The Best PEO Service Providers of 2024

If your small business struggles to manage HR processes efficiently, it may be time to seek an outsourced solution to support your business, such as a professional employer organization (PEO). Small companies needing full HR support benefit from a PEO, as it provides full-service HR functions like employee onboarding, benefits administration, payroll processing and tax filing, reporting, and compliance assistance. PEOs differ from traditional human resources outsourcing (HRO) services because of the co-employment model: The PEO absorbs your employees legally to leverage large numbers in benefits markets to obtain competitive pricing.

A PEO is a company that can take care of HR responsibilities, primarily for small and midsize companies. PEOs have drawbacks, but they can manage HR functions, like employee training and development, risk and compliance, workers’ compensation, payroll and benefits. Some PEOs bundle these services in a preset package; others offer customizable plans with a la carte features. When you partner with a PEO, you enter a co-employment agreement, which means the PEO is the legal employer of record (EOR) for your employees.

When you partner with a PEO, you enter a co-employment agreement, which means the PEO is the legal employer of record (EOR) for your employees. This allows PEOs to act as massive corporations with hundreds of thousands of employees. PEOs can negotiate contracts with employee benefits providers for more favorable rates on unemployment and workers’ compensation insurance. It also gives them the power and scope to build and leverage powerful time-tracking and payroll technology for small businesses.

When you sign on with a PEO, you’ll work closely with customer success managers (and other team members) to build the services you need for your small business. As your business grows, your PEO can adjust to meet your needs. Working with a PEO under the co-employment model essentially means that you’re partnering with a team of specialists to build out the administrative and back-end processes of your organization’s human resources needs. If it makes sense for your business financially, these organizations can take a lot of the stress out of running your business so you can focus on more pressing needs.

Roughly 208,000 small and midsize businesses partner with PEOs to get high-quality benefits and proper HR support to help their businesses run smoothly. A PEO must adhere to both state and federal regulations, so some companies are divided by region or state.

There are many advantages of partnering with a PEO service. While the benefits you experience will depend on your reason for using a PEO, here are some of the most common benefits:

1. Cost savings: A PEO can automate repetitive HR functions and streamline a variety of tasks, saving you time and money. Since a PEO can essentially replace the need to hire certain HR staff, you can save money on salary overhead as well. A PEO also provides more competitive and cost-effective benefits to small businesses than SMBs would otherwise be able to afford on their own
2. Compliance assistance: A PEO is the legal employer of record for your workers, which automatically takes some of that legal pressure away from your business. They can also perform time-consuming legal tasks like workers’ compensation management, and advise you on certain processes and procedures needed to keep your organization compliant with labor and employment laws.
3. Employee recruitment: One of the best ways to attract top talent is to offer a comprehensive benefits package, but the cost of putting together such a robust package can be difficult for many small businesses. A PEO makes this possible by providing you with competitive benefits at affordable rates.
4. Employee experience: A PEO automates many of your repetitive HR processes, giving your internal HR staff more time to focus on employee experience measures like company culture and engagement. Additionally, a PEO platform can streamline payroll payments, benefits enrollment, and other self-service features for employees to manage their own HR functions.
5. Peace of mind: Having a PEO manage your HR functions takes the burden of HR off your plate, leaving you with peace of mind that your employees are being taken care of. Although this benefit can’t be measured by numbers, it can be a great advantage for many small business owners.

PEOs offer two main pricing structures for small and midsize businesses: They charge either a per-employee fee (roughly $40 to $160 per month) or a percentage of your total monthly payroll (roughly 3% to 12%). There are advantages and disadvantages to both types of pricing. The best pricing model for your business depends on factors such as your business type, the number of employees you have and the PEO services you want.

PEOs typically do not offer free trials of their HR services, and contract lengths and structures vary by company. Some PEOs only offer long-term contracts, while others don’t require a contract at all. Cancellation policies also vary, but business owners typically need to provide at least 30 to 60 days’ notice before terminating their PEO service. Some companies allow you to leave at any time for any reason; others charge you a fee for leaving.

Below are other crucial items to address with the PEO service you’re considering. You should go over this information, even though it may be available on the company’s website, with a member of the PEO’s sales team to gain a complete understanding of the PEO’s services.

