A. While all three organizations administer employee benefits, they provide these services in very distinct ways. An ASO is a service provider only. The relationship is between the client and the ASO. All programs are maintained in the client’s name. Payroll and taxes are paid using the client’s federal ID number. With an ASO, the client is not limited to the benefits provided by the PEO or the ELO, but can establish plans that fit the needs of both the employees and the client.

In ELO, the worksite employees are not employees of the client firm but are only the employees of the ELO.

In the PEO relationship, co-employment exists. The worksite employees are employees of both the client and the PEO.

ASO’s are a cost effective way to consolidate and coordinate the outsourcing of payroll, tax administration, employee benefits and general human resources administration allowing HR professionals to focus on employee relations and other HR activities that contribute to a company’s success.