What is a PEO? How Does the PEO Model Work?

In the business world, PEO stands for Professional Employer Organization. A PEO works with businesses and organizations to help manage payroll, benefits, compliance, and other HR and administrative duties.

What is a PEO? How Does the PEO Model Work?

According to NAPEO research, “Small businesses that work with a PEO grow 7 to 9 percent faster, have employee turnover that is 10 to 14 percent lower, and are 50 percent less likely to go out of business.”

PEOs such as Resourcing Edge mitigate risk and keep costs at a minimum by acting as the employer of record and managing critical HR and employment-related risks and responsibilities.

 

The Co-Employment PEO Model

In order for a PEO to manage workers’ comp, W-2s, 1099s, payroll, tax filings, benefits, PTO administration, and other administrative burdens, a PEO establishes a co-employment relationship with its clients to distribute employer responsibilities. 

As the employer of record, the PEO takes on the responsibility of critical human resource responsibilities, including HR, payroll, benefits, tax filings, and risk management. Meanwhile, the client retains the responsibility for its product or service, managing employees, and directing the day-to-day business operations. 

A contract, typically called a client service agreement (CSA), clearly defines the relationship. By sharing employer responsibilities, you can spend more time focusing on your business and the bottom line.

The Day-to-Day of a Professional Employer Organization 

As a co-employer, the PEO is responsible for the day-to-day administration of a wide range of HR functions, including:


Acting as the employer of record for these purposes allows your PEO to assume much more responsibility than a payroll or recruitment company can on their own. 

Rather than outsourcing different HR functions to different service providers, the PEO model allows you to streamline everything in one place.

Biggest Benefits of PEOs

PEOs offer a wide array of services and benefits to their clients, helping them handle their HR and employment-related needs so they can focus on the core of their business.

PEOs also provide your company with big-company benefits at low rates by pooling their buying power.

Access to High-Quality, Affordable Health Insurance and Benefits 

One significant benefit for small and medium-sized companies is access to efficiencies and cost savings associated with larger enterprises. PEOs are essentially collections of companies that pool their buying power for high-quality, affordable benefits. 

PEOs can leverage their collective bargaining power to secure lower rates for benefits like health insurance, workers’ comp, retirement plans, and more. PEOs also handle the headache of managing relationships with insurance carriers, administering employee benefit programs, following regulatory requirements, and managing COBRA for terminated employees.

The end result is a comprehensive and cost-effective benefits program that helps companies attract, hire, and retain talent to grow their business and compete in the marketplace.

A PEO allows you to gain access to a wider range of benefits than a smaller company could get on its own: 

 

Resourcing Edge provides our clients access to Fortune-500 employee benefits plans.

We offer our clients national benefit plans from leading insurance carriers such as UnitedHealthcare and MetLife. Resourcing Edge is one of a select few PEOs that has partnered with UnitedHealthcare to offer a wide assortment of fully-insured, ACA-compliant, national medical insurance plans. We have also partnered with MetLife to provide high-quality national dental, vision, disability, and life insurance plans. 

SaaS Technology Solutions

Many PEOs offer HR tools and information through Software-as-a-Service (SaaS) technology.

Using these self-service portals, employees can log into their accounts at any time to access personal information about their paychecks, direct deposits, overtime, paid time off (PTO), benefit plans, and more.

On the client side, employers are able to make quick changes to things like employee status, pay rates, and payroll. As a technology-focused CPEO, Resourcing Edge provides robust web-based management software, deployed in a SaaS environment, to save you time and money.

Our online self-service tools include: 

 

Additional PEO Services and Support 

There are many other services that PEOs provide in addition to things like payroll, taxes, and benefits.

Resourcing Edge also offers ongoing support and assistance for everything from benefits administration and risk management to job descriptions and paid-time-off policies.

Here are some additional services and strategies that PEOs provide: 

 

With HR specialists in every department, you can lean on Resourcing Edge to strategize procedures and processes to support the growth and success of your organization. 

Why You Should Use a Certified and Accredited PEO

It’s important that your PEO is certified, accredited, and bonded.

Resourcing Edge completed a rigorous process to meet the contractual, operational, and financial standards to qualify for accreditation by the Employer Services Assurance Corporation (ESAC). ESAC is an independent, non-profit accreditation and financial assurance organization for the PEO industry.

ESAC accreditation confirms all PEO key employer liabilities, compliance with state and federal regulatory requirements, and adherence to industry financial, ethical, and operational best practices.

Additionally, ESAC’s financial assurance program is backed by over $15 million in surety bonding, protecting accredited PEO clients, employees, taxing authorities and insurer. These surety bonds provide assurance of the timely and appropriate performance of key employer services.

Only 5% of the outsourcing service providers in the nation are accredited. 

As an ESAC accredited service provider, Resourcing Edge’s financial, operational, and ethical standards are independently verified by the industry gold standard. 

Certified Professional Employer Organization (CPEO)

The certified designation goes to any PEO that passes the voluntary certification by the IRS.*

Resourcing Edge is one of the first PEOs to be IRS Certified, which means our clients have less liability and more protection.

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

Gain the Competitive Edge with Resourcing Edge

Resourcing Edge is an IRS certified and ESAC accredited PEO with extensive experience serving clients in a broad spectrum of industries, including health care, home services, real estate, and restaurants. Clients range from small start-ups to global corporations. We create customized solutions to fit the specific needs of your business.

By using a Certified PEO such as Resourcing Edge, you can take your mind off the day-to-day hassle of payroll and HR administration and focus on what’s important: growing your business. 

Get access to SPHR and PHR-certified Human Resource Consulting and Advice as well as: 

 

We are your single source for HR operations, providing administrative relief and HR best practices through a convenient PEO model. 

Contact Resourcing Edge to learn exactly how we can help your business.