In this article, we explain what Deel is responsible for and what our clients are responsible for when entering into a PEO (Professional Employer Organisation) relationship. When a company partners with a PEO provider like Deel, both companies enter into a co-employment relationship. This means the PEO provider shares in some of the company’s legal and financial liability for the services.

Who Does What?

Essentially, the PEO is the administrative employer and the client is the worksite employer. The following table is an overview of each party’s responsibilities:

Deel PEO Responsibilities In Detail

See further information about the services Deel PEO provides below:

[ACCORDION] Compliance With The Law

Deel PEO will perform its obligations under the Agreement with the client in compliance with all Federal and State laws and regulations governing Professional Employer Organizations.

[ACCORDION] Employee Benefits

Upon request by the client, Deel PEO will offer certain employee benefits to eligible covered employees and their eligible dependents through PEO sponsored plans and administer these plans in compliance with applicable laws and regulations and the terms and provisions of the applicable plan documents. 

[ACCORDION] Employment Practices

To the extent requested by the client, Deel PEO will provide Human Resources consulting services, including assisting in the preparation of an Employee Handbook and other personnel policies and procedures. Deel PEO is not providing legal advice or otherwise acting as the common-law employer of client’s Covered Employees when performing these services. The client is responsible to consult with legal counsel as needed regarding Human Resource or employment-related issues.

[ACCORDION] Payroll Administration

Deel PEO will process payroll payments in accordance with the applicable laws and regulations, conditioned upon the client timely and accurately supplying all payroll data and funds necessary for Deel PEO to perform the payroll processing services. 

[ACCORDION] Payroll Taxes

Deel PEO will withhold, report and remit Federal, State, and local payroll taxes, including unemployment insurance contributions. Deel PEO will prepare and submit tax reporting forms required by law or regulation with respect to such compensation and benefits, including Forms W-2 (Wage and Tax Statement), W-4 (Covered Employee’s Withholding Allowable Certificate), and any similar forms prescribed by any state or local government. Deel PEO will process and receive any tax credits that may be due to clients as a result of the PEO’s efforts, including any work opportunity tax credits (WOTC).

[ACCORDION] Unemployment Compensation

Deel PEO will administer unemployment compensation filings and claims, including opposing unemployment claims when appropriate. In those states or other jurisdictions in which the PEO may or must use the client’s employer account for purposes of reporting and remitting unemployment insurance contributions or any other payroll taxes, the client authorizes the PEO to do so and agrees to cooperate with the PEO in the use of the client’s account. The client will provide all required and requested forms, signatures, powers of attorney, reports, documents, and current and historical data.

[ACCORDION] Workers' Compensation

Deel PEO will provide workers’ compensation insurance coverage for covered employees and administer claims under this coverage in accordance with the requirements of applicable law. Deel PEO is not a workers’ compensation insurance provider, carrier, or broker and may not be subject to certain laws and regulations governing providers, carriers, or brokers. 

[ACCORDION] EPLI and Cyber Liability Insurance

Deel PEO will provide Employment Practices Liability Insurance (EPLI) and Cyber Liability Insurance (CLI). If the client maintains its own EPLI or CLI, separate from the PEO, the client’s coverage is primary. In the event of a claim against the client and/or the PEO covered by PEO’s EPLI or CLI, the client is responsible for payment of the deductible or self-insured retention, including all legal fees and costs incurred within the deductible. The client is responsible for any expenses, claims, settlements, damages, judgments and attorney fees associated with any claim brought by a covered employee against the client and/or the PEO not covered by PEO’s EPLI or CLI, as well as any settlement or claim costs that exceed the amount paid by the insurance carrier according to the EPLI or CLI policies. Deel PEO’s EPLI and CLI will only apply to claims made and submitted for coverage during and arising from events occurring within the contractually agreed relationship between the client and the PEO. Deel PEO makes no representations regarding the insurance carrier, insurance limits, deductible, or scope of coverage provided by the PEO’s EPLI and CLI policies, and all such terms are subject to change without notice. Any coverage provided by EPLI or CLI is subject to the limits of liability, terms, conditions and exclusions of the PEO’s policies.

