Top Benefits Offered by Using a PEO

Put simply, a PEO, or Professional Employer Organization, is a large employer. This means the organization has the ability to legally provide benefits to co-employees.

When a client company takes steps to partner with a PEO, they enter into a co-employment relationship. This relationship allows the PEO to offer specific advantages to the company partnering with them – your business.


Finding the right PEO for this partnership is critical and consulting the information found in the Best PEO Services and Companies – Our 2018 Reviews – DigitalExits can be helpful when considering all the options.

Here you can learn more about the benefits of this partnership for your business.

Human Capital Cost Reduction

Outsourcing your human resources through PEOs may help your company reduce fixed costs while increasing your bottom line. A PEO can help reduce HR costs by utilizing the large size to receive the economies of scale on all types of employee benefits.

Another area where PEOs are beneficial is with workers’ compensation coverage. In many situations, the umbrella policy of PEOs have lower rates than what your company can get on its own, helping to further reduce costs.

Improved Employee Benefits

Because PEOs have thousands of employees under their master policies, i.e. health insurance, they are able to purchase more robust benefits at lower rates (saving you money while increasing benefit options). This gives your small company the ability to offer Fortune 500 level benefits to employees, even if you only have a 10-person team. This is a huge advantage and can help you better retain “top talent” in your organization.

Risk Management

By partnering with a PEO, your company is entering into a co-employment relationship. This means you now share the responsibility of handling various threats. In the long run, this can help to reduce the impact of compliance requirements. It’s important to understand that while PEOs can help with this, they don’t completely eliminate the risk.

When your company is pooled under the PEO, the risks associated with increases in SUI, workers’ compensation and health insurance premiums/rates are reduced significantly. A PEO can manage this risk internally and underwrite companies for the appropriate fit into a pool that reduces the risk, while screening out the companies that may increase this risk.

Regulatory Compliance

Regulatory Compliance

A PEO has compliance experts who remain aware of the changes going on with healthcare, regulations and labor laws. It has become more and more difficult for companies to remain “on top” of these changes alone. Each year, these changes happen and if the regulatory changes are not implemented, in some cases, they can present a serious threat to the company in the form of additional company costs or penalties.

Business Scalability

A PEO has the ability and infrastructure to handle a wide array of companies, usually ranging from five to 500 employees – or more. If you have a company with just five employees, in growth mode, or a company with over 200 employees, the PEO can easily handle up- or down-scaling with minimal impact on your business as a whole.

With PEOs presences growing, it’s becoming more and more difficult to select the one that’s right for your organization, with more than 700 in the U.S. today. The good news is, finding the right one is possible with a bit of time and effort. There are even some professional services out there that can help match you with the right PEO service for your company’s needs.