Plan Structure

One thing to pay attention to is how a PEO packages its services, like employee onboarding and development, insurance policies, workers’ compensation claims, payroll processing, risk and compliance management, and HR tasks. Some PEOs provide a one-size-fits-all solution, whereas others offer customizable services that you can add or remove to fit your small business’s needs. Both models have advantages and disadvantages. A bundled solution means you can grow into all of the features without changing the pay structure, while an a la carte option is more tailored to your business and can save you money if you need only a few services, such as payroll and health insurance.

Additional Fees

Inquire upfront about additional fees. For example, some companies charge a fee if you cancel service. Thoroughly review the materials the sales team gives you to spot any costs associated with service. If you’re not sure, ask the sales representative. Also, remember that the pricing model, whether it charges per employee or a percentage of income, does not include additional costs for healthcare and other employee benefits.

Employee Minimums

Many of the PEOs we evaluated require a minimum number of employees — usually five — to qualify for their services. (Another type of minimum you may see is a minimum monthly salary if your business is below a certain employee threshold.)

If you don’t qualify, many companies offer administrative services organization (ASO) or HR outsourcing services. While these services may be similar to the PEO model, they do not have co-employment agreements.

Make sure you understand what your PEO expects from you. You don’t want to have to cancel your service or pay an additional fee for falling below the PEO’s minimum requirements.

The first step in any buying decision is to understand exactly what your company needs. In the case of a PEO, are you looking for health benefits? COBRA administration? A seamless cloud-based platform to keep HR information organized?

It’s also important to look for an organization that fits your budget and can support your growth. That is one of the major advantages of working with a PEO: It can help your organization grow from an administrative perspective.

We spoke with business owners and CEOs to identify what deciding factors are most important when choosing a professional employer organization.

Payroll and Employee Benefits Administration

It’s not surprising that payroll and employee benefits administration rank among the top reasons why business leaders choose to partner with a PEO. Managing these functions is a major feat for any business, especially small businesses with limited money and resources.

Maxime Bouillon, co-founder and CEO of Archie, told us that working with ADP TotalSource helped simplify HR tasks so he could concentrate on expanding his business. In the buying process, he put an emphasis on taking care of employee benefits, payroll and compliance.

“From my perspective, in the business world, entrusting payroll and compliance management to another individual feels like a welcomed relief that frees up your time to focus on the core aspects of growing your business,” Bouillon told us.

In addition to freeing up your time on payroll and benefits administration, PEOs are especially valuable for small businesses that want to access competitive yet affordable employee benefits.

For example, one of the biggest reasons why Steven Rothberg, founder of College Recruiter, chose to partner with Insperity was because he wanted to provide his small team with top-of-the-line benefits.

“In addition to it simply being the right thing to do, we felt that [offering comprehensive benefits] would lead to better recruitment and retention, and it has,” said Rothberg. “We’ve heard from a number of employees over the years that a key factor in them choosing to join us instead of accepting a job offer from a rival was that we offered better benefits.”

In your search for choosing a PEO, review their payroll features and potential benefits offerings.

Compliance and Risk Management

Another critical feature to asses when choosing a PEO is its ability to help with legal compliance and risk management. Some PEOs specialize in certain industries, providing you with focused industry support. Look for a PEO that can help address your specific compliance needs.

Daniel Vasquez, owner of Dynamic Auto Movers, quickly realized just how vital risk management was when he partnered with Insperity.

“At Dynamic Auto Movers, we’re growing fast, and staying compliant with ever-changing labor laws can be a nightmare,” said Vasquez. “With Insperity, we didn’t just get HR support; we got a built-in safety net that shielded us from costly mistakes, like misclassifying employees or missing a compliance update. This saved us from potential legal headaches down the road.”

Simon Lee, CEO of Glance, shared similar insights when choosing a PEO for his mobile app development company. He needed legal and compliance support to employ developers in different countries.

“We operate in several states and countries, and the employment laws are different in all those places, which was something other than what an in-house team could manage,” said Lee. “The PEO’s capacity to manage international compliance and quickly bring new talent on board was precious as we grew.”

Platform Usability and Scalability

When choosing the right PEO, it’s important to consider how user-friendly and scalable the platform is. You want an HR solution that can be easily utilized by your workers and incorporated into current and future processes.

“If the PEO’s platform is not user-friendly or if it is not easily customizable, then it may end up hampering your productivity rather than helping it,” said Lee.

Customer Support

A factor that can make a world of difference, but is often over looked, is a PEO’s customer support. This includes the implementation process as well as ongoing support. Vasquez and Bouillon both noted this as a key factor to consider when choosing a PEO.

