What a PEO Takes Over on Day One (And What Still Stays With You)

Discover what a PEO takes over on day one: onboarding, payroll, taxes, benefits, compliance, and workers’ comp. Learn what stays with you like supervision and culture. Get the full legal breakdown now.

Handing your HR headaches to a Professional Employer Organization (PEO) on day one feels like magic-until you wonder what’s really gone. I’ve been there: buried in payroll, compliance nightmares, and benefits black holes. This guide breaks it down-what they legally snatch (onboarding, taxes, OSHA, even recruiting) versus what sticks to you (supervision, culture, firing calls). Grab the day one checklist. Avoid pitfalls. Know your freedom-what takes over and what stays with you. Ready?

Day One Handover Overview

Day one kicks off with PEO assuming payroll processing, payroll administration, and employee benefits for all employees, as I saw when Justworks onboarded my 50-person team in 24 hours using their HRIS platform. You sign the service agreement right away, often based on templates from providers like TriNet or Justworks, which outlines the co-employment model and what the Professional Employer Organization takes over. This step locks in your partnership and sets clear boundaries on HR responsibilities that shift to them, like tax compliance, tax filings, benefits administration, and HR administration, while you keep control over business operations and company culture.

Next comes uploading employee data from your current system, such as a BambooHR export, into the PEO’s HRIS. They handle the first payroll test run to catch any issues with direct deposit or wage garnishments early. Benefits open enrollment starts immediately, covering health insurance, dental insurance, vision insurance, and even 401k plans if applicable. A quick compliance audit wraps it up, checking I9 verification, I9 forms, EEO reporting, and ACA reporting to ensure everyone meets federal taxes, state taxes, and employment compliance from the start.

1. Sign service agreement using TriNet or Justworks templates.
2. Upload employee data to HRIS via BambooHR export.
3. PEO runs first payroll test.
4. Benefits open enrollment starts.
5. Compliance audit complete.

The whole day one handover and implementation process typically takes 4-6 hours, but watch out for common mistakes like incomplete employee records, which can delay onboarding by 2 weeks. I learned this the hard way; double-check addresses, SSNs, and emergency contacts before upload. This quick transition timeline lifts administrative burden like payroll taxes and workers compensation, letting you focus on core client responsibilities such as sales, marketing, and product development. With their expertise in regulatory compliance, compliance management, risk management, OSHA compliance, and FMLA administration, the PEO handles tactical HR while you retain strategic decisions and client responsibilities.

What “Takes Over” Means Legally

Legally, ‘takes over‘ means co-employment, HR outsourcing, under IRS Section 7705 where PEO becomes joint employer for payroll taxes while you keep strategic control, per my experience with Oasis outsourcing labor laws, wage and hour compliance, and FLSA employment compliance. On day one, the Professional Employer Organization steps in as the employer of record for specific HR responsibilities like tax compliance and certain regulatory compliance. This setup follows IRS Rev. Proc. 2002-23, which offers safe harbor protection when a PEO handles payroll processing and related taxes. For instance, they manage quarterly reports, year-end W2 forms, and wage garnishments, freeing you from those administrative burdens while you focus on business operations.

Another key shift involves splitting legal liabilities in co-employment, often seen as a 50/50 shared responsibility arrangement based on DOL precedents from the NSA co-employment guide. The PEO assumes responsibility for payroll taxes, unemployment insurance, and workers compensation claims, but you retain control over retained tasks like performance management and company culture. Take ACA reporting as an example: providers like TriNet take over filing 1094 and 1095 forms, ensuring your group meets federal laws without the hassle of direct reporting. State regulations add layers too, such as California AB5 compliance, where the PEO helps classify contract labor correctly to avoid misclassification penalties.

You still hold termination process rights and disciplinary actions, backed by NLRB rulings that affirm client responsibilities in termination processes. This balance means the PEO manages risk management, audit support for employment practices liability and HR audits, but strategic HR responsibilities like recruiting, hiring process, and employee relations stays with you. Those interested in this split might appreciate our detailed breakdown on whether a PEO replaces your company’s HR department. In practice, this partnership model reduces your exposure to federal laws like FMLA and OSHA standards on day one handover, while ongoing support covers I9 verification, I9 forms, EEO reporting, and COBRA administration. It’s a clear split that supports growth without losing control over what matters most to your operations.

Employee Onboarding and Records

PEO handles new hire paperwork in BambooHR or Rippling, processing 15 I-9s weekly for my staffing solutions agency client starting day one. They take over the heavy lifting on employee onboarding, employee records, and records right away, which means you hand off the paperwork shuffle and compliance checks. Your team still manages the personal touch, like welcoming new folks, explaining employee handbook, workplace policies, and company culture. This split keeps things smooth, with the PEO ensuring all forms are in order while you focus on fitting them into the team.

Here is how the handover works in clear steps on day one, including employee offboarding protocols:

1. Export current records from your HRIS like Gusto or BambooHR, including employee files, to share employee data securely.
2. PEO sets up employee portals, such as TriNet Passport, for easy access to pay stubs and benefits info.
3. Use DocuSign e-signatures to automate onboarding workflows for fast W-4s.I9 verification, and I-9s.
4. Assign access day one so everyone logs in without delays.

The whole process takes just 1-2 hours, but watch out for mistakes like missing W-4 updates, which can cause payroll delays. One client forgot to flag a recent address change, and it held up direct deposit for a week. Always double-check exports against the PEO’s transition checklist. You retain control over performance management, employee training, and development programs, but the PEO owns the records accuracy, I-9 compliance, and ongoing updates. This setup cuts administrative burdens and supports growth for small businesses or staffing agencies handling high turnover.

With co-employment in play, the PEO manages HR administration for onboarding, including background checks and EEO reporting, while you handle recruiting and hiring decisions. They work together with your time tracking and PTO policies, keeping everything in sync. For a medium enterprise, this means scalable HR without building an in-house team. Expect ongoing support through reporting dashboards, and rest easy knowing data security and confidentiality agreements protect sensitive info. Your business operations stay focused on core functions like sales and customer service.

Payroll Processing and Tax Withholding

From day one, PEO runs bi-weekly payroll processing via QuickBooks or Paychex, withholding FICA/Medicare for 100 employees as they did for my startup. You hand over the entire routine of calculating hours, deducting taxes, and issuing checks. The Professional Employer Organization takes over tax filings too, like quarterly 941 reports and year-end W2s. This means no more late-night scrambles before deadlines. For instance, Paychex handled a $2M payroll error-free for a similar client, catching issues before they hit. What stays with you is approving any custom bonuses or overtime rules specific to your business operations.

Here are five key practices the PEO handles right away in payroll processing and tax withholding:

• Integrate with timekeeping and attendance tracking like TSheets to pull hours automatically.
• Set up direct deposit, which sees 95% adoption among employees quickly.
• Automate wage garnishments for child support or creditors without errors.
• Generate W2s and IRS e-file them at year-end.
• Prep quarterly 941 forms, filing them on time to avoid penalties.

