If your company has employees — or intends to hire employees in the future — you need to find a way to manage your human resources (HR) functions. While a business with just a few employees might be able to manage HR without any assistance, many companies find it valuable to outsource their HR responsibilities. One outsourcing option is to partner with a professional employer organization (PEO). To help you identify the right PEO for your business, I’ve conducted hours of research to come up with some of the best services on the market.
What Is a Professional Employer Organization?
A professional employer organization is an HR outsourcing provider that companies partner with via a co-employment arrangement. Through this partnership, the PEO is your employees’ legal employer of record (EOR) and helps manage your HR functions like payroll, benefits administration, employee training, and legal compliance; however, you still maintain the responsibility of managing your workers’ day-to-day activities. PEOs tend to bundle their HR services, although some offer add-on services and plan customizations.
Best PEO Services
Our Top Picks for 2024 | ||||||||
Best For | Industry Expertise | Customer Service | Usability | International Compliance | Scalability | Risk Management | Remote Teams | Benefits Administration |
Starting Price | Varies based on customer’s needs | Free HR platform for up to 200 employees; EOR starts at $599 per month | $59 per employee, per month | Payroll starts at $12 per employee, per month; EOR starts at $650 per employee, per month | $8 per employee, per month | Varies based on customer’s needs | $39 per month, plus $5 per employee | Varies based on customer’s needs |
Employee Minimum | 5 | 1 | 2 | 1 | 5 | 5 | 5 | 5 |
Contract Length | Varies based on customer’s needs | Month-to-month | Month-to-month and annual | Annual and multi-year | Month-to-month | Annual and multi-year | Month-to-month | Month-to-month, annual, and multi-year |
ESAC Certified | Yes | No | Yes | No | No | Yes | Yes | Yes |
Rating |
The Best Picks for PEOs
Here are some of the best professional employer organizations available.
TriNetBest for Industry Expertise
Pros & Cons
Our Review for TriNet
As a PEO, TriNet is an expert in human resources. When researching its services, I was especially pleased with TriNet’s ability to customize its HR solutions based on client industry and vertical. With TriNet’s support solution, Connect 360, HR experts and support reps are available 24/7 via web chat. In addition to providing you with complete HR services and general support, TriNet gives you the option to connect with experts who have industry-specific knowledge. This isn’t something that many competitors offer, but it enables you to receive HR guidance that is tailored to your unique business and industry. This can be especially valuable for maintaining legal compliance.
DeelBest for Customer Service
Pros & Cons
Our Review for Deel
Good customer service can be a game changer when it comes to handling HR, and Deel does not disappoint. Deel offers multiple service plans with a wide range of add-on options. When you first connect with Deel, a representative will work with you to help set up a plan that meets all of your needs. Unlike some competitors, Deel provides you with a dedicated customer success manager. It also offers 24/7 in-app chat support, so you can get your HR questions answered any time of day or night. This can be especially valuable for those trying to manage the intricacies of HR for a global workforce.
JustworksBest for Usability
Pros & Cons
Our Review for Justworks
When it comes to platform usability, Justworks takes the cake. I like that the company lists its plans and pricing online so employers can get a clear look at what it has to offer. Justworks is one of the most intuitive and user-friendly PEO platforms that I tested. The interface design is clean and easy to navigate, and the shallow learning curve is great for companies that need their employees to be onboarded quickly. Although the platform is simple to navigate, I was also impressed with the digital self-help resources that the PEO has to offer. You can easily access a help center, blogs, webinars, and more. Multitiered U.S.-based support is also available for further assistance.
Papaya GlobalBest for International Compliance
Pros & Cons
Our Review for Papaya Global
Unlike traditional PEOs that support only U.S.-based employees, Papaya is a global service that can support workers in more than 160 countries. This breadth of support is important for global companies that need to maintain compliance in multiple countries. I like that Papaya offers localized advisory services in each country it operates in, so you can rest assured that you are getting accurate and compliant support based on your location. Although global employment laws apply to employees and contractors differently, Papaya has experience with both types of workers, so it can help mixed teams stay compliant. Since Papaya’s HR platform is system agnostic, you can integrate it with other tech platforms to send employee data seamlessly, reducing the potential for human errors.
