It is sometimes said that the leased employee is simply a ‘borrowed servant’ in the client company. In practical terms, this means that an employee leasing company could re-assign an employee to a different client company, without any change in the underlying contract. An employee leasing company offers businesses short-term or per-project staffing solutions by providing their clients with workers who can work on-site at the client’s office or place of business. While an employee leasing company supplies businesses with workers, a PEO does not. Instead, a PEO provides employee-related services, such as payroll and benefits. And unlike employee leasing, when your contract with a PEO ends, your employees remain your employees.

1. Want to discover how a co-employment relationship with ExtensisHR can help you reach your business goals?
2. In practical terms, a PEO will handle tasks such as payroll processing, benefits administration, workers’ compensation insurance, and regulatory compliance on behalf of their clients.
3. Depending on your situation, employee leasing companies can provide your business with short-term or per-project staffing solutions.
4. Although there are many great benefits that come with working with a professional employer organization, there are a few disadvantages you should be aware of.
5. While it is still common for some companies to call themselves an ‘employee leasing’ company, they generally operate as a PEO and are subject to the same rules and protections as companies that call themselves a ‘PEO’.

Some PEOs offer expanded HR services as well, such as employee training, recruitment and performance management. The relationship between your business and a PEO is often referred to as a partnership. While PEOs are designed to help you comply with labor laws, there’s not always a guarantee they will.

Do I Need To Use All of a PEO’s Services?

Vested HR provides PEO HR solutions and services that will help take your company to the next level of success. We work with each of our clients to address their needs and the needs of their employees. As an employer, businesses have a wide variety of potential liabilities that can lead to high penalties whenever they’re violated.

This means, for example, either of the joint employers can hire or terminate an employee, set starting salaries and grant wage increases. Contrast this with co-employment, where only one employer—the PEO’s client—has control over the employees. Alternatively, employers may be able to offer a higher quality benefit package for roughly the same amount of money. An improvement in the quality of benefits will help the firm attract and retain better employees and improve employee morale. The specifics can vary, but any business looking to lighten the load of work stands to benefit.

Maintain Compliance

Add to that the fact that most temp agencies pay weekly and it becomes an important consideration for someone who needs a job quickly. Cassie is a deputy editor, collaborating with teams around the world while living in the beautiful hills of Kentucky. She is passionate about economic development and is on the board of two non-profit organizations seeking to revitalize her former railroad town. Prior to joining the team at Forbes Advisor, Cassie was a Content Operations Manager and Copywriting Manager at Fit Small Business. When she’s away from her laptop, she can be found working out, trying new restaurants, and spending time with her family. Who knows, perhaps a PEO solution can be a competitive advantage for your business.

Labour Hire Licensing Laws in Australia: Compliance and Penalties

The PEO typically remits wages and withholdings of the worksite employees and reports, collects and deposits employment taxes with local, state and federal authorities. The PEO also issues the Form W-2 for the compensation paid by it under its EIN. The client company retains responsibility for and manages product development and production, business operations, marketing, sales, and service. The PEO and the client will share certain responsibilities, as determined in the CSA.

This confusion may stem from the relationship between a PEO and its client, called co-employment. And while many think employee leasing and co-employment are the same, they are very different. The number of employees covered by a professional employer organization in the U.S. When a business enters into a contractual what is peo employee leasing company arrangement with a PEO, it’s basically outsourcing its administrative HR tasks. If you’re a small business owner looking for a smart way to handle your HR functions, a PEO may be exactly what you need. Make sure you do your research and choose a reputable provider with a proven track record of success.

Learn more about employee leasing.

Contact us if you’re ready to find out if working with a PEO is a smart business move for your company! Our team is ready to answer any questions or concerns about the benefits of working with professional employer organizations. When you enter into an employee leasing arrangement, the employee leasing company’s employees work for you but you do not employ them—as the term “leasing” indicates, it’s a lease arrangement.

Benefits of Employee Leasing

This allows you to budget in other expenses for the year, including the hiring of more temporary or permanent employees. PEO is similar to the concept of ‘Employer of Record’ (EOR) services, where a third-party company becomes the legal employer of a workforce and takes over the compliance responsibilities of an employer. For a breakdown on the exact difference between EOR and PEO services check out our EOR vs PEO guide. With PEOs, the employees are still yours and the fees are way less than leasing and staffing companies. PEOs are ideal for small to midsize businesses (SMBs) who wish to outsource their HR tasks. Whether you’re in real estate, retail, engineering, healthcare, law, accounting, manufacturing, information technology (IT), wholesale or any other industry, a PEO is worth considering.

A PEO provides a client company assistance with things like payroll, tax administration and human resources solutions. Additionally, a global PEO specialises in global employment and tax laws which means that legal compliance is handled. The benefit of this for the client company is that they have an employee that undergoes day-to-day tasks within the company but the HR responsibilities, such as payroll and employee tax withholding are outsourced to the PEO. Employee leasing is an arrangement where an employee leasing company supplies the workers a business needs, often on a short-term basis or for a longer term on a per-project basis. A PEO acts as a co-employer that provides services for your business and its employees.

In the relationship between the PEO and the client company, the PEO serves as the “Employer of Record” (EOR) for insurance and tax purposes. This means that the PEO is technically the legal employer but the client company still has day-to-day involvement with the employee and provides management instructions to the employee. PEO employee leasing is similar because it involves handling many of the same responsibilities and tasks. The goal https://adprun.net/ is to create the same type of employment relationship, but between the PEO and the client. A PEO will not provide workers, but will manage the HR tasks of your current employees (and any new employees you hire). According to the National Association of Professional Employer Organizations (NAPEO), the confusion exists because, historically, it was common to use employee leasing terms to describe the services provided by early PEOs.

It can allow you to outsource important HR functions, such as payroll, benefits and training while ensuring compliance with federal and state employment laws. By working with a PEO, you may free up your time and focus on improving your products or services and growing your business. Also known as a temporary employment arrangement, it’s the practice of supplying new workers or contractors usually on a temporary basis. Often times employee leasing is for work on a specific project that has a start and end date. Leasing employees is ideal for companies that want to expand abroad and want to make the process as efficient and cost-effective as possible.

Working with a PEO, especially a Certified PEO, ensures small business owners that they remain compliant with all HR and employment related laws and regulations. Instead of having to worry about HR, business leaders can focus all their efforts on other activities that can grow the company. The good news with leased employees is if you want to let them go you just call your staffing salesperson; end of the story. Leased employees are not a permanent or cost-effective solution to growing a small business.