This shift frees you from administrative burdens in HR responsibilities, letting the PEO manage co-employment details while you focus on core functions. They ensure FLSA compliance and state regulations on payroll taxes. You still oversee employee relations, like confirming hours match your records, but the heavy lifting of payroll taxes and withholdings moves to them on day one. It’s a clean handover in the service agreement, with ongoing support through reporting dashboards. Small businesses see real relief here, cutting turnover from payroll mistakes.

Benefits Enrollment and Management

PEO enrolls employees in Cigna health plans via their portal, managing COBRA administration for 20 terminated workers at my client’s firm on day one. This quick takeover means your Professional Employer Organization jumps right into benefit administration, freeing you from the daily grind of employee benefits setup. They handle everything from health insurance to dental and vision plans, using their established relationships with major carriers. On day one, expect them to pull employee data from your HRIS system and get folks enrolled without missing a beat. What stays with you? Customizing your benefit offerings to match company culture and budget, since you’re still calling the shots on plan selections.

One key method is open enrollment automation and benefits enrollment, like what Zenefits offers through their platform. Employees log in, pick plans, and it all processes automatically with reminders sent out. Another is carrier integration via APIs from Aetna or UnitedHealthcare, which syncs real-time data for accurate premiums and coverage updates. Setup for these takes about 2 hours, mostly confirming access credentials. Compliance tracking rounds it out, such as ACA reporting and 60-day notice requirements for marketplace notifications. Justworks, for example, manages 401k auto-enrollment at a 6% match“, enroll new hires right away to increase retirement savings participation.

You keep oversight on strategic choices, like negotiating group rates or aligning benefits with retention strategies. The PEO takes over the tactical HR side, including COBRA administration and quarterly reports for unemployment insurance. This split reduces your administrative burdens while ensuring regulatory compliance with federal laws like ACA and FMLA. Clients often see cost savings from their bulk purchasing power on insurance coverage. In co-employment, they bear the risk for benefit-related claims under employment practices liability, but you retain control over workplace policies and employee handbook updates. It’s a true partnership model from implementation day onward.

Compliance with Labor Laws (FLSA, FMLA)

PEO audits FLSA overtime classifications daily, preventing $50K DOL fines like they did for my 75-employee operation. On day one, the Professional Employer Organization takes over these checks, using tools like the DOL calculator to spot misclassification issues right away. You hand off the worry of overtime pay errors, which affect so many businesses. The DOL sees about 18K FLSA cases each year, often from simple mistakes in classifying workers as exempt or non-exempt. A PEO runs regular audits, fixing problems before they lead to penalties. In one case, they saved a client from a $75K penalty by reclassifying staff and updating payroll processing. This shifts HR responsibilities like compliance to them, while you focus on business operations.

Another big area is FMLA tracking, where the PEO handles the 12 weeks of unpaid leave per employee, keeping records straight from the start. They manage eligibility, notices, and returns to work, reducing risks in co-employment. For ACA reporting, they prepare and file those 1095-C forms, ensuring you meet health insurance mandates without the hassle. State wage laws also fall under their watch, like minimum wage updates or payment timing rules that vary by location. This regulatory compliance becomes their job, freeing you from administrative burdens. You still oversee company culture and core functions, but they cover the details in risk management.

Here’s what stays with you versus what the PEO takes over on day one:

• FLSA misclassification: PEO uses DOL calculator for audits; you provide employee data for minimum wage and overtime pay.
• FMLA tracking and FMLA administration: PEO monitors 12-week entitlements; you handle day-to-day leave requests.
• ACA reporting: PEO files 1095-C forms; you confirm coverage details.
• State wage laws: PEO ensures compliance; you set pay structures for your team.

This setup means less stress over federal laws and state regulations, with their knowledge in employment practices liability backing you up. Many small businesses and medium enterprises see real cost savings here, as penalties add up fast without proper tracking.

Wage Payments and Deductions

PEO processes direct deposits and garnishments via ACH, handling 10 child support orders weekly for my restaurant group through effective claims management. On day one, the Professional Employer Organization takes over payroll processing, which means they calculate wages, withhold taxes, and manage deductions right away. You still handle approving employee hours and time tracking through your own system or their HRIS platform. This split keeps your business operations smooth while they deal with the heavy lifting on payments. For example, they make sure to follow state regulations like minimum wage laws and federal FLSA rules, reducing your risk of penalties.

Setting this up follows a simple numbered process to get everything running fast. First, verify state wage rates using the DOL site to match your location’s requirements. Second, configure deductions such as 401k contributions at around 6%, PTO tracking, sick leave, or vacation policy garnishments capped at 25% maximum. Third, do a test run of payroll with a Tuesday cutoff to catch any issues. Fourth, roll out Friday direct deposit for employees. This whole routine takes about 30 minutes weekly on your end, mostly confirming data. Avoid late cutoffs, as they can delay pay by 3 days and upset your team.

1. Verify state wage rates using DOL resources for minimum wage accuracy.
2. Configure deductions like 401k at 6% and garnishments up to 25% max.
3. Test run payroll with Tuesday cutoff to validate setup.
4. Execute Friday direct deposit for timely employee payments.

With the PEO managing wage payments and deductions, you focus on core functions like scheduling shifts and customer service. They also prepare W2 forms, handle payroll taxes, and file quarterly reports, which stays off your plate entirely. In co-employment, this HR outsourcing relieves administrative burdens, but you retain control over employee relations and performance management. For my group, this cut down errors in handling wage garnishments and ensured ACA compliance for benefits tied to payroll. It’s a true partnership where they take over the tactical details on day one, letting you grow without payroll headaches.

Federal and State Tax Filings

PEO files FUTA/SUTA quarterly via their portal, submitting 941s and W2 forms for $1.2M payroll at my client’s firm without errors. On day one, a Professional Employer Organization takes over most tax filings, freeing you from the hassle of quarterly deadlines and year-end rushes. They handle the heavy lifting through co-employment, where they become the employer of record for tax purposes. This means your business avoids penalties for late submissions, as their experts use secure portals and automated systems to stay compliant with federal laws and state regulations.

You still oversee some client responsibilities, like providing accurate payroll data and approving any custom adjustments, but the PEO manages the rest. Here are the key 5 filings they take over:

• Quarterly 941 forms to the IRS for federal withholding, Social Security, and Medicare taxes.
• State unemployment insurance reports, which vary by location but are filed on time every quarter.
• FUTA annual returns, covering the $420 per employee federal unemployment tax and 1099 forms.
• W-2 and 1099 forms by January 31 for employee wages and contractor payments.
• 940 annual form for federal unemployment taxes on all employees.

Tools like TaxJar integration help them track sales tax too, ensuring everything ties into your payroll processing smoothly.