RipplingBest for Scalability
Pros & Cons
Our Review for Rippling
Rippling is a scalable HR solution that can be customized to meet your evolving needs. Instead of offering just one bundled solution, Rippling offers an HR tech base plan with several add-on features and services. It even offers device- and app-management add-ons, which aren’t services other competitors offer. I like that Rippling doesn’t operate just as a PEO. Its HR platform is also available as a stand-alone HR service (without a co-employment model), so users can easily scale between a PEO and non-PEO plan without the headache of losing any employee data.
One more feature that makes Rippling so scalable is its automation capabilities. You can set up permissions and workflow automations within the system, allowing you to not only streamline your HR functions, but also modify the solution as your HR needs change.
InsperityBest for Risk Management
Pros & Cons
Our Review for Insperity
Insperity is a full-service PEO that offers HR support to help you mitigate legal risks and maintain compliance. The company conducts HR-related audits to help you identify areas of noncompliance. It also offers numerous online books and courses for your workers to continue their education. Educating employees is not only a great way to upskill your team and stay up to date with training requirements on things like harassment and discrimination, but it can also help manage risk by ensuring your staff is informed on safety precautions, employment laws, and company policies. If you need additional assistance, Insperity offers dedicated customer support specialists.
Paychex PEOBest for Remote Teams
Pros & Cons
Our Review for Paychex PEO
Paychex is a powerful PEO that supports employers throughout the U.S. Since it is a full-service HR solution, it can perform or support virtually any HR function you need, such as payroll processing, tax administration, HR policy creation, benefits administration, HR reporting, risk and compliance, and employee training and development. With its breadth of services and intuitive cloud-based platform, Paychex is great for supporting remote and dispersed teams. It has a wealth of employee self-service features, as well as iOS and Android mobile apps, so you and your employees can manage essential HR functions from any location.
ADP TotalSourceBest for Benefits Management
Pros & Cons
Our Review for ADP TotalSource
As one of the largest PEOs on the market, ADP can support small, medium, and large businesses in nearly any industry. ADP offers robust HR services like employee onboarding, payroll processing, risk mitigation, compliance assistance, and HR reporting, but the HR service I was most impressed with was its benefits administration capabilities. The PEO behemoth has some serious power when it comes to offering comprehensive benefits at affordable rates. This is especially ideal for SMBs that want to attract and retain top talent. I also found the platform to be quite intuitive, making it easy for employees to navigate the benefits enrollment process.
PEO Cost
The majority of PEOs charge on a per-employee basis, ranging between $40 and $160 per employee per month. However, it can be challenging to get an apples-to-apples comparison for PEO pricing, as many HR vendors don’t list pricing online, or they offer different features and pricing models. For example, some PEOs offer plans with bundled HR services, while others offer customizable or tiered plans with add-on options.
- Minimum requirements: Most PEOs require you to have at least five employees and use their payroll platform.
- Add-on fees: Some vendors charge a monthly base fee as well as fees for things like payroll, implementation, and advanced support. You can also expect to pay extra for employee benefits like health insurance.
- Trials and discounts: Although most PEOs don’t offer free trials, they do offer free product demos for employers to test out their HR platform before making a commitment. Many also offer annual pricing options with discounted rates.
Lastly, it’s important to note that many PEOs support only U.S. companies with domestic employees. If you need an EOR that can support international employees, expect to pay more — around $600 per employee per month.
How to Choose a PEO
A PEO has a major impact on your organization’s people and processes. As a result, it’s important you do your due diligence to ensure you are choosing the right HR partner. These five steps can help you identify and choose the right PEO for your business:
- Clearly define your HR needs. The first step to choosing a PEO is to assess your current HR processes and needs. PEOs offer many of the same features, so it can be overwhelming to choose one over another if you aren’t sure what you are looking for. Identify what HR functions you can handle in-house and what functions you want to outsource. Don’t forget to consider what functions you may want to outsource in the future as your company expands.
- Research potential PEOs on the market. There are several great PEOs on the market, many of which I’ve mentioned above. While they all offer HR services, they vary in terms of specific features, pricing and plan structures, industry support, compliance measures, and customer service. With your list of HR needs in hand, search for the top PEOs on the market that offer the specific terms you are looking for.
