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How Does A Professional Employer Organization Work?

A professional employer organization, or PEO, is a relationship entered by a small to mid-sized business where the PEO company takes on 100 percent of the workforce management administrative responsibility for the company. Specifically, the PEO company takes on the following responsibilities:

PEO services improve retention rates
  • Becomes the employer of record for a company’s employees
  • Responsible for payroll processing and completing payroll taxes
  • Takes over human resources administration and benefits administration
  • Manages workers’ compensation insurances
  • Makes sure the employer has policies that are in compliance with federal, state, and local regulatory policies

The PEO company is able to take on these employee administration obligations because of the co-employment agreement, where employees of a company actually become employees of the PEO firm. The small to mid-sized business is still responsible for all day-to-day management, but the PEO is the employer of record so they can manage all of the employee administration burdens.

The benefits of co-employment through a PEO

More often than not, companies look at co-employment as a bad thing. They feel that they lose some of their control over their employees due to this relationship. This is simply not true. The purpose of the co-employment agreement is to provide relief to employers, by:

  • Relieving employers of the time-consuming burden of employee management activities, such as payroll processing and payroll tax filing.
  • The PEO firm is responsible for nearly all compliance requirements, which reduces your company’s exposure to compliance lawsuits and fines. In fact, XcelHR shares  liability with employers, so they know we are on top of compliance management.
  • The PEO company administers health, dental, life, vision, and many more  insurances, so your company can focus on the core of their business. In addition,  PEOs have greater buying power for insurances and benefits, so we reduce your  overhead costs.
PEOs help employers obtain higher quality benefits

How does the PEO relationship help my government contracting efforts?

There are two primary ways the XcelHR PEO relationship helps government contractors. The first, and most important reason, is that our company manages every aspect of compliance. Government contractors are held to higher standards when it comes to compliance, and are frequently exposed to government audits ensuring that the contractor is compliant. For companies that aren’t compliant, they must, at least, demonstrate they are making significant strides to become compliant. The PEO relationship not only guarantees you will eventually be 100 percent compliant, but shows the government that your company is making the strides to become compliant.

Additionally, our company does a tremendous amount of work with government contractors. We work with contractors in every state, and understand the contracting environment for each state. At XcelHR, we provide our PEO customers with access to government contracting specialists that assist throughout the entire federal procurement process.

Terminated contracts happen because of compliance issues

The XcelHR Value

Take the initial steps to show the government that you are demonstrating compliance. When you enter the XcelHR PEO relationship you get the proactive compliance solutions you need, the shared liability employers want, and comprehensive relief from payroll, benefits, risk management, and human resources administration. Let us manage the intricacies of employee management, while you focus on the core of your business.