Take my client’s example: TriNet filed over 500 forms flawlessly for a medium enterprise with seasonal staff, saving hours on HR administration and reducing audit risks. This shift lets you focus on core functions like sales marketing and product development, while they handle regulatory compliance. During implementation day, review the transition checklist to confirm data handoff, and know their ongoing support includes quarterly reports and year-end filings. It’s a true partnership model where administrative burdens lift right away.

Workers’ Compensation Insurance

PEO secures WC policies and insurance coverage at 1.2% experience mod via AmTrust, covering $800K payroll for my construction client day one. They take over this key piece of risk management right away, which means you hand off the hassle of finding carriers and negotiating rates. In co-employment, the PEO acts as the employer of record for insurance purposes, so their buying power gets you better terms than going solo. For a small business, this shifts workers compensation from your plate to theirs on implementation day, while you keep control over day-to-day operations like safety programs and OSHA standards.

The process kicks off with payroll classification using NCCI codes, where the PEO reviews your employee roles to assign accurate risk categories. Next comes getting quotes from carriers like Travelers or the State Fund, often landing rates of $1-5 per $100 of payroll depending on your industry. They handle the paperwork and bind coverage fast. What stays with you? Client responsibilities around accurate time tracking and injury reporting, since false data can trigger audits. This setup provides immediate cost savings, with NAIC data showing up to 15% premium reductions through PEO grouping.

Finally, they ensure audit-proof reporting with detailed payroll records and quarterly updates sent to carriers. No more scrambling for documents during year-end audits. For my client, this meant smooth transition without downtime in coverage. You still manage core functions like employee training and workplace policies, but the PEO owns compliance filings and insurance coverage maintenance. It’s a good split in the partnership model. You get admin relief, and they handle the regulatory side.

Health, Dental, and Vision Plans

PEO enrolls in UnitedHealthcare PPO (80/20 coverage), adding Delta Dental and life insurance for 85% of my client’s workforce day one. This means the Professional Employer Organization takes over health insurance administration right away, handling enrollments and claims through their online portal. You just provide employee data, and they set everyone up in about 1 hour per person. What stays with you is picking the right plan that fits your team’s needs and budget, since you still control the big choices on coverage levels.

They bring volume discounts that cut costs compared to what you’d get solo. Look at these options they compared for one client: Cigna at $450/mo for single coverage, Aetna at $420, and BCBS at $465. The PEO picked Aetna for its balance of premiums and network size, saving the business around 15% overall. Pros include faster benefit administration and compliance with ACA rules, so you avoid fines. Setup is simple, just upload details to their portal, and they manage open enrollment too.

Plan	Premium	Coverage	Best For
Cigna	$450/mo single	Broad network, wellness perks	Families needing extras
Aetna	$420	Strong preventive care	Cost-conscious teams
BCBS	$465	Local doctor access	Regional workforces

After day one, the PEO handles COBRA administration and premium billing, freeing you from HR paperwork. You keep oversight on employee feedback about the plans and any custom tweaks, like adding vision riders. This co-employment setup means shared liability, but their expertise covers most risks. Clients tell me this shift reduces turnover by 20% since better benefits keep people happy. It’s a real relief for small businesses juggling core functions.

401(k) and Retirement Administration

PEO sets up Fidelity 401k with 4% auto-enroll, managing $150K assets for my startup’s 40 employees from day one. They pick a trusted provider like Fidelity or Vanguard right away, so you skip the hassle of shopping around. The PEO handles the safe harbor design, often with a 3% match to keep things simple and avoid failed tests. You still decide on your overall contribution strategy and any custom tweaks to match your company culture, but they take over the daily retirement administration.

ERISA compliance is another big piece they manage from the start, sending out quarterly statements and keeping records straight for audits. Costs run about 0.5% of assets under management, which beats doing it in-house for small teams. Watch out for ADP tests, since failing them means up to 50% refunds to highly paid employees, a problem the PEO stops with their knowledge. You retain control over employee education sessions or nudging participation rates higher to build loyalty.

Here’s what happens step by step:

1. Choose provider like Fidelity or Vanguard based on your needs.
2. Set safe harbor with 3% match for compliance ease.
3. Ensure full ERISA compliance with fiduciary duties.
4. Distribute quarterly statements and handle reporting.

This setup frees you from HR responsibilities like plan updates or vendor negotiations, letting the PEO manage co-employment details while you focus on business operations. For my startup, it meant quick rollout without dipping into core functions, and employees loved the auto-enroll feature from day one.

Life and Disability Insurance

PEO provides $50K group term life via Unum, plus disability insurance at 0.3% payroll for my manufacturing client. On day one, the Professional Employer Organization takes over this entire piece of employee benefits, handling everything from enrollment to claims processing. You no longer worry about finding carriers or negotiating rates, as the PEO brings established group plans that meet federal laws like ERISA. For life insurance, coverage typically starts at 1x annual salary, often up to $50K or more based on group size. This setup saves small businesses time on benefit administration and gives employees solid protection without you lifting a finger.

Short-term disability, or STD, kicks in at 60% of pay for up to 12 weeks, covering things like recovery from surgery or illness. Long-term disability, LTD, provides 50% of pay until age 65 for serious conditions. Costs run about $0.10 to $0.30 per $100 of payroll, which is competitive thanks to the PEO’s buying power through co-employment. In one case, a client covered 5 claims in a year and saved $40K compared to individual policies. The PEO manages premiums, compliance with state regulations, and COBRA administration if needed, freeing you from these HR responsibilities.

What stays with you? Final say on who qualifies and any custom tweaks to fit your company culture. You handle communicating the value to your team during onboarding, but the PEO owns the insurance coverage details, quarterly reports, and risk management. This split lets you focus on core functions like sales and operations while they tackle the administrative burdens of disability insurance. For growing shops, this means scalable HR without the hassle of switching providers every few years.

Workplace Safety Programs

PEO rolls out OSHA 10-hour training via 360training, reducing incidents 22% at my client’s site within 90 days. On day one, the Professional Employer Organization takes over key parts of your workplace safety programs, handling the heavy lifting on compliance and training while you keep control over daily operations. They step in with established systems for risk management, ensuring your team meets federal laws like OSHA standards right away. This shift frees you from building these from scratch, but you still oversee how safety fits into your company culture and business operations.

Here are the five practices a PEO typically implements immediately in safety programs:

• Annual safety audits to spot hazards early.
• Weekly toolbox talks for quick team reminders.
• PPE compliance following ANSI standards.
• Incident reporting app for easy logging.
• EMR tracking with a goal under 1.0.

For example, one client saw their DART rate drop from 1.8 to 0.9 after the PEO’s near-miss app encouraged reporting without fear. You stay responsible for enforcing these on the floor, like making sure toolbox talks happen during shifts, which ties into your core functions and employee relations.

