Employer of Record vs PEO: Complete 2025 Comparison
Understand the key differences between Employer of Record (EOR) and Professional Employer Organization (PEO) services. Our comprehensive guide helps you choose the right solution for your business needs, compliance requirements, and global expansion strategy.
Key Definitions: EOR vs PEO at a Glance
Employer of Record (EOR)
A service that legally employs workers on behalf of another company, handling payroll, benefits, taxes, and compliance. Ideal for international hiring and global expansion without establishing legal entities.
Professional Employer Organization (PEO)
A co-employment model where businesses share HR responsibilities with a PEO provider. The PEO handles HR administration, benefits, payroll, and compliance for domestic operations while you retain operational control.
Detailed Comparison: EOR vs PEO
| Feature | Employer of Record (EOR) | Professional Employer Organization (PEO) |
|---|---|---|
| Primary Purpose | Legal employment of international workers | Shared HR services for domestic operations |
| Employment Relationship | EOR is the legal employer | Co-employment model (shared responsibility) |
| Geographic Scope | Global/International focus | Primarily domestic operations |
| Legal Entity Required | No - EOR provides legal presence | Yes - client must be established entity |
| Control Over Employees | Client retains day-to-day management | Shared control with PEO |
| Typical Cost Range | $450-$800 per employee/month | 2-12% of gross payroll |
| Setup Time | 1-4 weeks | 2-8 weeks |
| Best For | Global expansion, remote teams, compliance | Growing companies, HR outsourcing, benefits |
Key Differences Explained
Employer of Record
✅ Best When You Need:
- International hiring without local entities
- Quick global expansion (1-4 weeks)
- Complex international compliance management
- Remote-first or distributed teams
- Testing new markets with minimal risk
⚠️ Considerations:
- Higher per-employee costs
- Less control over employment policies
- Dependency on EOR provider's capabilities
Professional Employer Organization
✅ Best When You Need:
- Comprehensive HR outsourcing domestically
- Access to enterprise-level benefits
- Reduced HR administrative burden
- Cost-effective for larger teams (50+ employees)
- Compliance and risk management support
⚠️ Considerations:
- Shared employment relationship
- Limited international capabilities
- Longer setup and implementation time
Top EOR & PEO Providers: At a Glance
ADP
Rippling
JustWorks
Gusto
Looking for EOR Solutions?
For international hiring and global expansion, consider dedicated EOR providers like Multiplier, Deel, Remote, or Oyster.
Compare EOR PlatformsFrequently Asked Questions: EOR vs PEO
Get answers to the most common questions about Employer of Record and Professional Employer Organization services.
Is PEO the same as EOR?
No, PEO and EOR are different services with distinct purposes. A Professional Employer Organization (PEO) provides shared HR services to businesses within the same country through a co-employment model. An Employer of Record (EOR) legally employs workers on behalf of another company, typically for international hiring. Key differences: PEOs focus on domestic HR outsourcing with shared control, while EORs enable global expansion without establishing local entities.
What are the three types of PEO?
The three main types of PEO services are: 1) Full-Service PEO - Complete HR outsourcing including payroll, benefits, compliance, and risk management. 2) Administrative Services Only (ASO) - HR administration without taking on employment liability. 3) Hybrid PEO - Combination of PEO services with client-retained control over specific HR functions. Full-service PEOs like ADP and JustWorks offer the most comprehensive solution, while ASO models provide more flexibility.
What is the alternative to employer of record?
Alternatives to EOR include: 1) Establishing your own legal entity in each country (high cost, 3-12 months setup). 2) Using a PEO for domestic operations only. 3) Direct contractor relationships (limited control, compliance risks). 4) Hybrid solutions combining multiple approaches. 5) Global payroll providers for existing entities. For international hiring specifically, setting up subsidiaries is the main alternative, but it requires significant investment and time.
What is a PEO vs HRIS?
PEO (Professional Employer Organization) is a service model where you share employment responsibilities with the provider - they handle HR administration, payroll, benefits, and compliance. HRIS (Human Resources Information System) is software for managing HR data and processes that you operate yourself. Key difference: PEO provides actual HR services and shares liability, while HRIS is just technology. You can use HRIS with in-house HR or combine it with PEO services for comprehensive coverage.
What is a PEO in the UK?
