Frequently Asked Questions about PEO Companies

PEO stands for Professional Employer Organization.

How a PEO Company Works for You

A PEO acts as the “Administrative Employer” while the client company acts as the “Worksite Employer”. Clients continue to direct and control the workforce, including hours, pay rates, and employee benefits. However, as your PEO company, CBR will attend to all the administrative tasks related to HR and keep you working smoothly with benefit vendors, government agencies, the Industrial Commission, and taxing authorities.

Want to know more about co-employment? Read our section called What is Co-Employment?

Still wondering if it’s for you? Read about the benefits of using a PEO

Are you wearing more HR hats than you think? See the Real Definition of HR

A PEO Keeps You Focused on Growing Your Business

A PEO focuses on one thing…keeping you focused on growing your business. The PEO model was designed to accomplish the greater goal of reducing your administrative headaches and cost, allowing you to spend your time doing what you should be doing…growing your business and enjoying the benefits of ownership.

Usually, more than 5 employees, although some PEOs will service companies with less depending on their needs and circumstances.

Both the client and the PEO. The client is the “worksite employer” and the PEO is the “administrative employer”.

The client takes back the entire administrative burden for its employees. Unemployment taxes start accruing under the client’s ID numbers and any benefits that were secured by the PEO under its plans will cease to be available. The client becomes responsible to replace those benefits for its employees

January 1st is typical, but it can make sense at other times, depending on how the PEO setup is handled. Some clients prefer to start January 1 due to tax implications. Others prefer to make the change when their benefit plans renew since rates and plans are usually changing anyway. It all depends on the primary reason for the change.

Fortune 500 benefits for small employers. PEOs also have “skin in the game” with your compliance issues because of the coemployment relationship.

No, if it’s handled professionally. Your employees will see improved benefits and an increase in your focus as the details fall off your desk. A PEO cannot change or govern your internal culture, no matter what the contract says.

In most cases, both the client and PEO name appears on the paycheck.

The PEO.

Yes. The PEO will handle the administration, but you are required to comply with FMLA since the PEO has more than 50 employees. However, the hardship rule can sometime be applied to your business.

Sometimes. There are many PEOs that allow this setup, and will still administer your benefits. Most national firms do not allow this.

Those agreements stay in effect. However, if there are glaring differences between these agreements and the PEO’s employment policies, they may need to be resolved prior to beginning the arrangement.

In many states, the PEO rate is used. In some states the client retains their own account.