How to Explain PEOs to Your Employees

When an employer enters into a contractual relationship with a Professional Employer Organization (PEO) the employer is outsourcing a variety of its back-office and human resources functions. For the employer, many of its day-to-day activities will change, but less so for its employees. Explaining what will change is a valuable step in communicating your employer-employee relationship.

Who’s the boss?

A simple explanation that you can provide to your staff is that for tax purposes, the PEO is listed as their employer on their paychecks and W-2s. However, their supervisor and job responsibilities won’t change. Employees should understand that you will continue to make all hiring, firing, and performance decisions – not the PEO.

You still make the decisions

If the PEO is handling your HR matters, employees may speak with their immediate supervisors or contact a member of the PEO’s HR Department. Be clear that just because they can contact your PEO to investigate an HR issue, you, as the employer, will make any decisions regarding the outcome of the investigation.

Work smarter, not harder

The purpose of a PEO relationship is to outsource your time-consuming tasks so that you can focus on your business. Ensuring that employees understand what a PEO is will smooth the transition for your whole workforce.

Want to learn more about how to get started with a PEO? Contact MBA today!

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