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Client Responsibilities In Detail

See further information about the services the client provides below:

[ACCORDION] Work Site Safety 

The client is the sole employer with respect to safety-related compliance. The client retains exclusive control over the safety of the workplace(s) where covered employees work and sole responsibility for compliance with applicable federal, state and local health and safety laws, regulations, ordinances, directives and rules relating to the workplace. The client is solely responsible for identifying and eliminating all known workplace threats to covered employees’ health or safety. The client has not retained Deel PEO to manage or control the client’s business or operations, and the PEO has no duty or authority to inspect, install, modify, repair, or maintain any equipment, tools, vehicles, or machinery that covered employees may use. However, Deel PEO reserves the right to inspect the client’s workplace for the sole purpose of verifying compliance with the terms of thor agreement. Any inspections that the PEO or its workers’ compensation insurance carrier may conduct are not for the purpose of identifying the unique threats to the health and safety of covered employees that may exist in Client’s workplace(s), and do not fulfill a requirement for a full safety audit or inspection under applicable laws or regulations.

[ACCORDION] At-Will Employment

Deel PEO is not bound by any employment contract between the client and a covered employee. Upon the termination of the contract between the client and the PEO, all covered employees are no longer covered employees serviced by PEO. Any and all services provided by the PEO will be retroactive to the last date of service for which the PEO was fully paid by the client for the PEO’s services.

[ACCORDION] Workers' Compensation Classification Code Assignment and Changes in Job Status 

The client is solely responsible for the accuracy of the workers’ compensation classification code assignment. The client must notify Deel PEO immediately of any change that may affect the workers’ compensation status of any covered employee, including any change in job duties or job locations. 

[ACCORDION] Client Benefit Plans 

The client will not provide employee benefits to covered employees or their dependents in addition to or in lieu of the benefits available under the PEO Benefit Plans without the written consent of the PEO. If benefits are provided to employees under a client’s independent plan and this plan is not administered by the PEO, the client must: 

(i) Ensure that the plan is administered in compliance with applicable law and the terms and provisions of the applicable plan documents

(ii) Retain sole responsibility and liability for the plan 

[ACCORDION] Confidential Information 

The client retains sole responsibility for the maintenance and protection of their confidential information, trade secrets, and proprietary information. Except when required by law and/or to perform its duties under the contract, Deel PEO will not disclose payroll, health-related data and/or other confidential information it receives from the client.

[ACCORDION] Control of Client Business 

The client has the exclusive responsibility for control of their business, other than the services provided to covered employees by the PEO during the term of the contract. 

[ACCORDION] Cooperation with the PEO 

The client will respond in a timely and accurate fashion to requests from Deel PEO for records and data necessary for the PEO to perform its services. Upon receipt, the client must immediately send the PEO copies of demands, notices, claims, summons and other legal papers related to covered employees. The client must cooperate with the PEO in the investigation, remediation, settlement, and defense of legal claims related to covered employees

[ACCORDION] Employee Supervision 

The client is responsible for sufficiently supervising, directing, and controlling the covered employees in order for the client to safely and lawfully conduct its business.

[ACCORDION] Downsizing Notices 

The client will provide all notices required by the Worker Adjustment and Retraining Notification Act (WARN), and similar state and local laws. 

[ACCORDION] Employee Documentation and Communication 

The client will comply with Deel PEO ’s directives regarding the requirements to onboard covered employees. The client must cooperate with the PEO to ensure the receipt of all properly completed new-hire onboarding documentation, including form W-4, form I-9, and any additional documentation the PEO may require. The client must not permit a newly-hired covered employee to commence work until the PEO has approved the new hire onboarding paperwork and accepted the worker as a covered employee. Once accepted, Deel PEO may freely communicate with the covered employee through text message or other mediums of communication. The client will cooperate in accident/injury investigations by the applicable workers’ compensation carrier or its representative. If modified or light duty is required for a covered employee by law, or requested by the PEO or its workers’ compensation carrier, the PEO will assist the client in providing modified or light duty. In the event the PEO safety consultants provide advice or information to the client regarding safety in the workplace, the PEO does so as a consultant only and not as the employer in control of the workplace. The client at all times retains sole responsibility for providing appropriate training regarding job duties, workplace safety, and other related topics. 

[ACCORDION] Fiduciary Liability 

Deel PEO does not provide the client with insurance for fiduciary liability covering loss that might result from a loss of covered employee funds held by the PEO in a fiduciary capacity.