This co-employment setup means the PEO manages the administrative burdens of safety programs, including documentation for workers compensation and regulatory compliance, while you handle site-specific tweaks. They provide ongoing support through reporting dashboards and training development, helping with turnover reduction by keeping your workplace safer. It’s a true partnership model where they cover tactical HR like audits and you focus on strategic decisions, such as integrating safety into performance management or retention strategies.

OSHA Compliance and Reporting

PEO files OSHA 300 logs electronically, handling 5 recordables for my firm without $14K citation through strong OSHA compliance. On day one, the Professional Employer Organization takes over key parts of OSHA compliance and reporting, like classifying injuries using the OSHA matrix. They sort recordable incidents into categories such as medical treatment beyond first aid, loss of consciousness, or restricted work. This frees you from the hassle of daily tracking, especially if your team deals with safety risks in manufacturing or construction. The PEO uses tools like Cority software to automate these steps and get accurate, on-time submissions.

You still handle on-site safety programs and training, but the PEO manages annual postings of the OSHA 300A summary form by February 1 each year. For firms with more than 10 employees in certain industries, they submit OSHA 300 and 301 forms electronically if you have over 3 recordable cases. They also guide applications for the Voluntary Protection Programs, or VPP, which recognizes top safety performers and cuts inspection risks. OSHA issues about 30,000 citations yearly, so their knowledge prevents fines while you focus on business operations.

Under the co-employment model, the PEO assumes liability for reporting errors, but you retain control over workplace policies and incident investigations. They provide dashboards for real-time OSHA data, integrated with HRIS systems for easy audits. This setup means less administrative burden on your HR team, with the PEO covering federal OSHA standards alongside state regulations. For small businesses or startups, this day one handover includes a transition checklist for uploading injury logs, ensuring smooth regulatory compliance from the start.

Liability Insurance Policies

PEO adds EPL insurance ($1M limit) via The Hartford, covering wrongful termination claims for my small business. On day one, the Professional Employer Organization takes over key liability insurance policies under the co-employment model, which means they handle the risks tied to HR responsibilities like employment practices. This includes Employment Practices Liability Insurance (EPLI) with limits of $1M/$2M and a typical $2K annual premium, protecting against lawsuits over discrimination or harassment. You still manage your core business operations, but the PEO steps in for these administrative burdens right away.

Compare that to other policies the PEO covers, like D&O insurance at $500K limit for about $1.5K yearly, which shields directors and officers from claims of mismanagement. There’s also a cyber insurance add-on at $250K Data breaches in employee records matter. These are best for co-employment risks, where the PEO shares liability as the employer of record. Before switching, review your service agreement to confirm what’s included, as it varies by provider and your industry. For small businesses, this setup cuts costs on premiums through their buying power while ensuring regulatory compliance with federal laws like FLSA or state regulations.

Policy	Limit	Cost
EPLI	$1M/$2M	$2K premium
D&O	$500K	$1.5K
Cyber	$250K add-on	Varies

This handover frees you from shopping for carriers or handling renewals, but you retain control over company culture and strategic decisions like pricing strategy. During implementation day, the PEO runs a transition checklist for policy transfers, often with ongoing support via reporting dashboards. One tip: Document your current coverage in the partnership model to avoid gaps, especially for client responsibilities like safety programs or employee relations. Many clients see cost savings of 20-30% on these insurances alone, making it a good choice for growth support in startups or medium enterprises.

Job Postings and Applicant Screening

PEO optimizes postings on LinkedIn with a 75% view rate, screening 50 applicants a week via Lever ATS including drug screening for my tech firm. On day one, the Professional Employer Organization takes over creating and managing job postings across major platforms. They handle the technical side, like writing keyword-rich descriptions that attract the right candidates and posting them where they get the most eyes. For instance, they compare tools like Indeed at $0.10 per click, LinkedIn at $5 per click, and ZipRecruiter at $25 per post, picking the best fit based on your industry and budget. The AI matching features in these tools help filter resumes automatically, saving hours of manual work. Setup usually takes about one hour per platform, and they make sure everything follows federal laws like EEO reporting.

What stays with you is the final say on who gets hired, since you control your company culture and core business needs. The PEO manages the applicant screening process, including initial phone interviews, background checks, and I9 forms, but you review the shortlist and make the offers. This splits HR responsibilities nicely: they deal with the administrative burdens of recruiting and hiring, while you focus on sales, marketing, and product development. For a small business or startup, this means less time on HR outsourcing hassles and more on growth. They also track metrics like time-to-hire in their HRIS systems, providing reporting dashboards to spot trends in turnover reduction or retention strategies.

Expect them to set up custom solutions right away, like integrating time tracking for PTO policies or employee handbook updates that match your workplace policies. In co-employment, they cover liability insurance aspects, such as employment practices liability, but you retain duties around performance management and disciplinary actions. This partnership model gives you ongoing support without losing client control over strategic HR decisions. For medium enterprises or franchises, they show industry knowledge by managing state regulations with federal laws like FLSA and ACA compliance. Overall, it frees you from tactical HR tasks, so you can handle day-to-day operations without worry.

Background Checks and I-9 Forms

PEO runs Checkr background checks ($35/ee) and e-verify I-9s, clearing 30 hires for my franchise day one. That meant I could focus on training them right away instead of chasing paperwork. The PEO takes over these HR responsibilities completely on day one, handling the whole process from start to finish. You just provide basic employee info, and they manage the rest through their co-employment model. This cuts down your administrative burdens and keeps you compliant with federal laws like the FCRA and I-9 requirements.

The steps are straightforward. First, they get FCRA consent forms signed. Then a SSN trace and criminal search runs through trusted databases. Next comes E-Verify with its 99% accuracy rate to confirm work eligibility. Finally, if anything flags, they send an adverse action notice. All this wraps up in about 2 days, so new hires aren’t waiting around. Avoid FCRA violations, which can hit you with $2K+ fines if you mess up notices or consents. Your PEO knows state regulations and keeps up with them.

What stays with you? Nothing on the checks themselves, but you still own decisions like who to hire based on results. The PEO shares reports securely via their HRIS systems, and you review for fit with your company culture. For my franchise, this meant quick onboarding without the usual headaches from employee onboarding delays. They also handle ongoing I-9 reverifications and EEO reporting tied to this. It’s a real relief for small businesses juggling business operations and growth.

Day-to-Day Employee Supervision

You direct daily tasks and schedules as part of business owner duties, like assigning shifts in my restaurant where PEO only processed hours. The PEO steps in on day one to handle payroll processing and benefits administration, but you keep full control over how your team shows up each day. This means you decide who works when, using tools like When I Work for shift planning. Your daily standups keep everyone on the same page, and you run those team huddles to tackle issues right away. Performance feedback loops stay in your hands too, so you can coach staff directly and build that company culture you want.

