Why use a PEO?

Companies who use PEO services are stronger, more profitable and offer better benefits giving them a competitive edge in hiring and performance.

According to a study conducted by NAPEO, companies who use PEO services

  • Are 50% less likely to go out of business
  • Have a 10% – 14% lower employee turnover
  • Pay 40% less on health insurance premiums

They also experience these benefits:

  • Doubling of an annual revenue growth compared to similar companies that do not use a PEO
  • A 16% higher likelihood of increasing profitability
  • 7-9% more growth than businesses not working with a PEO
  • 4-5% higher employee engagement
  • Employees have better employee benefits, many of which are typically only offered by large corporations such as 401(k) plans; health, dental, life, and other insurances; and dependent care


 What is a PEO?

A Professional Employer Organization, frequently referred to as Employee Leasing, offers a variety of services to help run a business.  By using collective buying power, a PEO may help their clients save money while getting better quality services as well. PEOs can save time by taking over responsibilities of managing certain business functions on behalf of the business.

 Who uses a PEO?

Small to mid-size businesses tend to benefit the most from PEO services although larger companies are growing their use of PEO services. According to NAPEO, the average client of a PEO is a business with 19 worksite employees.  Recent trends show that larger businesses are using PEOs because of their technology solutions and expertise in HR management. PEOs can work with with companies that have over 500 employees by partnering with their internal HR teams. PEOs are used across a wide variety of industries.  Many PEOs have industry specific services.

 How does a PEO work?

A PEO co-employs their clients’ worksite employees through a contractual allocation and sharing of defined employer responsibilities. This allows the PEO to remit wages and withholdings of the worksite employees while reporting, collecting and depositing employment taxes with local, state and federal authorities.  In addition, a PEO can also help their clients obtain collective buying power for other services such as employee benefits, workers compensation and much more.

 Why use a PEO?

PEOs save businesses time by managing some of the responsibilities of the client’s business. PEOs save businesses money by leveraging the collective buying power of all of their client members.  This buying power gives businesses who use PEOs better quality benefits and services than they could otherwise obtain independently.

 Does a business owner give up control of their business?

No. The client of the PEO retains ownership and control over their operations. As co-employers, a PEO and their client have shared responsibilities and liabilities as set forth in their Client Service Agreement (CSA).  Each PEO and client agreement is unique.

 Can a PEO help with Workers Compensation?

Yes, a PEO can help clients obtain Workers Compensation coverage.  This can be especially helpful for companies that have experienced workers comp claims and may be having difficulty getting coverage or feel that they may be paying too much for the required coverage.  Because of collective buying power, a PEO can often save their client’s money for this type of coverage.