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PEO vs. EOR: The Difference Between Employer of Record and PEO

11 Apr


Most people believe that the term PEO (Professional Employer Organization) and
(Employer of Record) are essentially the same type of HR outsourcing service, but that couldn’t be further from the truth.

Let’s talk about the 4 main differences between employer of record vs. PEO to help you understand which option is best for your business.

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Key differences between PEO vs. EOR companies

Here are the four major differences between using an employer of record vs. peo companies:

1. Employment relationship

  • PEO – With a PEO, the PEO provider becomes the co-employer of the client’s employees and assumes many employer responsibilities, such as payroll, benefits, and tax filings.
  • EOR – In contrast, an employer of record assumes full legal responsibility for the employment relationship with the client’s employees, including all employment-related legal liabilities.

2. Ownership of employees

  • PEO – In a PEO arrangement, the client company remains the owner of the employees and retains control over their day-to-day tasks and job responsibilities.
  • EOR – With an EOR, an EOR takes on full ownership of the employees, including control over their job responsibilities, performance, and pay.

3. Scope of services

  • PEO – PEOs generally provide a broad range of HR services that can include payroll administration, employee benefits, HR compliance, and risk management.
  • EOR – EORs typically provide more limited services, and generally are more focused on payroll processing and tax compliance.

4. Size of businesses served

  • PEO – PEOs are better suited for serving small and medium-sized businesses.
  • EORs – EORs typically work with larger organizations that have a global presence and a need for international employment services.

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EOR vs. PEO: Which should you choose?

The decision to choose between a PEO vs. an EOR will depend on the specific needs of your business.

EORs are better suited for larger organizations that need to manage a global workforce and want to outsource all legal employment responsibilities.

PEOs are generally more suitable for small and medium-sized businesses that need a range of HR services but want to maintain control over their employees.

Questions? Learn more about what a PEO is or contact us to discuss how using a PEO can help grow your business.

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