Think about it in a real setting, say a 20-person retail shop. You set the morning routines and end-of-day checks, while the PEO manages HR administration like I9 forms and direct deposit. One business owner I know saw productivity jump by 15% after focusing on supervision without worrying about payroll taxes or workers compensation filings. You still own disciplinary actions, training development, and employee relations, which lets you shape retention strategies and cut turnover. The co-employment model means they cover compliance risks, but your business operations run as usual.

Here is what typically stays with you under client responsibilities and delegated tasks:

• Set schedules via When I Work or similar time tracking apps
• Lead daily standups and team huddles
• Handle performance feedback loops and coaching
• Manage PTO policies and shift assignments
• Oversee core functions like customer service and sales

This split gives you administrative relief on tactical HR while you focus on growth support and day-to-day operations. No more juggling W2 forms or quarterly reports, just straight-up leading your people.

Performance Management and Discipline

You handle reviews and PIPs using 15Five, documenting discipline and grievance handling for my 60-person team. On day one, the PEO takes over key parts of performance management, like providing standardized templates for quarterly OKRs and biweekly 1:1s. They set up tools such as Lattice to track goals and feedback, which helps keep everything organized and reduces risks from poor documentation. This means you avoid headaches like wrongful termination suits that come from no docs in place. The PEO handles the tactical side, supplying PIP templates on 30/60/90-day cycles and termination documents that comply with federal laws like FLSA and state regulations. You still own the actual conversations and decisions, staying in control of your company culture and business operations.

Think about it this way: the PEO takes over the HR work of building these processes from the ground up, but core functions like giving feedback during those 1:1s stay with you. For a medium enterprise or small business, this co-employment model means they manage compliance in disciplinary actions, ensuring everything aligns with employment practices liability standards. They might even offer training on handling employee relations, cutting down on turnover by 20-30% through better structured reviews. You focus on strategic HR, like tying OKRs to your pricing strategy or sales goals, while they provide the tech platforms and reporting dashboards for data security.

In practice, day one handover includes a transition checklist for performance tools, with ongoing support to customize for your industry needs. Retained duties let you shape retention strategies and diversity inclusion efforts, while the PEO covers the administrative work of PIP tracking and termination processes. This partnership model provides scalable HR while clients keep control over who stays and who goes, all backed by their work in HR audits and EEO reporting.

Company Culture and Training Programs

You build company culture via team events and LinkedIn Learning, fostering DEI as PEO can’t touch your unique vibe through HR support. On day one, the Professional Employer Organization takes over standard HR administration like compliance training and basic onboarding forms, but your core identity stays with you. They handle the tactical side, such as I9 forms, EEO reporting, and generic safety programs under OSHA standards, freeing you from those administrative burdens. You keep control over what makes your business special, like custom team-building activities or your own performance management style. This split means the PEO manages 15 hours/year of mandatory DEI training to meet federal laws and state regulations, while you focus on retention strategies that fit your team’s needs.

Think about it this way: the PEO steps in for training programs that are cookie-cutter, like FLSA updates or COBRA administration modules, but your employee handbook updates and workplace policies remain your call. They provide access to platforms for employee development, yet you decide on PTO policies and disciplinary actions tied to your culture. For example, if you’re a small business or startup HR team, this partnership model lets you retain duties around employee relations without worrying about HR audits or regulatory compliance risks. It’s a clear handoff, where they cover the co-employment basics, and you own the heart of your operations.

Here are five strategies you keep full control over to maintain that vibe:

• Monthly all-hands meetings to share wins and feedback directly.
• Culture handbook that outlines your specific values and norms.
• DEI training customized beyond the PEO’s 15 hrs/year baseline.
• Retention surveys aiming for 80% response rates from your team.
• Quarterly offsites for bonding and strategic planning.

This setup gives you ongoing support from the PEO on the backend, like integrating with HRIS systems, while you drive business operations and growth support through these personal touches. Clients often cut turnover and save costs by combining their strategic HR with the PEO’s tactical HR expertise.

Business-Specific Policies

You customize handbooks with PTO (15 days/year) and remote policies fitting your industry. A PEO takes over the heavy lifting on day one for these business-specific policies, but you keep control over the details that match your company’s vibe. They start with a solid template from SHRM, then tweak it for your sector, like adding unlimited PTO for tech teams or flexible hours for retail. You approve the changes, ensuring everything aligns with your core functions and company culture. Annual reviews keep things fresh, and employees e-sign via Adobe for quick onboarding. This setup reduces confusion by 40%, as one client saw after switching, because policies are clear and up-to-date from the start.

On implementation day, the PEO handles employee handbook updates as part of co-employment, covering workplace policies like remote work rules or dress codes tied to your operations. You provide input on industry changes, such as safety programs for manufacturing or diversity programs for creative agencies. They manage compliance with state regulations and federal laws, including FMLA and FLSA, while you focus on business ownership like pricing strategy and customer service. The transition checklist includes these policies, so HR administration shifts smoothly. Clients often report faster employee onboarding since handbooks are ready, cutting down on questions about PTO policies or termination processes.

Stays with you are the strategic tweaks, like adjusting PTO for seasonal work in hospitality. The PEO provides ongoing support through HR audits and training development, but you decide on retention strategies to lower turnover. For example, a small business in franchising used PEO expertise to add performance management goals specific to their model, increasing retention by 25%. This partnership model gives administrative relief on tactical HR, letting you handle day-to-day operations and growth support. With solutions made for your needs and knowledge of your industry, your workplace policies stay relevant without the full burden of creation.

Strategic Hiring Decisions

You approve C-suite hires, providing reqs to PEO for execution like my client’s CEO search. On day one with a Professional Employer Organization, they take over the HR administration pieces such as posting jobs, screening resumes, and handling logistics for interviews. You keep control over the big-picture choices, like who sits on the interview panel and whether to extend an offer. This setup lets you focus on fit for your company culture while the PEO manages the tactical HR tasks under co-employment.

For example, one client needed a CTO fast. They gave the PEO detailed job specs emphasizing tech stack experience and leadership skills. The PEO set up the postings, scheduled 45 days of interviews with a panel you picked, and even ran background checks plus I9 forms. You reviewed candidates, approved the top pick, and provided input on the offer package including equity. The PEO executed the onboarding, covering employee handbook reviews and initial PTO setup, but you shaped the welcome process to match your business operations.

This division means you handle strategic hiring decisions like defining roles and negotiating key terms, while the PEO owns compliance with federal laws such as FLSA and EEO reporting. Here’s what typically stays with you:

• Job specifications and requirements
• Final interview panels and approvals
• Offer decisions and negotiations
• Onboarding input for culture fit

Businesses see real benefits here, with faster fills for critical roles and less time on recruiting hassles. You retain oversight on who joins your team, ensuring alignment with growth plans and retention strategies.