- Check PEO accreditation and compliance. PEOs can receive accreditation from the Internal Revenue Service (IRS) and the Employer Services Assurance Corporation (ESAC). Although some great PEOs aren’t accredited, checking for accreditation can be a quick way to verify a PEO’s trustworthiness. Since a PEO plays a major role in your legal compliance, you also want to check out its website and reviews for terms of compliance and compliance support.
- Conduct demos with top PEO providers. Once you have your shortlist of PEOs, reach out to each HR provider to schedule a product demo. Most PEOs don’t offer a free trial, but a product demo can give you a firsthand look at the PEO’s tech platform and the features it offers. During this demo, ask a lot of questions. What is implementation like? What happens if your company scales rapidly? Can it support multistate payroll? How comprehensive is the mobile platform? Ask specific questions that are relevant to your specific business needs.
- Compare PEO features and contracts. After the demos, you will have a better feel for what each PEO has to offer. Obtain a quote from each vendor and compare them based on things like HR services, pricing and contracts, implementation, tech usability, scalability, compliance assistance, industry knowledge, and HR support.
By this point, you might have found a clear winner. If so, that’s great! However, it can be beneficial to consult with key stakeholders before making a final decision, such as your HR professionals and other employees who will frequently use the software.
Methodology
To find the best professional employer organizations on the market, I started by researching and analyzing dozens of potential HR outsourcing solutions. I discovered who the key players are through industry experience and market research, and then I did a deep dive on each PEO provider. I looked at company websites, competitor comparison pages, the Better Business Bureau (BBB), accreditation sites, and customer reviews.
Through this research, I was able to examine and compare pricing, contract requirements, HR services and limitations, payroll processing capabilities, benefits administration, accreditations, compliance, and customer support. I also participated in guided tours and product demos to gain firsthand experience with each platform’s functionality and ease of use.
PEO FAQ
What types of businesses need a PEO?
Virtually any type of business can use a PEO, but the ones that often find themselves needing a PEO are typically small to midsize businesses. It can be difficult to manage HR functions with limited HR knowledge or resources, so a PEO can be advantageous in keeping SMBs on track. Fast-scaling companies that outgrow their ability to manage HR functions can also benefit from a PEO, as it can help maintain a structured onboarding process and HR policies that are compliant with federal, state, and local laws.
Can a nonprofit use a PEO?
Yes, nonprofits can partner with a PEO. If your nonprofit wants to outsource its HR functions to a PEO, check for a provider that specifically says it can work with nonprofits. Some PEOs even offer discounted rates for nonprofits.
Who is the legal employer with a PEO?
A PEO operates through a co-employment agreement, with the PEO becoming the legal employer of record for your employees. This means it will handle legal employment processes like payroll processing, tax administration, and HR compliance. Despite this relationship, you still have control over the day-to-day responsibilities of your workers.
How do you know if you need a PEO?
Assessing your current HR capabilities and needs will help determine whether you need a PEO. For example, if you have become unable to manage your HR responsibilities on your own, you are a great candidate for a PEO. A PEO is also advantageous for small businesses that want access to more competitive benefits, or those struggling to maintain or keep up with HR compliance measures and regulations.
You also want to consider whether a co-employment agreement is right for you. This arrangement is good for those looking to relieve themselves of some of the legal burden that comes with having employees; however, if you want to retain complete ownership of your employees, you may be better suited for a general HR outsourcing (HRO) provider, which doesn’t have the co-employment agreement of a PEO.
What is the main difference between a PEO and a regular payroll company?
There are a few main differences between PEOs and regular payroll companies, mainly features and employee ownership. Payroll companies offer traditional features associated with processing payroll, whereas PEOs can offer full-service HR functions and compliance assistance. Additionally, a PEO will be the legal employer of record for your employees, whereas a payroll company will not.
One thing of note is that some PEOs do offer their payroll platform as a stand-alone solution, so the two company types are not necessarily mutually exclusive.
What are the disadvantages of a PEO?
With a PEO, you lose ownership of your employees from a legal standpoint. While this can be a benefit for some, it’s not always the right arrangement for all employers. You also lose control over some HR processes, as the PEO has its way of doing things. This can be a disadvantage for some companies that have strict security protocols or want to keep all their employee data in-house.
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