What is a PEO?
In a PEO or employee leasing contract, there is a true co-employment relationship. The employees become the employees-of-record for taxation and unemployment as well as for some benefit and workers' compensation policies. They remain under the jurisdiction and common-law employment of the business owner.
PEO's offer a wide range of services and a "bundled concept" of the co-employment package. Co-employment has been defined and recognized by the IRS, DOL, EEOC and most state governments.
Illustration of PEO/Client Co-Employment Relationship
Professional Employer Organization and Client (Worksite Employer) share a co-employment relationship regarding the employee.
The Service Contract specifies responsibilities and ties the employee to the Professional Employer Organization. Each employee will be required to fill out paperwork provided by the PEO. Various responsibilities are shared. Typical responsibilities that are placed with the PEO are the every day, non-revenue generating administrative tasks such as payroll, tax pay and file, unemployment administration, workers' compensation and its management, and much more.
Typical PEO's handle many of the Human Resource administration and advise employers on certain aspects of employment management. Worksite employers continue to handle the day to day hiring, firing, rate of pay, and disciplinary actions and other standard worksite employment issues.
What is an ASO?As with a PEO there are certain contractual relationship and obligations transferred to the ASO (Administrative Services Outsourcing). The most common services are Payroll, HR Assistance, Unemployment Management, I-9 compliance, employee manuals and training, and more. Most ASO platforms allow a wide range of services to choose from and still remain autonomous as far as the employment relationship is concerned.
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