Managing employees’ operations and conducting administrative work can be tricky. It often requires a lot of work from startups and companies since it demands being acquainted daily, with all the legal updates, filing with the relevant authorities at the right time, etc.
For this reason, it is very beneficial to consider acquiring help from an entity or organization that can do that work on your behalf. Such an entity or organization is known by a Professional Employment Organization (PEO).
In this regard, the company seeking assistance with its administrative work enters into a PEO agreement or what is known as a Client Service Agreement with a PEO. Therefore the latter will be responsible for everything related to the administration and the management of human resources responsibilities in your company (the client).
The relationship between the client and the PEO is considered a co-employment relationship, where the PEO is the employer of record. Consequently, they both share employer responsibilities.
With the PEO focusing on the administrative work, the client will be relieved of this obstacle and focus on achieving its goals. The Human Resources (HR) workload will be significantly reduced, which will enable them to work on other things, think of beneficial ideas that will help the client grow and develop.
The services provided by the PEO will be set out in the agreement. They usually include payroll processing, a healthy administration plan, performance management, employer insurance, tax administration, employer compliance assistance, risk management, retirement plan, bonuses, sick time, and more.
By having the PEO handle all administrative work and matters related to employees, the client will reduce his risks and legal liability.
The PEO will be in charge of keeping up with all the changes that may occur to the laws and regulations and ultimately ensure compliance. It will be responsible for reporting and filing everything related to taxes to the relevant authorities.
Consequently, the PEO will assume responsibility and will be held liable for every work it conducts.
Here, it is essential to mention a particular misconception when it comes to PEO. Certain companies tend to think and worry that they will lose their authority and connection over their employees.
This is why it is critical to clarify that the client will always be responsible for everything related to his employees’ day-to-day control. The client is the one that hires, fires, supervise, and promotes its employees. He is the one that is responsible for discharging their tasks and assignments.
It is essential to add that the client will remain the only owner of his intellectual property. All the information acquired by the PEO while conducting his work will remain confidential by inserting a confidential clause in the PEO agreement.