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PEO Agreements: Why They Matter and What to Look For

4 min read

Let’s start with the basics: a PEO, or professional employer organization, is a company that provides HR-related services to other businesses.

By entering into a PEO contract, a client company can outsource tasks like payroll processing, benefits administration, and risk management to the PEO, freeing up time and resources to focus on core business functions.

In addition to those services, a PEO can offer a wide range of other HR-related services. For example, they may assist with recruitment and hiring, employee training and development, and performance management. Some PEOs may offer specialized services like HR consulting or executive coaching.

What is a PEO Service Agreement?

A PEO service agreement is a contract between a PEO and a client company that outlines the services the PEO will provide. These services include payroll processing, benefits administration, and risk management — everything we had in the previous section.

So, what does a PEO service agreement include? PEO service agreements should consist of several vital components to ensure that both the PEO and the client company are on the same page and that the deal is fair and legally binding, including:

  • Scope of services
  • Payment terms
  • Responsibilities of each party
  • Liability and indemnification
  • Confidentiality and data security
  • Termination and renewal
  • Governing law and jurisdiction

That’s a lot of high-level jargon, so let’s break it down. First, the contract between your business and your PEO should lay out what services the PEO will provide for you and align with your company’s needs. That way, you know exactly what you’re getting into.

Next, you’ll want to know how much you’ll pay and when. The agreement should spell out any fees or payment schedules so there are no surprises down the line. You should also be clear on what each party’s responsibilities are. Who’s responsible for keeping records? Who’s in charge of reporting? You don’t want any misunderstandings on this front.

Finally, you’ll want to ensure there are provisions for liability and indemnification. That way, if something goes wrong, everyone knows who’s responsible and what the consequences will be. Read through the agreement carefully and ask questions if anything needs clarification. That way, you can be confident that you and the PEO are on the same page.

Ultimately, a well-crafted PEO agreement can be a game-changer for clients, allowing them to focus on their core business while leaving HR tasks to the experts. So, if you’re in the market for a PEO, take your time, research, and find the right partner for you!

How to Pick a PEO Partner

Of course, when choosing a PEO partner, you must ensure you’re working with a trustworthy and reputable company. Here are a few things to consider:

  • Check the PEO’s track record and reputation. Do they have a history of providing high-quality service and support?
  • Look for certifications or accreditations. Some PEOs may be certified by organizations like the Employer Services Assurance Corporation (ESAC), which can provide an added layer of assurance.
  • Consider the PEO’s financial stability. You want to make sure they have the resources to deliver on their promises and continue providing services in the future.
  • Ask for references and case studies. A reputable PEO should be able to provide examples of how they’ve helped other businesses like yours.

By evaluating potential PEO partners carefully and asking the right questions, you can find a partner who will help your business thrive.

Simplify Your Business with 

We know picking the right PEO for your business can be overwhelming, but we’re here to help!’s team has all the educational resources and connections to PEO partners you need to make the best choice for your organization. We’ll guide you toward the best PEO option for your needs and budget.

Our trusted PEO partners are experts at working with businesses like yours. All you have to do is reach out to us and tell us what kind of PEO services you’re looking for. Within 24-72 hours, we’ll get back to you with a range of options and competitive pricing.

Our team is here to answer questions and help you make an informed decision. Let us do the heavy lifting and help you find the perfect PEO partner for your company!

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Contact us today to learn more about how we can help you achieve your goals.

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