“I advise anyone considering a PEO to ask about how proactive they are in setup, not just how fast they’ll respond when things go wrong,” said Vasquez.

Bouillon echoed similar advice, stating that good customer support is essential.

“Spend time looking into the providers reputation and customer support services before making a decision, because they play a role in determining how successful the overall experience will be for everyone involved,” said Bouillon.

A great way to test the usability of the PEO platform is to perform a demo with the vendor before committing. During this demo, ask about scalability to ensure the PEO can evolve with your business.

“Scalability was crucial,” said Bouillon. “Having a partner that could evolve with us was essential for our growth journey.”

PEOs provide several beneficial resources for small businesses. Because they focus on HR tasks and administration, you are left with more time to focus on your business. On top of that, PEOs can offer better benefits to your employees than you might be able to obtain on your own. This can help you attract and retain top talent. Many employer organizations use mobile applications and online portals for small businesses and employees to easily access important information, like payroll, benefits and training courses.

Although not every business will need every PEO feature available, here are some of the top PEO features that could help your business.

Administrative HR Services

One advantage of partnering with a PEO is having a professional organization take care of all your HR services. PEOs can create your employee handbook and policies, onboard new hires, cover HR administrative tasks, offer unemployment assistance, and help with compliance reporting and employee termination. They often have online HR reporting tools, employee self-service options and advanced HR technology.

Workforce analytics help to streamline HR functions and inform business decisions. Source: Deel 

Employee Benefits

Because PEOs co-employ multiple businesses’ employees, they can offer better employee benefits than you might otherwise be able to provide. PEOs typically offer medical, dental, vision, life, and long- and short-term disability insurance. Some offer additional plans, like flexible spending accounts (FSAs), health savings accounts (HSAs) and health reimbursement arrangements (HRAs).

Employees often receive retirement plans, such as 401(k) plans, as well as additional benefits, like commuter and parking discounts, home and auto insurance discounts, and access to employee assistance programs. Many employers receive guidance on Affordable Care Act (ACA) compliance, while their employees get access to consulting services by licensed benefits professionals. The benefits vary by PEO, as does the cost.

Payroll

PEOs offer small businesses an affordable way to package all of their HR responsibilities, including payroll processing and taxes. PEOs can process your employee payroll, prepare and distribute payroll checks, administer direct deposits, and process employee liens and garnishments. PEOs take care of your employees’ paid time off, track their sick and vacation time, and prepare and distribute their W-2s.

Many PEOs offer quarterly and year-end state and federal tax deposits and filing, along with detailed management reports. The PEO you partner with should be able to handle all of your employee payroll needs. By including this cost in the PEO’s total, you can ultimately save money on your payroll.

Risk and Compliance

Managing risk and legal compliance is an important part of running a small business. However, if you work with a PEO, it can manage much of that for you. Depending on your business’s industry, this could be a great deal of work handled by someone else. The level of compliance and risk that a PEO manages varies, but many PEOs perform tasks such as managing ACA coordination and compliance, running on-site safety inspections, performing accident investigations and job hazard analyses, allocating workers’ compensation coverage, and maintaining OSHA compliance for your business.

A PEO ensures that your business takes the appropriate measures to maintain workplace safety. Some PEOs provide employment practices liability insurance (EPLI) coverage, safety and loss prevention programs, Health Insurance Portability and Accountability Act (HIPAA) compliance, and Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance. There are several other compliance measures that PEOs can take to keep your employees safe and ensure that your business abides by legal employment guidelines. This alone is reason enough for some businesses to partner with a PEO.

Training and Development

Some PEOs offer employee training and development. Many provide online and on-site training courses that your employees can take to enhance their skills. They can access courses on communication, sexual harassment and discrimination, hiring and firing, disciplinary actions, leadership, social media and workplace technology, as well as get industry-specific training.

Not all PEOs provide continuing-education courses, and the courses that PEOs do offer vary. However, at the very least, most PEOs can train your staff on necessary workplace concepts, like avoiding workplace discrimination and sexual harassment.

Customer Support

Make sure the PEO you partner with assigns you a designated team of experts who can handle your HR, risk management, benefits and payroll needs. Work with a company that provides specialists in each area, along with a relationship manager who can help you take advantage of all of the services the PEO offers. Sometimes, the HR consultant doubles as a relationship manager, which is also a good option. The best companies have HR consultants who are certified by the Society for Human Resource Management (SHRM). SHRM certification ensures that your account coordinator is more than just a company relationship manager.

