Most businesses today need help managing increasingly complex employee-related matters. Many companies turn to professional employee organizations (PEO’s) or administrative service organizations (ASO’s) for help.
Both kinds of organizations provide integrated services to effectively manage critical human resource responsibilities and employer risks. However, there are distinct differences in the ways they operate.
Professional Employer Organizations (PEO)
PEO’s (often called “co-employers”) deliver human resource services by establishing and maintaining an employer relationship with clients’ employees. This means clients maintain who they hire and fire, but employees are paid under the PEO’s tax ID number and the PEO carries workers compensation and benefits plans for employees.
Administrative Services Organization’s (ASO’s)
Administrative Services Organizations act as subcontractors: assisting employers with human resource responsibilities without requiring a co-employer relationship and allowing employers to maintain a sole relationship with their employees and control of benefits offerings, workers’ compensation claims and unemployment claims. They offer all the same services as PEO’s, with some advantages. One specific advantage of the ASO model is that services can be offered in bundled or unbundled packages (PEO’s cannot do this because of their responsibilities as the “employer of record”).
Purpose Employer Solutions believes that the ASO model is more advantageous for most small- to medium-sized businesses and operates primarily as an ASO. However, we do have the ability to operate as a PEO for clients who are better served by this option, and for those who may not qualify for an ASO.