Frequently Asked Questions
Q. Who uses a PEO?
A. The average client of a PEO is a small to mid-sized business with 5-50 employees, though larger businesses also find value in a PEO relationship. PEO clients come from every type of industry or business such as: accounting firms, manufacturers, doctors offices, wholesale and retail operations, artesian contractors (plumbers, electrician, carpenters, roofers, etc…) and many more.
Q. How many Americans are employed in a co-employment Professional Employer Organization arrangement?
A. It is estimated that 2-3 million Americans are currently co-employed in a PEO arrangement. PEOs serve companies and their workforces in every state and the industry continues to grow more at an average of 15% each year. Today, it is estimated there are approximately 1000 PEO companies.
Q. What is the difference between employee leasing and a PEO arrangement?
A. Older statutes governing PEO services still use the term “employee leasing”, however there are several differences between the employee leasing and PEO concepts. Employee Leasing companies were formed based on a “sole employer” concept, whereby the employee leasing company was the employer of the leased employees. PEOs are based on a “co-employment” relationship between the Client Company and PEO with the client’s workforce. Today, the major distinction is that employee leasing or staffing service supplies new workers on a temporary or project specific basis. These leased employees return to the staffing service for reassignment after completion of their work with the client. Some would define employee leasing as a supplemental, temporary employment arrangement where one or more workers are assigned to a customer for a fixed period of time, often for a specific project. This concepts creates little long-term equity or investment between the worker and customer (much like leasing a car for two years and knowing that you are using it for a specific need but not building any long-term equity). A Professional Employer Organization or co-employment arrangement, however, involves all or a significant number of the client’s existing worksite employees in a long-term, non-project related, employment relationship. The PEO assumes employer responsibility for employee administration, workers compensation, labor compliance, employment tax filings, employee files, health benefits and other human resource purposes. Through the use of a PEO relationship, client companies make a long-term investment in their workers, because in most cases, the Professional Employer Organization provides access to health benefits, retirement savings plans and other critical employee benefits for their worksite employees. In the event a PEO relationship is terminated, the co-employees will cease to work for the PEO but will continue as employees of the client.
Q. What is the difference between temporary staffing services and a PEO arrangement?
A. Like employee leasing, a temporary staffing service recruits employees and assigns them to clients to support or supplement the client’s workforce in special work situations, such as employee absences, temporary skill shortages or seasonal workloads. These workers are traditionally only a small portion of the client’s workforce. The Professional Employer Organization service contractually assumes and manages employee administration for a client’s entire workforce. Industry ratios identify the PEO arrangement as a long-term relationship with nearly 90% of our clients and worksite employees remaining with the PEO for a year or longer. Worksite employees participate in the PEO’s full range of employee benefits including, health benefits, dental and life insurance, vision care and retirement savings plans.