[ACCORDION] Employment Legal Compliance 

The client must comply with Federal, State and local laws governing labor and employment, including: 

• The Civil Rights Acts of 1866, 1964 (including Title VII), and 1991
• The Age Discrimination in Employment Act (ADEA)
• The Americans with Disabilities Act (ADA)
• The Family and Medical Leave Act (FMLA)
• The Fair Labor Standards Act (FLSA)
• The Worker Adjustment and Retraining Notification Act (WARN)
• The National Labor Relations Act (NLRA)
• The Equal Pay Act (EPA)
• The Vietnam Era Veteran’s Readjustment Assistance Act (VEVRAA)
• The Fair Credit Reporting Act (FCRA)
• The Employee Polygraph Protection Act (EPPA)
• The Immigration Reform and Control Act (IRCA)
• The Older Workers Benefits Protection Act (OWBPA)
• The Occupational Health and Safety Act (OSHA)
• The Uniformed Services Employment and Reemployment Rights Act (USERRA)
• The Genetic Information Non- Discrimination Act (GINA)
• All other local, state (including any and all states within the United States), and federal laws governing the employment relationship, including laws governing discrimination and harassment in the workplace and the regulation of wages and hours in the workplace.

[ACCORDION] Exclusive Relationship 

Without the written consent of Deel PEO, neither the client nor any affiliate of the client will pay wages or other taxable compensation directly to any covered employee, or directly employ and compensate any covered employee. If this occurs, the client will:

• Be solely responsible to perform all employer obligations, including provision of workers’ compensation insurance coverage, paying all earned wages, withholding, payment of employment taxes, and compliance with all laws and regulations governing the employment relationship
• Bear all risk resulting from any failure to perform any such obligations
• Indemnify Deel PEO against any loss, cost, claims or expense arising as a result of such employment or by operation of law as a result of failure of the client to perform any obligation. 

The client remains solely responsible for payment of reimbursable business expenses owed to covered employees.

[ACCORDION] Leave Laws and Compliance 

The client is solely responsible for obligations and costs associated with compliance with the federal Family and Medical Leave Act (FMLA) and similar state and local laws, including the cost of reinstating or finding replacement employment and the cost of continuing benefits during FMLA or other similar leave. The client must acknowledge that the PEO is not a joint employer for purposes of Leave Laws. However, in the event that a court or administrative agency determines the PEO to be a joint employer for purposes of Leave Laws, the client agrees that it is the primary employer and that it will be the successor employer upon termination of contract between the client and the PEO for purposes of Leave Laws compliance.

[ACCORDION] Government Contracts 

The client is solely responsible for complying with requirements pertaining to government contracts pursuant to federal, state, county or local laws, regulations, and ordinances, including compliance with Executive Order 11246, the Walsh-Healey Public Contracts Act, the Davis Bacon Act, and the Service Contract Act of 1965.

[ACCORDION] Employee Selection 

The client has the sole responsibility for the pre-hiring evaluation of covered employees. No worker will be deemed a covered employee until accepted by the PEO. The client may conduct testing, interviews, background investigation and other review of the suitability of any covered employee as it deems appropriate, with or without the assistance of the PEO, prior to employment. Any such testing, interviews, and investigations must be conducted in compliance with all applicable laws, rules, and regulations. Deel PEO has no obligation or liability to the client with respect to the suitability of any covered employee for their job responsibilities. If Deel PEO provides any consulting services or assistance to the client, the PEO is not providing legal advice. The client is responsible for consulting with outside legal counsel as needed regarding its recruiting and hiring practices.

[ACCORDION] Legal Compliance 

The client has the responsibility for complying with all laws governing the client’s business, including required filings, licensing, taxes, fidelity bonding, insurance, facilities/building codes and regulations, and environmental compliance. If any covered employee is required to be licensed, registered or certified under any federal, state, or municipal law or regulation, or to act under the supervision of such a licensed, registered or certified person or entity in performing their services, they are deemed to be an employee of the client for licensure purposes. The client is solely responsible for verifying such licensure and/or providing the required supervision

[ACCORDION] Notice of Claims 

The client must promptly advise Deel PEO of all covered employee complaints, claims, filings and requests related to their employment and will provide the PEO with complete and accurate information regarding such matters. The client must promptly advise Deel PEO of any claims of discrimination, sexual harassment or other improper conduct of a covered employee, or if a covered employee is alleged to be a victim of discrimination, sexual harassment, or other improper conduct, no later than 5 business days after the client learns of the claim or allegation.

[ACCORDION] Other Taxes and Fees 

Other than payroll-related withholding and taxes covered by the contract between the client and Deel PEO, the client has the sole responsibility for paying and reporting all taxes and governmental fees (including environmental fees required by any applicable state’s Health and Safety Codes).

[ACCORDION] Paid Prerequisites

The client is solely responsible for administering, funding, and accurately determining eligibility for paid perquisites, including vacation, sick leave, other paid time off, profit sharing, deferred compensation, bonuses, severance payments, stock options/grants/warrants, commissions or other equity-based compensation, and other incentive compensation payments. All payments should be made through the PEO’s payroll in order to ensure proper reporting and remittance of taxes. Deel PEO takes no responsibility for the administration or funding of paid perquisites payments.

