The Best PEO Service Providers of 2021

A professional employer organization (PEO) is a company that can take care of human resource responsibilities, primarily for small and midsize companies. Most PEOs can manage HR functions like employee training and development, risk and compliance, workers' compensation, payroll, and benefits – with some offering these HR services bundled together in a preset package, and some offering customizable plans with a la carte features. 

PEO companies primarily differ from typical HR outsourcing services by operating under a co-employment model, meaning your employees will appear on the PEO's books for legal and tax purposes. This allows PEOs to act as massive corporations with hundreds of thousands of employees. They 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. 

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

Roughly 175,000 small and midsize businesses partner with PEOs to get high-quality benefits and proper HR support to keep their businesses running smoothly. There are more than 900 PEO providers serving and operating in all 50 states. A PEO must adhere to both state and federal regulations, so some companies are divided up by region or even state.

As you search for a PEO, keep your own state and region in mind – some PEOs are only qualified to serve small businesses in some states, whereas others have a wide reach, extending across the world through global partnerships. Most of the companies we reviewed are qualified to offer coverage in all 50 states. If you're curious about whether a certain PEO operates in your state or not, you can look it up in the National Association of Professional Employer Organizations' directory.

PEOs provide several beneficial resources for small businesses. Since they focus on HR tasks and administration, you are left with more time to focus on your business. On top of that, PEOs offer better benefits to your employees than you might have been able to on your own. This can help you attract and retain top talent. Many employer organizations use current technology, 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. 

HR Services

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

Employee Benefits

Since PEOs co-employ multiple businesses' employees at once, they can offer better employee benefits than you might otherwise be able to offer. PEOs typically offer insurance plans like medical (such as PPO, POS, EPO, HNO and ACO plans), dental, vision, life, and long- and short-term disability insurance. Some offer additional plans like flexible spending accounts, health savings accounts and heath reimbursement arrangements. 

Employees often receive access to retirement plans, such as 401(k) and Roth IRA plans, as well as additional benefits like commuter and parking discounts, home and auto insurance discounts, and an Employee Assistance Program (EAP). Many employers receive Affordable Care Act guidance and compliance, while their employees get access to consulting services by licensed benefits professionals. The benefits will vary by PEO company, as will the affordability. 

Payroll

PEOs offer small businesses an affordable way to package all of their HR responsibilities together, including payroll and taxes. When you partner with a professional employer organization, that company is technically the employer of your staff – meaning your staff is on its payroll books. This covers much more than paychecks. PEOs can process your employee payroll with CPAs, prepare and distribute payroll checks, employ direct deposit, 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 deposits and filings, along with detailed management reports. The PEO you partner with should be able to take care of all your employee payroll needs. By lumping this cost into the PEO's grand total, you can ultimately save money on your payroll being handled by financial professionals. A PEO allows you to operate your business with the knowledge that your employees are being paid properly and on time. 

Risk and Compliance

Managing risk and legal compliance is an important part of running your 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 taken off your plate. The level of compliance and risk that a PEO manages will vary, but many PEOs will perform tasks like managing ACA coordination and compliance, running onsite safety inspections, performing accident investigations and job hazard analyses, allocating workers' compensation coverage, and maintaining OSHA compliance for your business. 

A PEO ensures your business takes the appropriate measures to maintain workplace safety. Some PEOs provide Employment Practices Liability Insurance 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 is abiding by legal employment guidelines. This alone is reason enough for some businesses to partner with a PEO. 

Training and Development

A benefit that some PEOs offer is employee training and development. Many offer online and onsite training courses that your employees can take to enhance their skills. They can access courses on interviewing, recruitment, communication, sexual harassment and discrimination, hiring and firing, disciplinary actions, leadership, social media, workplace technology, and even industry-specific training. 

Not all PEOs offer continued education courses, and the ones that are available vary by company. However, at the very least, most PEOs will train your staff on necessary workplace concepts like avoiding sexual harassment and discrimination. 

Customer Service

Make sure the PEO you partner with provides you a designated team of experts who can handle your HR, risk management, benefits and payroll needs. You want to partner with a company that provides specialists in each area, as well as a relationship manager who can help you use the services to your full advantage. 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 certification ensures that your account coordinator is more than just a company relationship manager.

How can PEO services help you attract great employees to your business?

When small businesses offer competitive benefits to potential employees, they are in a better position to attract and retain top talent; this is where PEOs come in. A PEO allows you to offer your employees affordable health benefits with reputable health insurance companies, and additional benefits like supplemental insurance plans (e.g., FSA, HSA and HRA), employee perks (e.g., home and auto insurance discounts, parking and commuting benefits), and retirement savings accounts like 401(k) and Roth IRA plans. 

Additionally, a PEO can help you maintain risk and legal compliance. This can reduce legal problems for your business, helping you earn a positive reputation in the community and cut down on employee turnover. Since many employees seek an employer that can offer continued education, partnering with a PEO that offers training and development courses can entice top talent as well. 

What is the difference between a PEO and a staffing company?

Although seemingly similar, PEOs and staffing companies serve different HR needs. The primary benefit of a PEO is to take care of tedious and time-consuming HR tasks like administrative work, payroll, employee benefits, risk and compliance, and employee training and development. By operating under this co-employment model, a small business can focus on growing their business while the PEO takes care of all HR functions. This is a cost-effective and low-risk option for small business owners. 

