12 Ways PEOs Provide HR Support

Small and medium-sized businesses must comply with complex federal, state and local employment-related rules and requirements. Professional employer organizations (PEOs) assist businesses with HR functions and help navigate HR compliance.

Some of the most common ways that PEOs provide support are:

• Compliance support for wage and hour requirements
• Provide workers’ compensation insurance and managing claims
• Support for payroll compliance
• Resources to help prevent and manage employment-related claims

In fiscal year 2024, the Equal Employment Opportunity Commission (EEOC) received 88,531 new charges of discrimination, an increase of more than 9% over the prior year. Additionally, in the same fiscal year, the EEOC secured over $700 million in monetary relief.

To help mitigate risks that may result in penalties, fees, settlements and judgments, many SMBs turn to PEOs for HR support.

12 Ways PEOs Provide HR Support

When a business outsources its HR to a PEO, the client enters into a co-employment relationship with the PEO. This means that the PEO takes on certain responsibilities such as payroll taxes administration for payroll paid through its platform, provide workers' compensation coverage and claims handling and benefits administration for PEO-sponsored benefits for the client.

Let’s look at 12 ways that PEOs provide human resources support:

1. Wage and hour compliance

The requirements related to overtime pay, meal and rest breaks, and minimum wage can be detailed and precise.

PEOs help employers with compliance by providing integrated systems for time tracking and pay calculation, which can mitigate the risk of errors and violations of the Fair Labor Standards Act (FLSA) and similar state rules. They also can keep clients on top of the current rules and requirements.

PEO services may include:

• Timekeeping systems
• Pay reviews
• Policy development support

2. Workers’ compensation

Most employers are responsible for complying with OSHA and industry-specific workplace safety requirements, providing workers’ compensation insurance, reporting workplace accidents and properly handling workers’ compensation claims.

PEOs can help with workers' compensation as well as safety program development and compliance monitoring, which can help mitigate workplace incidents and OSHA citation risks. They also provide workers’ compensation insurance and handle claims.

Services may include:

• Pay-as-you-go billing for cash flow optimization
• Expedited claims handling
• Fraud prevention assistance
• Integrated medical care
• Nurse advocacy
• Access to physician networks

3. Payroll compliance

Payroll must be accurate and timely, and tax compliance involves complying with federal, state and local payroll tax rules and requirements.

PEOs use advanced technology to simplify the payroll processing and payroll tax calculation. Their payroll administration services help mitigate risks by providing expertise and support on payroll tax accounts, reviewing current processes and syncing payroll information. A PEO may also help by providing on-demand payroll tax expertise from HR professionals.

Services may include:

• Calculate and withhold federal, state and local payroll taxes, and remit the same to the applicable agencies
• Electronic Form W-2 preparation and delivery
• Unemployment tax administration

4. HR compliance

Employers have to comply with federal, state and, often, local anti-discrimination and anti-harassment rules and requirements.

PEOs provide HR expertise that can mitigate risk, enhance workplace culture and foster inclusivity. Their guidance on best practices, starting with talent acquisition, can help your business  prevent issues related to discrimination and harassment.

Services may include:

• Best practices for policy development
• Training programs
• Reference library including HR compliance resources

5. Leave management and FMLA compliance

The federal Family and Medical Leave Act (FMLA), Americans with Disabilities Act, and state and local regulations govern when employers must provide employees with paid or unpaid time off, such as for illness, disability or family care. The requirements are complex.

PEOs help employers stay on top of rules and requirements. They help with centralized leave administration and tracking, to make sure leave approvals and documentation are done efficiently.

Services may include:

• Leave eligibility tracking
• Interactive process management
• Return-to-work coordination

6. Benefits compliance

Employee benefits are subject to various rules. To avoid penalties, health insurance plans have to meet Affordable Care Act (ACA) requirements. Retirement plans and health insurance plans must comply with the Employee Retirement Income Security Act (ERISA) and other federal regulations.

PEOs not only give businesses access to big company insurance and retirement plans but also provide expert best practice guidance on the ACA, COBRA and state filings for PEO-sponsored benefits.

Benefits compliance services may include:

• Performing administration for PEO-sponsored health plans
• Serving as the primary fiduciary for the PEO-sponsored retirement plans
• COBRA administration
• 401(k) required reporting and reviews

7. Employment documentation and record keeping

Proper documentation can help your interests. Some documents and records, such as payroll records, are explicitly mandated. Others, while not mandatory, may be helpful to have on record should questions or disputes arise. PEOs can help provide information on best practices regarding storing information.

Certain PEOs may provide administrative support with systematic documentation processes and retention. This support can be in the form of document templates, retention schedules or secure storage systems.  

  8. Termination and disciplinary action support

Laws and regulations on the federal, state and local levels prohibit unlawful termination and disciplinary actions, such as demoting or firing an employee for discriminatory reasons. Businesses must also follow certain procedures whenever an employee leaves a company, such as requirements regarding the timing of the final paycheck.

PEOs provide structured termination processes and documentation services to help prevent wrongful termination claims.

Services may include:

• Termination compliance checklists
• Progressive discipline frameworks
• Exit procedures

9. Evolving rules and requirements

Employment-related rules and requirements change frequently as new ones are enacted and old ones are amended. If you don’t keep pace with evolving employment-related rules and requirements covering all the compliance areas and HR policies mentioned in this article, you could inadvertently fall out of compliance.

PEOs have teams of professionals with compliance and HR expertise that stay on top of these evolving employment-related rules and requirements.

Services may include:

• Guidance on rules and requirements
• Expertise on compliance with pay and payroll taxes in any state
• Client communications

10. Risk mitigation

A PEO may provide you access to a legal hotline, so you can address employment-related questions that may arise with legal experts, claims support and expert guidance for complex situations. PEOs also can provide access to employment practices liability insurance (EPLI) . Should claims arise, they can help support you throughout the process.

Services may include:

• Access to EPLI and outside counsel
• Manage claims progress and resolution, including discovery and settlement assistance
• Review attorney invoices and direct payments
• Answer questions about the claim process

11. Employee classification compliance

It’s easy to make mistakes when classifying workers as independent contractors or employees, as the line between the two is not always clear.

PEOs can help by providing expert classification tools and resources to help protect your SMB from Department of Labor audits, IRS investigations and misclassification penalties.

Services may include:

• Classification assessments
• Resources for self-service assessments
• Secure storage of independent contractor documents
• Self-service onboarding: welcome link, info submission, agreements with e-signature

12. Multi-state HR compliance navigation

If you have employees in more than one state, compliance becomes more complicated, as your company will be subject to the compliance requirements of all the states where you have workers.

PEOs provide state-specific compliance expertise.

Workforce solutions may include:

• State law databases
• Policy customization
• Access to local experts

How to Get HR Support from a PEO

The complexity of HR compliance makes it nearly impossible for small or medium-sized businesses to handle on their own without cutting into the time and resources needed to work on core goals and strategic planning.

TriNet provides expert HR compliance assistance and risk mitigation to support SMBs in navigating HR compliance. We stay on top with the constantly changing compliance landscape, provide advanced automation with our platform to enhance efficiency, provide resources to help address employment-related concerns, helping to mitigate your exposure when facing an employment-related claim.

By outsourcing your HR functions to TriNet, you’ll save time and gain cost efficiency. And by engaging us, you’ll gain the peace of mind of knowing that our experts are looking out for you. It’s a smart business strategy.

To find out more, download our free eGuide: Three ways to help mitigate HR compliance risk.