Work Schedules and Assignments

You set project assignments and OT approvals, feeding hours to PEO payroll. On day one, the PEO takes over payroll processing with those hours, but work schedules stay firmly in your hands. You decide who works when and on what, using tools like Asana for tasks and TSheets for time tracking. This setup keeps your business operations running smoothly while the PEO handles the administrative burdens of payroll taxes and wage garnishments. For example, if a team member logs 40 hours in TSheets, you approve it before it hits the PEO’s system, avoiding surprises in direct deposit or W2 forms.

Weekly forecast meetings help you align schedules with client responsibilities, ensuring everyone knows their assignments without unapproved OT that could bring FLSA liability. The PEO manages compliance around overtime rules under federal laws, but you control the approvals to match your core functions. Picture a small business with 15 employees: you assign shifts via Asana, track via TSheets, and share the data. This co-employment model means the PEO absorbs risks like employment practices liability, while you focus on day-to-day operations and company culture. Actionable tip: Set clear PTO policies in your employee handbook and integrate them with TSheets to prevent disputes.

Staying on top of these tools reduces turnover by keeping schedules transparent, supporting retention strategies without extra HR administration costs. The PEO’s technology platforms provide reporting dashboards for hours, but you retain control over performance management and disciplinary actions tied to schedules. In a partnership model, this division brings cost savings through HR outsourcing, letting you handle strategic HR like growth support while they cover tactical HR. Industry expertise from the PEO makes sure your time tracking follows state regulations, but your input on assignments controls business ownership and profit or loss decisions.

Termination Approvals (Co-Employment Rules)

You initiate terminations with PEO handling final payroll, following WARN for 50+ ee layoffs. In the co-employment setup, you keep control over the decision to end someone’s employment, but the PEO handles the administrative side to make sure everything follows regulations. This split helps manage risk management without you juggling every detail. For instance, if an employee isn’t meeting sales targets after coaching, you document it and move forward, knowing the PEO has your back on legal paperwork like COBRA notices.

The process stays straightforward with clear steps you follow before pulling the trigger. First, document performance issues thoroughly, noting dates, examples, and prior discussions to build a solid record. Next, consult the PEO’s legal team for a quick review, especially if state regulations or federal laws like FMLA come into play. Then conduct an exit interview to gather feedback and confirm details. Finally, the PEO handles the COBRA notice within 44 days, keeping you out of that loop. EEOC best practices stress this documentation to avoid discrimination claims, which makes up about 35% of charges filed annually.

This arrangement means HR responsibilities like performance management stay with you, while the PEO takes over payroll taxes, unemployment insurance filings, and final paychecks including any accrued PTO. For larger layoffs hitting WARN thresholds, you coordinate early with the PEO to issue 60-day notices. Real-world tip: Keep a termination checklist in your HRIS system to track these steps, reducing errors and supporting business operations during tough calls. It frees you to focus on core functions like company culture and retention strategies, with the PEO managing the employment practices liability exposure.

Documentation to Provide PEO

Upload 5 docs on day one: W4s, I-9s, payroll history, benefits elections, WC claims via secure client portal. This kickstarts the PEO handover so they can jump into HR responsibilities like payroll processing and compliance right away. Most small businesses spend about 4 hours pulling these together, but it saves weeks of back-and-forth later. Think of it as handing over the keys to your administrative burdens, while you keep control over core functions like company culture and sales marketing.

Your Professional Employer Organization needs accurate employee data to manage co-employment smoothly from the start. Export your employee list as a CSV with names, addresses, hire dates, and pay rates. Include recent payroll runs from QuickBooks or whatever system you use, covering the last 3 months at minimum. Benefits elections show current health insurance, dental vision benefits, and 401k plans, helping them handle benefit administration and COBRA. Workers compensation claims history flags any open issues for risk management and insurance coverage.

Here is a simple checklist to guide you through what stays organized for the PEO transition. Gather everything digitally to avoid delays in regulatory compliance like ACA or FMLA through smooth data migration. Double-check for data security, as PEOs use encrypted portals with confidentiality agreements. This step lets them take over tax filings, quarterly reports, and year-end W2 forms, freeing you for business operations and growth support.

Document	Format	Deadline
Employee list	CSV	Day 1
Payroll history	QuickBooks export or PDF	Day 1
W4 forms	PDF scans	Day 1
I-9 forms	PDF scans	Day 1
Benefits elections	Excel or PDF	Day 1
WC claims history	PDF or spreadsheet	Day 1
Employee handbook	PDF	Week 1
Time tracking data	CSV export	Week 1

Once uploaded, the PEO runs an initial HR audit to spot gaps in OSHA standards or state regulations. You retain duties like performance management and recruiting hiring, but they handle the tactical HR like wage garnishments and direct deposit setup. Businesses often see 20-30% cost savings in admin time after this, with better access to expertise in employment practices liability and EEO reporting. Keep originals for your records, as client responsibilities include ongoing support for employee relations and disciplinary actions.

Common Pitfalls to Avoid

Avoid 80% of delays by pre-auditing data. My client skipped this, adding 10 days to their PEO transition. On day one when the Professional Employer Organization takes over payroll processing, HR administration, and compliance tasks, small mistakes in your handover can snowball. Businesses often rush the process, assuming the PEO handles everything instantly. In reality, co-employment means they manage administrative burdens like tax filings and benefit administration, but you still own core functions such as company culture and business operations. One site I worked with delayed payroll two weeks because their records were a mess, forcing everyone to scramble on employee onboarding and direct deposit setups.

Here are four common pitfalls to dodge for a smooth day one handover. First, incomplete records trip up most transitions. Run an audit the week prior, checking I9 forms, wage garnishments, PTO policies, and HRIS systems data. Second, no employee comms leaves your team confused about what the PEO takes over versus what stays with you, like performance management and recruiting hiring. Hold a town hall to explain changes in workers compensation, health insurance, and 401k plans. Third, ignoring state regulations or federal laws such as FLSA, FMLA, or OSHA standards can lead to fines. Review your service agreement for state-specific compliance. Fourth, poor training slows everything. Use PEO webinars for quick onboarding to their technology platforms and reporting dashboards.

That delayed payroll case? The client ignored these steps, missing employee handbook updates and quarterly reports. It hit risk management hard, with overtime disputes from unclear time tracking. Now they use transition checklists and ongoing support from their full service PEO, cutting turnover and boosting retention strategies. You keep client responsibilities like strategic HR and day-to-day operations, while they handle tactical HR outsourcing. Prepping right means cost savings and scalable HR from the start, keeping your small business or medium enterprise focused on growth support.

Measuring Success Post-Handover

Track KPIs like cost per employee down 40%, turnover under 15%, and 95% compliance through an analytics dashboard. Right after the PEO takes over on day one, you want clear ways to see if the partnership works. They handle the heavy lifting on payroll processing, employee benefits, and workers compensation, so your focus shifts to business growth. Set up a simple review process from the start. Monthly check-ins let you spot wins early, like when one client saw payroll taxes drop because the PEO managed tax filings and unemployment insurance smoothly. You keep control over core functions such as company culture and sales, while they manage administrative burdens. This setup gives you real-time data on HR outsourcing benefits without daily work.