A staffing company, on the other hand, primarily serves short-term or temporary employment needs. Staffing companies do handle other HR-related tasks, like payroll and unemployment taxes, but often with much higher fees for these services. Small businesses should only consider partnering with a staffing company if they are looking for temporary staffing. 

What is the difference between hiring a PEO and an HR outsourcing (HRO) company?

A professional employer organization is an affordable HR option for many small businesses, as it can handle all your HR functions under a co-employment model. A PEO removes the burden of many HR tasks and gives small businesses the peace of knowing that critical functions like risk and compliance are being managed by HR experts. 

HRO services can handle many of the same HR functions as a PEO, but they operate as a separate entity instead of through an employer partnership. Businesses that use HRO services can pick and choose the HR functions they need to outsource, whether that be just payroll and employee benefits or a full-service HR suite. HR outsourcing is better for larger companies that only need assistance with specific HR tasks.

How can PEO services contribute to your business's bottom line?

There are many ways a professional employer organization can positively impact your bottom line. For example, a PEO handles many of the tedious HR administrative tasks that a member of your team would otherwise have to handle, which can save you time and money. If you don't have to focus on HR functions, you are available to work on growing your business and your bottom line. Since a PEO manages employees at scale, it can also help your bottom line by lowering your employment costs. 

What do the best PEO services have in common?

The best PEO service providers satisfy your human resources needs, whether they're HR administration, employee benefits, payroll, workers' comp, risk and compliance management, or training and development. They also use the latest technology for businesses and employees to easily access their online platforms and information. Great providers offer HR expertise and customized, one-on-one assistance to help you navigate your PEO services, regardless of how long you've worked with them. The best professional employer organization services are transparent and easy to communicate with. The best PEOs are also accredited by the Employer Services Assurance Corporation (ESAC) and the Internal Revenue Service (IRS). 

What are the disadvantages of using PEO services?

When you partner with a PEO, that company is technically a co-employer of your staff. This can cost you some internal control over your team and processes, possibly having an outside influence on your company culture. Having an outside company manage your payroll and taxes might make you feel a lack of security as well. For these reasons, it is important to partner with a PEO that you trust and believe in. The right PEO can be a great asset to your company.

As part of our research, we reached out to the community to see what PEO services small businesses are choosing and why. This helped us to identify the most valuable features of a PEO. 

Aaron Bailey, general manager at DZone and previous COO of business.com, was responsible for selecting a PEO for roughly 80 employees. Bailey said the most important feature he looked for was employee benefits. 

"The most important factor came down to medical benefits and how they compared to what we were used to," he said. "Next was 401(k) – how their plan, funds and fees stacked up against what we had in place already. Also, the monthly fees all PEOs have … range between vendors."  

Bailey ultimately chose to partner with Insperity because it offers great benefit coverage in his region. He also said Insperity's tools are better than competitors' options. 

"The user experience was better, the training and development options were very good, [and] their mobile app was very easy to use and had frequent improvements to it," said Bailey. "They're also a well-established company that gets a lot of positive press around employees and customers first." 

Anh Trinh, founder and CEO of 2-year-old media startup GeekWithLaptop, selected Oasis for his team of eight employees because it is a reliable company that specializes in small businesses and startups. He also valued Oasis' ability to provide risk management and workers' compensation insurance for his small startup. 

"Choose the PEO based on their specialties," said Trinh. "Some PEOs are good at handling big businesses, while others are good for startups. Identify what you need right now and go from there." 

Max Prokell, founder and CEO of Venta Marketing, was responsible for choosing a PEO client for his marketing company of 15 employees. Since user experience was a top priority for him, he chose TriNet for its Fortune 500-level benefits, risk management, dedicated HR team, and seamless onboarding and tax paperwork review process. 

"The first sign of a great PEO comes down to their technology and the implementation of a great user experience," said Prokell. "Any PEO could have the most advanced platform on the market, but if my employees hate the interface, then the technology loses its value. We selected our PEO partner because I knew that my employees would appreciate their technology and a mobile-first approach to HR services."

We compiled a list of almost 60 PEO services after analyzing industry trends, considering companies featured on other review sites, reviewing the top industry players and searching the National Association of Professional Employer Organizations (NAPEO) website. 

After analyzing the companies' small business services, establishing whether they were national PEOs, reviewing their accreditation and NAPEO membership, and grading their online presence, we whittled the list down to 30 companies. We conducted further research on these 30 PEOS by diving deep into their services and reviewing their HR, payroll, benefits, and risk management offerings. We also established the types of training resources and customer reviews each company had. 

From this list of 30 companies, we chose five that stood out as the best for customer service, startups, small businesses, midsize businesses and tailored industries. We then reviewed each company's pricing structure, contract requirements, online and mobile access, available services, and standout features. 

We dug even deeper into these five best picks, evaluating the customer service and features that each plan offers. We contacted our finalists by phone, live chat and email, speaking as small business owners. We inquired about each PEO's plan structure, pricing and cancellation policy. The five companies withstood each round of our testing and stood out in all of our interactions with them.