[ACCORDION] Payroll Data 

The client will timely and accurately provide all data necessary for Deel PEO to process payroll for the covered employees, including hours worked, rates of pay, payments owed and exempt/non-exempt status for every payroll period, in accordance with the requirements of the Fair Labor Standards Act (FLSA), any applicable state or local law and any agreement between the client and the covered employee. The client assumes full responsibility for the accuracy of reports and the amount of remuneration due to each employee. The client is solely responsible for determining the exempt status of covered employees and alone possesses sufficient information to make such determinations, though upon request the PEO may provide information regarding the principles concerning exempt and non- exempt status classifications. The client shall maintain accurate records of hours worked to the extent required by law and will make these records available to the PEO upon request. The client is solely responsible for creating and maintaining records of hours worked and attendance, regardless of whether the client utilizes the time and attendance tracking systems provided by the PEO (if any). The client must maintain other records as directed by the PEO and in compliance with the PEO ’s policies and procedures. The client must not withhold, or authorize the withholding, of a payment of wages without the written permission from a covered employee and will not violate any applicable law pertaining to the payment of wages. The client will not violate any applicable law pertaining to deductions from wages when instructing the PEO to make deductions. The client must not make any taxable payment of any kind, except profit sharing or pension plan distributions pursuant to the terms of a qualified plan, directly to any covered employee. The client must immediately forward to the PEO any order or notice of garnishment, involuntary deduction, IRS lien or other legal process received by the client affecting wages paid to covered employees and, if requested by the PEO, sign any documents necessary to authorize thePEO to act on the client’s behalf in responding to legal process. The client is solely responsible for all non-compliance penalties and liabilities resulting from the client’s failure to timely forward any legal process to thePEO or to sign required authorization documents.

[ACCORDION] Prompt Payment 

The client must make timely payments due to the PEO to ensure timely payment of payroll

[ACCORDION] Reasonable Accommodations 

To the extent applicable to the client and required by applicable law, the client will, at its sole expense, accept obligations and costs associated with compliance with the ADA and similar state and local laws including, the cost of providing reasonable accommodation of disabilities and religious practices, reinstating employees returning from leave or finding replacement employment for them if required by law, and the cost of continuing benefits during leave if required by law.

[ACCORDION] ACA Compliance

The client is solely responsible and liable for all obligations with respect to Healthcare Reform’s Employer “Play or Pay” Mandate under Section 4980H of the Internal Revenue Code of 1986, as amended (IRC), and other applicable laws, including any tax reporting obligations under IRC Sections 6055 and 6056. If the PEO agrees to assist the client with these obligations:

• The PEO is not providing legal or tax advice to the client and the client will seek appropriate legal and tax advice from its own legal and tax advisors
• The PEO will rely on the accuracy of all information and documents provided by the client with respect to such assistance
• The client will remain solely responsible and liable for such obligations. 

If the client elects to participate in any group benefit plan offered by Deel PEO, the PEO represents that its Benefit Plan is a health plan:

• That provides “minimum essential coverage” within the meaning of the Patient Protection and Affordable Care Act (ACA)
• Is of “minimum value” within the meaning of Code Section 36B(c)(2)(C)(ii), Proposed Treasury Regulation Section 1.36B-6, and other applicable guidance
• All covered employees who are eligible for such health plan will be made an “offer of coverage” which satisfies both Treasury Regulation Section 54.4890-4(b)(1) and (2), so long as the client has provided the PEO with accurate and complete information necessary to make an “offer of coverage” on a timely basis. 

Deel PEO will be responsible for the reporting obligations under IRC Sections 6055 and 6056 for tax years with respect to covered employees. Deel PEO will not be responsible for the client’s ACA compliance related to any tax years prior to the contract between the PEO and the client, related to any benefit plans not offered by the PEO or related to employees that are not covered employees. 

[ACCORDION] Immigration

The client is solely responsible for all I-9 processes and procedures. The client will ensure that the I-9 is timely and properly completed for all newly hired covered employees, retain I-9 documents for the period required by law and update I-9’s when required by law. If requested by the client, Deel PEO may provide information or assistance regarding the proper procedures for completion of the I-9, however, the client retains sole responsibility for complying with all Form I-9 legal requirements. Any fines or other penalties resulting from the client failing to follow proper I-9 procedures and processes will be solely the client’s responsibility. The client must not engage in any discriminatory or other unlawful acts with respect to the I-9 process.

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