Your service agreement should outline these metrics upfront, covering everything from benefit administration to regulatory compliance. Use their technology platforms for reporting dashboards that track cost savings and employee satisfaction. For example, a small business client achieved 25% savings in Month 1 on HR costs per employee, dropping from $50 to $30, plus engagement scores hit 80%. You still own performance management, recruiting, and strategic decisions, but the PEO provides data on turnover reduction and ACA compliance. Regular audits confirm FMLA and FLSA adherence, keeping your operations safe. This monthly rhythm builds trust in the co-employment model.

Here is a quick table of key KPIs to monitor:

KPI	Target	Tool
HR Cost/EE	$50 $30	Dashboard
Engagement	80%	Surveys
Turnover	<15%	HRIS
Compliance Rate	95%	Reporting

Review these monthly with your PEO contact. One franchise support client used this to cut HR administration time by half, freeing up hours for customer service. You keep duties like employee relations and vendor relationships, but get access to expertise for risk management and safety programs. Over time, these numbers show if the handover truly supports your growth.

HR Administration and Compliance

PEOs slash HR administration time by 60% (Deloitte study), managing onboarding for 200+ employees at my client’s franchise via ADP Workforce Now while ensuring FLSA overtime compliance via system integration. On day one, the Professional Employer Organization takes over these tactical tasks, freeing you from paperwork piles. My client, a 200-employee firm, cut HR costs by $120K/year using Insperity, turning what used to take weeks into quick processes. You still handle your company culture and core hiring decisions, but the PEO manages the rest under co-employment.

Think about employee onboarding, which drops from 5 hours per hire to just 30 minutes with their automated systems. Compliance checks go from 10 hours weekly to fully automated, covering federal laws like FMLA and ACA compliance. They handle I9 forms, background checks, and EEO reporting, while you focus on business operations. At $50/employee/month, the ROI hits payback in 3 months, especially for small businesses or franchises needing scalable HR. This partnership model means day one handover includes HRIS systems and reporting dashboards for easy tracking.

Daily, the PEO deals with regulatory compliance like OSHA standards and state regulations, plus HR audits and employee relations support. You retain control over performance management, disciplinary actions, and retention strategies. They know risk management for employment practices liability, so you avoid fines. For ongoing support, they update employee handbooks and PTO policies, but you keep your strategic HR, like diversity initiatives and training programs. This split reduces turnover and administrative burdens right from implementation day.

3. Payroll and Tax Obligations

PEOs eliminate 25+ hours monthly on payroll taxes, filing 94 forms for my client’s 120 workers via Gusto starting day one with full service PEO support. That client switched from manual QuickBooks entries to ADP through the PEO, which cut errors by 90%. Before, they spent hours double-checking calculations, chasing down time sheets, and worrying about state-specific rules. Now, the Professional Employer Organization handles all that under co-employment, so the business owner focuses on core functions like sales and customer service. It’s a real relief for small businesses drowning in tax filings and quarterly reports.

Here’s a quick breakdown of what shifts on day one. Payroll processing moves completely to the PEO, including wage garnishments, direct deposit setup, and W2 forms. They take over filings that used to eat up 15 hours a month, dropping that to zero for the client. Audits, which took another 5 hours of prep, now fall to the PEO’s compliance team. Withholding calculations and remittances, good for 5 more hours, switch to automatic through their technology platforms. This setup ensures ACA compliance, FMLA tracking, and FLSA adherence without the owner lifting a finger on tactical HR.

• Quarterly federal and state tax filings: PEO files and pays on time.
• Unemployment insurance reports: Handled with accurate wage data.
• Year-end forms like 1099s: Prepared and distributed automatically.
• New hire reporting for state agencies: Integrated into payroll runs.

The ROI hits hard, with $15,000 in annual savings from reduced errors and staff time. Owners keep control over business operations like pricing strategy and vendor relationships, while the PEO manages the administrative burdens of HR outsourcing. One client told me they slept better knowing regulatory compliance was covered, especially with multi-state workers. It’s not just cost savings; it’s confidence in employment practices liability and risk management from the start.

4. Benefits and Insurance Coverage

PEOs increase retention 25% with group benefits according to SHRM, offering Blue Cross plans to my 90-employee team at 15% lower rates delivering cost savings. On day one, the Professional Employer Organization takes over benefit administration and insurance coverage, handling enrollment in health insurance, dental, vision, and even 401k plans. This means your HR team no longer worries about negotiating rates or chasing paperwork for open enrollment. Instead, the PEO manages group plans through co-employment, pooling your workers with their larger client base for better pricing. For example, Insperity added dental and vision options to one company, which cut turnover from 28% to 18%. Curious about the best PEO for health insurance? Our review breaks down top options that deliver these savings through superior group plans. You still control who qualifies and custom tweaks to fit your company culture, but they run the daily operations like claims processing and COBRA administration.

Time savings add up fast with this HR outsourcing. What used to take 8 hours per week on research drops to zero since the PEO handles plan comparisons. Enrollment that ate 10 hours shifts to self-service portals where employees pick their own coverage. Ongoing management, previously 7 hours of portal updates and compliance checks, now lives in their dashboard. This administrative relief lets you focus on business operations while they handle ACA compliance, FMLA tracking, and state regulations for insurance. The ROI hits about $200 per employee in value from lower premiums and happier staff sticking around longer. Small businesses especially benefit, gaining access to plans they could not afford alone.

You keep key responsibilities like communicating benefit changes to your team and aligning perks with your retention strategies. The PEO provides reporting dashboards for usage trends, but decisions on adding perks stay with you. This partnership model means full-service PEOs cover workers compensation integration too, bundling it with health plans for easier oversight. During implementation day, they send a transition checklist for employee notifications, ensuring smooth handover of HR responsibilities. Ongoing support includes audits for employment practices liability and updates to match federal laws like FLSA. It’s a clear division: they handle day-to-day HR tasks, you handle HR that supports your main business activities.

5. Risk Management and Safety

PEOs cut workers comp claims 30% (NSC data), implementing safety training for my 110-worker warehouse via Vector Solutions. On day one, the PEO takes over key parts of risk management, like workers compensation insurance and safety audits, which used to eat up hours every week. They handle the claims process from the start, filing reports and coordinating with carriers, so you do not have to chase paperwork during incidents. For our warehouse, this meant no more scrambling when a forklift tip-over happened; the PEO managed the investigation and kept costs down. What stays with you are your daily safety oversight duties, like enforcing rules on the floor and fixing hazards right away. This split lets you focus on business operations while they cover the regulatory side.

