Core Differences of a PEO vs. ASO vs HRO vs EOR & Why It’s Important

If you’re an employer shopping for an employee leasing solution, you’ve probably run across the acronyms PEO, ASO, HRO and EOR during your research. While there are many similarities between them, there are also plenty of differences, and not every option will be right for your company and your employees.

Here’s a little more information about these organizations and how they work.

PEO: A Professional Employer Organization, also known as employee leasing, assumes and manages critical HR management and employment-related responsibilities including employee administration, compliance, unemployment and workers compensation claims, risk management, health benefits and payroll. Through this co-employment arrangement, the business owner and the PEO contractually share employer responsibilities and liabilities.

ASO: An Administrative Service Organization, or ASO, could be considered HRO (Human Resources Outsourcing) but an ASO is NOT considered to be a PEO because it does not operate within a co-employment arrangement as an employer and a PEO do.  ASOs can provide payroll processing, administration support, and more. Additionally, they can administer insurance and benefits packages, though these policies are written individually for each group. As co-employer, PEOs will provide clients with access to master policy benefits as a part of their large group. ASOs simply help administer policies by managing payroll deductions, providing claims support, and reconciling invoices.

HRO: Human Resources Outsourcing refers to a variety of human resources companies that help clients offload some part of their administrative responsibilities, whether that be payroll processing or managing benefits. PEOs, on the other hand, provide a vast array of outsourced administrative services to the client, including payroll processing, insurance, employee benefit packages, HR support, and more.

EOR: An EOR, also known as Employer of Record, is a newer industry term for staffing or workforce management. Through an EOR arrangement, the EOR contractually assumes all of the employer liabilities for payroll, workers’ comp, tax filing and human resource support. In some circumstances, the EOR will also assist with recruitment, training and placement of temporary workforce for the worksite employer.

If you’re currently shopping for a PEO, ASO, HRO or EOR or need some preliminary guidance on which option will be the best for your business, the team of experts at AXIS is here to help. Click here to contact us.