Professional Employer Organizations partner with businesses to manage payroll, employee benefits, and back-office HR administration. The PEO solution involves a legal arrangement called “co-employment” which allows the PEO to make payroll, deposit employment taxes, and provide insurance benefits from its own account, rather than as an agent or on behalf of its client. In order to ensure that your PEO is fit to take on these responsibilities, you should understand its operating history and financial strength. This paper will assist you in performing your due diligence on a PEO.
The following whitepaper describes the five things that you should require of a PEO prior to signing a client service agreement include: (1) client references, (2) ESAC accreditation, (3) SAS No. 70 (Type II) Report, (4) audited financial statements, and (5) state license (if applicable).