Professional Employer Organization (PEO) Client Service Agreement

Summary

This service agreement is between a professional employer organization (PEO) and a client, and sets forth the terms and conditions under which the PEO will furnish the client with human resources and administrative services. The template includes practical guidance, drafting notes, and alternate clauses. A PEO is an entity that provides human resource-related services to a company/employer. Such services may include, among other things, payroll processing, recruiting, claims handling, training and development, risk/safety management, and benefit administration. The agreement allows a company to efficiently outsource such managerial functions, which often involve complex employee related matters, to a PEO with expertise in handling such issues. Delegating such duties allows a company to dedicate its time and resources to maintaining and growing its business, and also reduces the costs and burdens associated with administering and processing the services assumed by the PEO. Companies can therefore maintain a small (or no) human resource department, as such responsibilities will be largely (or entirely) outsourced to the PEO. The PEO provides its services by establishing itself as a co-employer of the customer's employees and by contractually agreeing to assume certain employer rights, responsibilities, and associated risks. PEOs do not, however, provide their clients with any workers employees. Rather, the PEO assumes a co-employer relationship and assumes certain responsibilities with the client's existing employees. By entering into the relationship, the client does not give up any control of its business operations. While the PEO assumes certain employment related responsibilities as articulated in the parties' agreement, the client retains full control over all other aspects of its business operations. For further guidance and materials, see Supply of Services and Supply of Services Agreements Resource Kit.