In the UK, PEO services are typically called "Umbrella Companies" or "HR Outsourcing" rather than PEO. These providers offer similar services: payroll processing, employment law compliance, benefits administration, and HR support. UK-specific considerations include PAYE tax compliance, auto-enrolment pensions, and employment law requirements. Popular UK providers include Peninsula, Croner, and IRIS. For international operations from the UK, consider EOR providers like Multiplier or Omnipresent.
What is the difference between a PPO and EOR?
PPO (Professional Provider Organization) typically refers to healthcare networks, not employment services. However, if you mean PEO vs EOR: PEO provides shared HR services domestically with co-employment, while EOR offers full legal employment internationally. If referring to staffing, Professional Staffing Organizations provide temporary workers but don't take on long-term employment responsibility like EORs do.
When should you use a PEO?
Use a PEO when: 1) You have 5-500 employees and want to outsource HR administration. 2) You need access to enterprise-level benefits at lower costs. 3) You want to reduce HR compliance risks and administrative burden. 4) You lack in-house HR expertise but want to maintain operational control. 5) You're growing rapidly and need scalable HR infrastructure. PEOs are ideal for domestic operations but limited for international expansion - use EOR for global hiring instead.
What is the alternative to a PEO?
PEO alternatives include: 1) In-house HR department - full control but higher costs. 2) HR software/HRIS - technology-only solution requiring internal management. 3) Outsourced HR consultants - project-based support. 4) Payroll service providers - limited to payroll processing. 5) Benefits brokers - insurance and benefits only. 6) Administrative Services Only (ASO) - HR admin without shared employment. For comprehensive solutions, full-service PEO or building internal capabilities are the main options.
What is the difference between HCM and PEO?
HCM (Human Capital Management) is software for managing all aspects of the employee lifecycle - recruiting, onboarding, performance, payroll, and benefits. PEO is a service model where you share employment responsibilities with a provider. Key difference: HCM is technology you use to manage HR internally, while PEO provides actual HR services. Many PEOs offer HCM software as part of their service, and you can use HCM systems independently or in combination with PEO services.
What is an employer of record in the UK?
An Employer of Record in the UK is a service that legally employs workers on behalf of international companies wanting to hire UK-based employees without establishing a UK entity. UK EOR providers handle PAYE tax compliance, National Insurance contributions, auto-enrolment pensions, employment law compliance, and statutory benefits. Popular UK EOR providers include Multiplier, Omnipresent, Remote, and local providers like Globalization Partners. This enables fast UK market entry (1-4 weeks vs 3-6 months for entity setup).
What is the best employer of record?
The best EOR depends on your needs: Deel offers the most comprehensive global coverage (150+ countries). Remote excels in user experience and developer-focused features. Multiplier provides cost-effective APAC expertise. Oyster offers premium people operations and modern UI. Omnipresent specializes in European compliance. For startups: consider Remofirst (budget-friendly). For enterprises: Globalization Partners or Atlas. Compare based on: geographic coverage, pricing, compliance expertise, and integration capabilities.
Is Gusto an EOR?
No, Gusto is not a full EOR provider. Gusto is primarily a payroll and HR software platform with some PEO-like services for domestic US operations. They offer payroll processing, benefits administration, and HR tools, but they don't provide international EOR services or legal employment in foreign countries. For international hiring, you'd need dedicated EOR providers like Deel, Remote, or Multiplier. Gusto works well for US-based small businesses but isn't suitable for global expansion.
Is Rippling only a PEO?
No, Rippling is not only a PEO. Rippling is an all-in-one HR platform that offers: 1) HRIS software for HR management, 2) PEO services for domestic US operations, and 3) Limited EOR capabilities in select countries (90+ countries). Their core strength is the integrated HR, IT, and Finance platform with workflow automation. For comprehensive international EOR services, dedicated providers like Deel or Remote typically offer broader coverage and deeper global expertise than Rippling's EOR offering.
Is JustWorks a PEO?
Yes, JustWorks is a certified PEO provider. They offer comprehensive PEO services including payroll processing, benefits administration (health, dental, vision, 401k), workers' compensation, compliance support, and HR tools. JustWorks operates under a co-employment model for US-based businesses, making them a true PEO rather than just an HR software provider. They're particularly popular with small to medium businesses (5-500 employees) due to competitive pricing ($59-149/month per employee) and user-friendly platform. However, they don't offer international EOR services.