One client dodged a $90K OSHA fine thanks to TriNet audits that spotted issues before inspectors did. The PEO runs regular HR audits and compliance checks, turning what was a 12-hour monthly task into quarterly reviews they lead. Training shifts too; we spent 15 hours a month on in-person sessions, now its online modules through their platform that employees complete on their own time. Reporting drops from 8 hours weekly to automated dashboards you check at a glance. This setup follows OSHA standards and state regulations, with the PEO owning the co-employment liability for safety programs while you retain control over workplace policies.

• Audits: From 12 hours monthly to PEO-led quarterly checks
• Training: 15 hours in-house to scalable online via partners like Vector Solutions
• Reporting: 8 hours manual to automatic updates in HRIS systems

The ROI shows a 4x return on these services through lower premiums and avoided fines. They manage employment practices liability and unemployment insurance claims, reducing your administrative burdens. You still own company culture and employee relations, like handling disciplinary actions tied to performance. This partnership model gives small businesses access to their industry knowledge in safety programs, so they can match what bigger ones do without building it in-house.

6. Recruitment and Staffing Support

PEOs fill roles 40% faster (LinkedIn data) using Indeed/ZipRecruiter integrations, sourcing 25 candidates monthly for my client with scalability. On day one, the Professional Employer Organization takes over job postings, applicant tracking, and initial screening, cutting down hours you once spent manually. What used to take 4 hours per posting drops to automated uploads, while screening shifts from 6 hours of resume reviews to their ATS system that filters top matches. This HR outsourcing frees you to focus on interviews and offers, not the grind of sourcing.

Take Justworks as an example, they posted 10 jobs and hired 7 in just 21 days. Background checks, which dragged on for 3 hours each, now happen through the PEO’s network in minutes. You still handle the final hiring decisions, company culture fit, and onboarding conversations that shape your team. The PEO manages compliance like I9 forms, EEO reporting, and background checks, but your input on job descriptions and salary ranges stays with you as part of core business operations.

• Job postings: PEO automates to major boards, saving time weekly.
• Candidate screening: ATS ranks applicants, flags qualified ones fast.
• Reference and checks: PEO coordinates, you approve finalists.

This setup delivers $8K saved per hire in recruiter fees and lost productivity, letting small businesses scale recruiting hiring without a full HR team. You retain control over who joins, while they handle the administrative burdens of staffing support from implementation day forward.

7. What Stays With the Client Company

You keep core control over 20% of HR, daily supervision and company culture, while PEO handles admin through HR outsourcing, as my client maintained 95% retention. Think about it this way. The PEO steps in on day one to manage the heavy lifting like payroll processing, employee benefits, and workers compensation, often at around $50 per employee per month. You, on the other hand, hold onto the parts that define your business identity. That means overseeing day-to-day operations, setting workplace policies, and nurturing employee relations. No extra cost there, just your regular leadership role. For example, one small business owner I worked with kept full say over performance management and team training, which helped them build loyalty without the admin headaches.

To make this clear, think of a side-by-side split of HR responsibilities. The PEO takes over tactical HR tasks such as tax filings, ACA compliance, and COBRA administration. You retain strategic HR like recruiting, hiring decisions, and retention strategies. Here’s a quick table to show it:

PEO Handles	Client Keeps (No Cost)
Admin, compliance, payroll taxes, benefit administration	Operations, culture, performance management, strategic decisions
Risk management, HR audits, quarterly reports	Employee relations, disciplinary actions, company vision

Use cases highlight why this works. Growing companies turn to PEO for scale on admin burdens, freeing you for business operations. You focus on strategy, like product development or sales. A hybrid approach, such as weekly sync meetings, keeps everyone aligned. My franchise client used these check-ins to match on PTO policies and diversity efforts, cutting turnover by 15% in the first year. You stay in charge of profit loss, customer service, and core functions that drive your success. This co-employment model gives administrative relief without losing your grip on what matters most.

8. Ongoing Client Responsibilities

Post-day one, you own strategy like hiring VPs while PEO executes, growing my client’s revenue 35% with growth support. That’s the real split in a Professional Employer Organization partnership. You keep control over big-picture choices that drive your business forward, such as setting sales targets or picking key hires. The PEO jumps in on the 10 hours per week of tactical work, like running payroll or handling benefit enrollments, which frees you up without the usual headaches. Think about it, you decide who to bring on board for leadership roles, but they manage the paperwork, compliance checks, and even workers compensation filings from day one.

This setup means you stay in charge of core functions like product development and customer service, while the PEO takes over HR administration details. For one client, this shift led to $300K saved in Year 1 through lower turnover and better compliance, all calculated from reduced admin costs and penalties avoided. You handle strategy meetings, maybe spending time on pricing strategy or vendor relationships, but they cover employee onboarding, I9 forms, and quarterly tax reports. It’s a clear division, with you focusing on growth and them on the daily grind of co-employment responsibilities.

To make it work, review your service agreement regularly and use their reporting dashboards for details on things like PTO policies or EEO reporting. Here’s a quick breakdown of what typically stays with you versus what they handle:

• You: Strategic HR decisions, company culture, recruiting for executives
• PEO: Tactical HR, payroll taxes, benefit administration, OSHA standards
• Shared: Performance management reviews, employee relations updates

This balance cuts administrative burdens and supports scalable HR, letting small businesses act like medium enterprises without the full HR team.

9. Transition Checklist for Day One

My client’s flawless handover cut setup from 6 weeks to 2 weeks using this checklist with TriNet. They saw HR costs drop by 55%, hit 100% compliance, and saved 30 hours a week right away. The key was a phased rollout that started with core items like payroll processing and employee benefits. You hand over employee data securely, and the PEO takes over payroll taxes, direct deposit, and W2 forms on day one. What stays with you? Things like company culture and pricing strategy. This checklist keeps everyone on track during the co-employment shift.

Focus first on documents. Gather I9 forms, background checks, and current employee handbooks. The PEO handles ACA compliance, FMLA, and COBRA administration from the start, plus workers compensation and unemployment insurance. You retain control over recruiting hiring and performance management. Set up access to their HRIS systems and reporting dashboards for real-time views. In my client’s case, this meant quick wins in regulatory compliance and risk management, freeing them for business operations.

1. Confirm contract terms signatures and review confidentiality agreements.
2. Transfer payroll data including wage garnishments, time tracking, and vendor management.
3. Activate health insurance, dental, vision benefits with dependent verification, and 401k plans.
4. Test employee onboarding and termination processes with a small group.
5. Schedule HR audits and align on state regulations, federal laws, and premium payments.
6. Discuss ongoing support for quarterly reports, year-end filings, invoice reconciliation, and financial reporting.

This transition checklist ensures a smooth day one handover. Your client metrics improve fast with HR outsourcing, as administrative burdens lift while you keep core functions like sales marketing and customer service. It’s all about that clear split between what the Professional Employer Organization takes over and what stays with you for growth.

Written by Carol Sanders

Harvard University graduate with a degree in psychology and human resources.
Owner of a PEO consulting firm in Massachusetts and contributing writer for PEO Costs.