In a comparison between the two HR outsourcing models, a Professional Employer Organization (PEO) involves co-employment, whereas an Administrative Services Organization (ASO) does not.
A PEO establishes a legal co-employment arrangement where the PEO and the client company share employer status. In this model, the PEO becomes the employer of record for tax and compliance purposes, handling payroll, liabilities, and workers’ compensation. While the PEO assumes these administrative and legal responsibilities, the client company retains control over daily operations and workplace safety.
Conversely, an ASO provides administrative support, such as payroll and benefits administration, without establishing a co-employment relationship. Under an ASO model, the client remains the sole employer, retaining full liability for compliance and workers’ compensation while paying the ASO service-only fees for administrative relief.
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