P-E- “Oh No”—avoiding common PEO pitfalls

-Submitted by Leni Plimpton

A professional employer organization (“PEO”) can be a great business choice for some companies.  But are you fully aware of what you are getting into?  A PEO becomes the co-employer of your employees and charges you a fee to take over human resources and payroll functions for your company, and often benefits administration as well.  But there are many pitfalls to be aware of.  To be sure you’re making a smart business choice and that you understand the risks and benefits involved, it is imperative to look closely at the terms of your contract.  For example, Fortis attorneys have seen PEO contracts that allocate all liability for HR issues such as discrimination to the employer.  An employment discrimination lawsuit is expensive and disruptive; and what if the PEO organization is the one who engaged in the discrimination?  Before hiring a PEO, stop and think, review the documents closely, and strongly consider hiring a lawyer to look over the contract and raise any red flags before it is too late.


Fortis Law Partners has a team of skilled professionals who are experienced in advising companies with questions about contracts, Human Resources issues, and wage and hour questions.  If you would like more information on a contract your company is considering entering, or if you are concerned about an employment issue your company is facing, do not hesitate to contact one of our attorneys.