The Best PEO Service Providers of 2019

Professional employer organizations (PEOs) take HR, payroll and benefits tasks off your hands so you can focus on running your business. These companies operate under a unique co-employment model, where your employees legally appear on a PEO's books but remain under your control. This model allows for a PEO to leverage major health benefits plans with the best providers no matter the client.

PEOs also have experience when it comes to handling HR problems or new payroll practices, like payroll taxes. PEOs can provide workplace training, unemployment insurance, workers' compensation coverage and other types of employee benefits. A PEO can handle your administrative tasks and give you the kind of employee benefits that will attract new workers. As a client, partnering with a PEO gives you access to great back-end administrative services for running your business.

PEOs are growing at a rapid rate. As business owners look to offset administrative tasks and offer better benefits, PEOs are answering the call. Currently, PEOs employ 3.7 million worksite employees and have annual wages around $176 billion. These numbers are only expected to increase in the coming years, offering small businesses better benefits options and more HR resources.

Before we dive into which PEO is best for various types of businesses, it's important to consider some important information about the industry, including commonalities with PEOs, such as contractual obligations and pricing structures, plus important factors and questions to keep in mind as you search for a professional employer organization.

If you already have a handle on a lot of this information, you can dive right into our best picks and reviews below.

After researching dozens of PEOs and spending hours on the phone with providers, we've identified the best PEO for very small businesses, the best PEO for startups, the best PEO for small businesses, the best PEO for midsize businesses, and the PEO with the best customer service.

PEOs offer two main forms of pricing: They either charge a per-employee fee or a percentage of your total payroll.

There are advantages and disadvantages to both types of pricing, and whether a PEO that charges you per employee or as a percentage of your payroll is right for you depends on your business, how many employees you have and the overall structure of the PEO plan.

There aren't any free trials with PEOs. Oasis Outsourcing was the only company that offered a plan that resembled a free trial, and it's in the form of a 90-day, money-back guarantee. During the initial phase of shopping for a PEO, ask the sales representative questions and iron out the details of service and how they relate to your business.

PEO contract length and structure vary by company. Some PEOs offer long-term contracts only while others don't require any contract at all. Cancellation policies also vary widely among companies and which plan you enroll in. Generally, you need to provide 30 to 60 days' notice before canceling your service. Some companies allow you to leave at any time for any reason; others charge you a fee for leaving.

Within each of our reviews, we've listed the cancellation policy of the PEO. It's critical, though, that you ask about the PEO's cancellation policy before you reach an agreement – you want the freedom and flexibility to cancel the service if you need to.

Below are additional crucial items to address with the PEO service you're considering hiring. 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 so you gain a complete understanding of the PEO's services.

• Additional fees. Ask the company upfront if there are any additional fees. Some companies charge for canceling service, for example. Make sure you thoroughly review the material the sales team gives you to spot any fees associated with service. If you're not sure, ask the sales representative. Also keep in mind that the cost structure, whether per employee or as a percentage of income, does not include additional costs for healthcare and other employee benefits plans.
• Employee minimums. Many of the PEOs we evaluated had an employee minimum; that is, they required a certain minimum number of employees – usually five or 10 – in order to qualify for their service. As you browse PEOs, keep in mind that you may need a minimum number of employees to qualify for the PEO offering. If you don't qualify, many companies offer ASO or HR outsourcing services, which may make sense for your business. Just be aware that while these services may be similar to the PEO model, it is a different agreement. Some companies also structure their services so a certain number of employees need to be enrolled in health benefits in order to qualify for service. Others require a minimum monthly salary requirement if your business is below a certain employee threshold. All of these companies have requirements and standards for the clients they take on. Make sure you understand what each company expects from you. If you fall below the PEO's employee minimum, for example, you don't want to have to cancel your services or pay an additional fee.
• Access to experts. Make sure the PEO you partner with provides you with 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 available to you 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 Resources Management (SHRM). SHRM certification ensures that your account coordinator is more than just a relationship manager.
• Plan structure. One final thing to pay attention to is how the company structures its plan. Some PEOs offer a one-size-fits-all solution, so you'll receive all your features for the same monthly fee. Others offer services that you can add and remove to tailor the plan to your small business's needs. There are advantages and disadvantages to both. A one-size-fits-all solution means you can grow into all the features without changing the pay structure, while an a la carte option is more customized to your business.

PEOs operate under a co-employment model, where 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. The co-employment model means these companies can negotiate contracts with employee benefits providers for more favorable insurance rates on workers' compensation insurance and unemployment insurance. It also means they have the power and scope to build and leverage powerful time and attendance 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. Many of the companies we reviewed offer a la carte services, where companies can sign up for individual services instead of full bundles.

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 a lot of the stress (and handle most of the legwork) out of running your business so you can focus on more important needs.

More than 150,000 small businesses partner with PEOs across the country to get high-quality benefits and proper HR support to keep their businesses running smoothly. There are more than 800 PEO services companies 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. Most of the companies we reviewed are qualified to offer coverage in all 50 states. If you're curious about whether a PEO operates in your state or not, you can look it up in the National Association of Professional Employer Organizations' directory.

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

After analyzing their 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 35 companies.

From the list of 35, we conducted further research and chose 12 companies that stood out as industry leaders. We picked these 12 companies 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 the company had.

From the list of 12 companies we selected, we chose five that stood out as best picks for customer service, small business, startups, very small businesses and midsize businesses. We then reviewed each company's pricing structure, contract requirements, online and mobile access, the services the PEO offered, and standout features.

Of the five best picks we determined, we dug even deeper, evaluating the customer service and features the plans offer. We contacted our finalists by phone, speaking as small business owners. We inquired about the 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.