Is ADP a PEO?
Yes, ADP offers PEO services through ADP TotalSource, their comprehensive PEO solution. ADP provides full co-employment services including payroll, benefits administration, HR compliance, workers' compensation, and risk management. As one of the largest PEO providers in the US, ADP serves businesses of all sizes with enterprise-grade capabilities. They also offer other services like standalone payroll, HRIS software, and talent management - so they're more than just a PEO, but PEO is a significant part of their offering. Costs typically range from 2-8% of gross payroll.
What are the downsides of PEO?
Key PEO downsides include: 1) Shared employment control - less autonomy over HR policies. 2) Dependency on PEO provider - potential service disruptions affect your entire workforce. 3) Limited customization - standardized benefits and policies may not fit unique needs. 4) Employee confusion about who their actual employer is. 5) Potential cost increases over time as PEO fees rise. 6) Exit complexity - difficult to transition away from PEO. 7) No international capabilities - limited to domestic operations. 8) Loss of direct vendor relationships for benefits and services.
Why switch to a PEO?
Companies switch to PEO for: 1) Cost savings - access to enterprise-level benefits at lower costs through pooled purchasing power. 2) Risk reduction - shared employment liability and compliance expertise. 3) Time savings - outsource time-consuming HR administration. 4) Expertise access - professional HR, legal, and compliance support. 5) Scalability - easily add/remove employees without internal HR expansion. 6) Focus on core business - redirect resources from HR admin to revenue-generating activities. 7) Improved benefits - offer competitive packages that attract top talent.
How many types of PEO are there?
There are 5 main types of PEO arrangements: 1) Full-Service PEO - complete HR outsourcing with co-employment. 2) Administrative Services Only (ASO) - HR admin without employment liability. 3) Hybrid PEO - selective outsourcing of specific HR functions. 4) Professional Employer Organization (traditional) - certified co-employment model. 5) HR Outsourcing - similar services without formal PEO certification. Additionally, some providers offer industry-specific PEO services (healthcare, construction, technology) or size-specific solutions (small business vs enterprise PEO).
Which is better, ADP or Rippling?
ADP vs Rippling depends on your needs: Choose ADP if: you need enterprise-scale PEO services, have 500+ employees, want proven reliability, or need extensive compliance support. ADP offers mature PEO services with deep market experience. Choose Rippling if: you want an all-in-one platform integrating HR, IT, and Finance, need modern user experience, have 50-500 employees, or want workflow automation. Rippling excels in platform integration and modern features. Cost: ADP typically costs 2-8% of payroll; Rippling costs $8-299/month plus per-employee fees.
What are the top PEO companies?
Top PEO companies in 2025: 1) ADP TotalSource - largest PEO with enterprise focus. 2) Insperity - comprehensive PEO for mid-market companies. 3) TriNet - technology and professional services specialization. 4) JustWorks - user-friendly platform for SMBs. 5) Paychex PEO - strong small business focus. 6) Rippling - modern all-in-one platform. 7) Oasis - regional PEO with personal service. 8) CoAdvantage - customizable PEO solutions. Choose based on: company size, industry focus, pricing model, and service level requirements.
How much does Rippling PEO cost?
Rippling PEO pricing: Base platform starts at $8/month per employee for core HRIS features. PEO services add $150-299/month per employee depending on benefits package and features selected. Total cost typically ranges $158-307/month per employee. This includes: payroll processing, benefits administration, workers' compensation, compliance support, and access to Rippling's integrated platform. Additional costs may apply for premium benefits, advanced features, or international capabilities. Pricing varies based on company size, industry, and specific requirements - contact Rippling for detailed quotes.
Decision Framework: EOR vs PEO
Choose Employer of Record If:
- You need to hire internationally without setting up legal entities
- You want fast global expansion (1-4 weeks)
- You're building a remote-first or distributed team
- You need comprehensive international compliance
- You want to test new markets with minimal risk
Choose PEO If:
- You operate primarily in one country (like the US)
- You want comprehensive HR outsourcing
- You need access to enterprise-level benefits
- You have 20+ employees and want cost efficiencies
- You want to reduce HR administrative burden
Ready to Choose the Right Solution?
Whether you need international EOR services or domestic PEO solutions, we've analyzed the top providers to help you make the best decision for your business needs.