • Avoid costly compliance missteps
  • Avoid an employee lawsuit

Cambridge Management Services, Inc. Partners With ADP TotalSource® for HCM

Hear from Cambridge Management Services on how their ADP® partnership helps them focus on leveraging employee engagement, proactive Affordable Care Act (ACA) compliance and benefits strategies that result in bottom-line impact.

Better benefits attract better talent

A PEO lets you offer a richer, more complete benefits package than you could likely provide on your own — everything from medical, dental, vision and life insurance; commuter benefits; long- and short-term disability; 401(k) plans and more.

What’s the payoff? Better benefits can help you:

  • Attract and retain employees
  • Compete with larger companies for talent
  • Position yourself as an employer of choice
  • Support the varied benefits needs of your diverse workforce

With a PEO, you don’t have to be the benefits point person. ADP communicates directly with your employees leading up to annual benefits enrollment to help educate your staff about their available choices. Your employees enroll online or by phone, and they speak directly with ADP when they have policy questions, life changes or need to report an incident.

Minimize the risks

ADP can help significantly reduce the risks of being an employer.

Lower your legal liability

By following our guidance and processes, you may be covered by our legal defense benefit if an employee sues your company. ADP TotalSource® is the only PEO to offer this benefit.

We know compliance so you can rest easy

Compliance is a central component of our PEO. Along with our systems and processes, our team of experts knows the latest HR compliance rules and regulations.

Create a safer workplace

A risk and safety consultant will collaborate with and advise you on your worksite-safety program, training and claims, and help with compliance for your specific industry. This can help to:

  • Minimize workers' compensation claims, legal liabilities and risk
  • Minimize employee injuries and employees missing work
  • Reduce fines and penalties
  • Uncover workplace-injury trends

4.85 out of 5 stars from clients who've rated us on Capterra

One less thing to worry about

A PEO can mean greater efficiency. You focus on managing and growing your business. We'll be your advisor on how to handle HR, payroll, benefits, compliance and talent.

We also partner with our clients to tackle today's talent topics, such as:

  • Growing your staff to successfully support your business model
  • Hiring the right people for your company
  • Understanding turnover and how to fix it for your company
  • Developing your staff for next career steps
  • Handling employee issues, harassment claims and much more

“I view the relationship [with ADP] as a partnership more than just a customer-supplier relationship. ... It can be a simple issue like updating a policy all the way to complex issues ... we have extra help out there that can help us navigate issues as we grow.”

—Arlyn Small, Senior VP Human Resources


What is co-employment?

The contract between a client and the Professional Employer Organization (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, benefits, payroll and tax infrastructure.

What is a certified PEO (CPEO)?

Certification by the IRS gives business owners confidence that a PEO partner meets the high standards set by the U.S. government and is recognized as the employer for federal employment tax purposes if certain other conditions are met.

A certified PEO is:

  • Treated as the employer of worksite employees for federal employment tax purposes
  • Allowed to pay wages and collect and remit federal payroll taxes on behalf of a client
  • Required to meet IRS certification requirements, including financial review and reporting requirements
  • Required to post a bond, up to $1 million, to guarantee payment of employment

ADP TotalSource is a certified PEO.*

What does working with a CPEO ensure?
  • Fiscal Ownership — CPEOs are solely responsible for the payment of federal employment taxes if certain conditions are met; if a company utilizes a non-certified PEO that doesn’t pay their taxes, they could be liable for the unpaid federal employment taxes, late penalties and interest related to their employees
  • Required Federal Standards — Because CPEOs can be solely responsible for the payment of federal employment taxes, they must meet specific requirements regarding tax status, background, experience, business location, financial reporting and more
  • Financial Guarantee — The certification program also requires a CPEO to post a bond each year of up to $1 million guaranteeing payment of its federal employment tax liabilities
  • Tax Restart Elimination — Certification eliminates the wage-base “restart” for certain federal payroll tax purposes for PEO customers that join or leave a CPEO relationship midyear
  • Customer Eligibility for Tax Credits — Certification allows customers of CPEOs to qualify for specified federal tax credits that they would be entitled to claim if there were no PEO relationship
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 and withholding and for paying payroll taxes, maintaining workers’ compensation coverage, providing employee benefits and career development programs, providing human resources guidance, and providing worksite safety guidance. You continue to operate your business as you did prior to the PEO relationship. You remain an employer and 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?

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, along with the benefits and expertise of a large organization.

If you want help in this area, ADP can help you shape your company culture and employment brand to represent the company you are today — or wish to be in the future.

Will a PEO help me stay in compliance with ever-changing employment laws?

A PEO gives your business a risk partner that shares certain employment risks. As a vested partner, ADP TotalSource tasks our risk-and-compliance experts to keep up with ongoing changes to HR and safety regulations. We can help you react and comply with the changes that affect your business.

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?

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?

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?

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, while with others, like ADP TotalSource, 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 nationwide, while others are limited to a state or region; even if you plan to stay local, you’ll want to consider a PEO that provides the most opportunities for your business
  • Services: Different PEOs 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

Learn more about our PEO offering, ADP TotalSource.

Who is in control of the employees? Where does the control/responsibility end for the PEO and start for the owner?

You have complete control over whom you hire and the work they perform day in, day out.

What is the definition of "small-to-midsized” businesses?

ADP's PEO supports businesses with as few as two employees and as many as several thousand employees.

Does the PEO actually put a person on-site for each client?

ADP's PEO provides you with dedicated experts, some of whom will come on-site when appropriate. The individuals are not, however, at a desk in your office every day.

Who we work with

Join the growing community of businesses leveraging ADP’s powerful technology, expertise and insight.

Cimquest 1-49 Employees Manufacturing Bedminster, NJ

4C Foods Corp 50-999 Employees Manufacturing Brooklyn, NY

Nina Footwear 50-999 Employees Retail New York, NY

American Campus Communities 1,000+ Employees Real Estate Service Austin, TX

KidPik Corp. 1-49 Employees Retail New York, NY

Safe Homes of Orange County 1-49 Employees Nonprofit Newburgh, NY

Grand Street Medical Associates Health Care Kingston, NY

Primetals Technologies 1,000+ Employees Manufacturing Alpharetta, GA

See what others say about working with ADP

Recommended product

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ADP TotalSource® For 1-1,000 Employees

A professional employer organization (PEO) with dedicated guidance and advanced cloud technology to manage your HR, talent, risks and payroll — plus access to Fortune 500®-caliber employee benefits.


Awards and Recognition

G2 Crowd
G2 Crowd Leader

ADP Workforce Now® | Spring 2019

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HR Technology Conference
Awesome New Technology

Benchmarking, Powered by ADP® | 2016

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IRS-Certified PEO

ADP TotalSource® | 2018

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*The IRS does not endorse any particular certified professional employer organization. For more information on certified professional employer organizations, go to

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