PEOs provide HR, payroll, and benefits services through co-employment relationships. Unlike EORs who are the sole employer, PEOs share employer responsibilities with clients. This model is common in the US and offers certain advantages.
Co-Employment Structure
In co-employment, the PEO handles administrative employer functions like payroll, taxes, and benefits. The client maintains day-to-day direction of work. Both are employers for different purposes. This differs from EOR where the EOR is sole employer.
PEO Benefits
PEOs provide access to better benefits through pooled buying power, HR expertise and support, workers compensation coverage, payroll and tax administration, and regulatory compliance assistance. Small businesses particularly benefit from these economies of scale.
Geographic Limitations
Traditional PEOs require client entities in each jurisdiction. They are not a substitute for local presence like EORs are. Some providers offer both PEO services domestically and EOR services internationally to address different needs.