We appreciate PEOs that provide online resources and knowledgeable customer support. Source: Justworks

Once you have chosen a PEO provider and signed the necessary contracts, it’s time to begin implementation. While some PEOs provide white-glove implementation service, others take a more hands-off approach, putting implementation in your hands.

Either way, here are three general steps you can take to implement a PEO service:

1. Inform and train your HR team. Ideally you’ve already involved key stakeholders in the PEO selection process, but now is the time to introduce the PEO to the rest of your internal HR team. Explain what services or functions the PEO and internal staff will handle, and schedule a training session for your team to become familiar with any new platforms or procedures.
2. Integrate your HR data. Set up data integration with the PEO’s software to ensure that payroll and employee data are transferred accurately. If you opt for assisted implementation, the PEO may do this transfer for you.
3. Transition the rest of your staff. Once your HR staff is trained and your PEO platform is integrated, inform the rest of your employees about the PEO arrangement. Get your employees on board by explaining the advantages, such as improved HR services or access to better benefits. Educate your workers on how to access their payroll information, benefits enrollment and other employee self-service features.

Once your PEO is implemented, the work doesn’t stop there. Regularly review the PEO’s performance, ensuring it meets agreed-upon service levels. If you notice any changes in your business needs or HR requirements, meet with the PEO to discuss potential modifications.

If you still haven’t found what you’re looking for in our best picks, don’t worry – there’s more! Here are a couple of other worthy contenders worth exploring.

Paychex

Paychex is a national company that offers customizable plans and flexible pricing. We like that it supports a wide range of business types and sizes, regardless of whether your employees are in the office, at home or a mix of the two. Businesses that partner with Paychex can receive essential HR functions, like HR administration, payroll processing, expense management, employee benefits information and risk-management support. And as your business changes or expands to multiple states, you can add or remove services accordingly. Read our full review on Paychex PEO to learn more.

AlphaStaff

AlphaStaff is a flexible PEO that offers a wide variety of HR services and features with tailored plans and pricing. It offers essential HR services, including employee training and development, strategy and handbook creation, compliance assistance, termination assistance, payroll processing and tax filing, and employee benefits administration. One of our favorite aspects of AlphaStaff is its support and guidance. When you partner with AlphaStaff, the company can review your organization to develop strategies that match your current and growing needs. The PEO also offers benefit advisory services to help you through the process of administering benefits in an efficient and compliant manner. Check out our complete AlphaStaff review to learn more.

To determine the best professional employer organizations on the market, our team of HR experts and software analysts evaluated an initial list of 60 vendors. We examined all 60 and eventually paired down the list based on critical factors such as pricing, available PEO features, platform usability and customer support.

After whittling our list down to nine, we chose seven PEO services as our top recommendations. Our experts and analysts studied each solution’s functionality and evaluated the products on more than 125 factors.

These factors were broken down into categories and weighted differently in our overall conclusion. The weights were determined based on how much business owners prioritize these criteria when shopping for business software and services and making purchasing decisions.

• Pricing (30%): Our experts and analysts compared and contrasted each vendor’s plans, judging which packages offered the best bang for your buck. They took into account plan structures, employee minimums, costs per employee, contract length requirements, and additional fees like implementation and cancellation fees.
• Features (25%): We looked for standard PEO service functions like administrative HR services, employee benefits administration, payroll and tax administration, employee training and development, legal compliance assistance and risk mitigation. We also assessed the available integrations and awarded extra points for advanced services, like global PEO services.
• Ease of Use (20%): Each PEO service includes HR software, so we tried the software solutions themselves, gauging each platform’s learning curve, user-friendliness and customization options. We also considered whether there was a fully featured mobile app to manage HR details on the go.
• Customizations (10%): No two business HR needs are exactly the same, which is why service customization is key. We evaluated not only how customizable each PEO service plan was (including number of options and add-ons) but also how customizable the software was itself. We also took a look at how many third-party applications each vendor is compatible with.
• Customer Service: (15%): We evaluated the range of customer service options, including whether phone, email and web chat assistance was provided with all package tiers. We also examined each vendor’s online resources for businesses interested in self-guided help.

Based on these criteria, we not only determined which professional employer organizations our readers could trust but also the ways in which each solution could best serve different business needs. Some services were better at certain tasks than others or more suited to a particular type of company. These takeaways informed the “Best for” use cases you see on this page.

To learn more about our methodology, see our full editorial process.