Employer of Record vs. Professional Employer Organization: What's the Difference?

An Employer of Record (EOR) and a Professional Employer Organization (PEO) are both third-party companies that help corporations outsource certain HR activities. However, there are some key differences between the two:

Legal employer: An EOR acts as the legal employer for a worker, meaning that it is responsible for handling all employment-related issues, such as payroll, taxes, and compliance with labor laws. A PEO, on the other hand, acts as a co-employer, meaning that the client company and the PEO share employment responsibilities.

Services offered: EORs generally provide a narrower range of services than PEOs. EORs typically focus on legal and compliance issues in a specific jurisdiction, while PEOs often offer a wider range of services such as HR, benefits, and worker's compensation.

Legal structure: EORs are usually structured as a single entity that hires employees on behalf of the client company in a specific country. PEOs are usually structured as multiple employer welfare arrangements (MEWA) which are subject to different state and federal laws.

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