PEO Service Agreement: What You Need to Know

A Professional Employer Organization (PEO) is a human resource outsourcing firm that provides businesses with a variety of HR-related services. These services include payroll management, benefits administration, compliance assistance, risk management, and much more.

If you are considering working with a PEO, it is important to understand the PEO service agreement. A PEO service agreement outlines the terms and conditions of the partnership between your business and the PEO.

Here are some key factors to consider when reviewing a PEO service agreement:

1. Services Provided: The PEO service agreement should clearly outline the services that the PEO will provide to your business. This includes payroll processing, benefits administration, regulatory compliance, and more. Make sure you understand exactly what services you are paying for.

2. Costs: The PEO service agreement should clearly outline the costs associated with the services provided. This includes the fees for each service, as well as any additional charges or fees that may apply. Make sure you understand the cost structure and that it fits within your budget.

3. Term: The PEO service agreement should specify the length of the agreement. This could be a set period (e.g. one year) or an ongoing relationship with the option to terminate at any time. Make sure you understand the term and any termination clauses.

4. Liability: The PEO service agreement should outline the liability of both parties. This includes any potential liability for errors or omissions in payroll processing, compliance issues, or other HR-related services. Make sure you understand your liability as well as the PEO’s liability.

5. Confidentiality: The PEO service agreement should outline any confidentiality agreements, including the protection of sensitive employee information, trade secrets, and other confidential information. Make sure you understand the confidentiality agreement and that it meets your standards.

6. Service Level Agreements (SLAs): The PEO service agreement should include SLAs that outline the expected level of service provided by the PEO. This includes response times, accuracy, and other key performance indicators. Make sure you understand and agree to the SLAs outlined in the agreement.

Working with a PEO can be a great way to streamline your HR operations and free up time for other important business activities. However, it is important to fully understand the terms and conditions of the PEO service agreement before signing on the dotted line. By doing so, you can ensure that the partnership is a positive and productive one for your business.