Professional Employer Organizations

What is a professional employer organization (PEO)?

A professional employer organization (PEO) is a firm that provides a service under which an employer can outsource employee management tasks, such as recruiting, employee benefits, payroll and workers' compensation, risk and safety management, and training and development. A PEO is able to do so by hiring a client company's employees, thus becoming their employer of record for tax and insurance purposes.

How does a PEO agreement work?

Princeton reserves the right to identify the talent, make the hiring decision, and determine the level of salary and benefits. Once Princeton makes a determination on all hiring details, it signs an agreement with the selected PEO. In the contract, the PEO will calculate the net take-home pay for the hired individual, the employer taxes and employee benefits for which the University is responsible, and a service fee, which equals to the higher of a flat pre-determined fee or a percentage of the salary of the hired individual. The PEO can also help identify a local health insurance plan if the individual is benefits eligible. The PEO will invoice the University monthly for the total cost of salary, benefits, health insurance (if any), and service fees. The PEO also signs an employment contract with the individual being hired.

PEOs are staffing firms that act as the employer of record. People hired through a PEO are not employees of Princeton. In some cases, the University may appoint the individual in a zero pay status, so that the individual can access certain university resources.

Why does the University use PEOs?

The PEOs Princeton uses have operations in most of the countries where we conduct research and study activities. These PEOs bring expertise in local employment law, regulations, health insurance, and other aspects of hiring. 

If a potential hire overseas is affiliated with an institution, the institutional payment method is the default method of payment and should be used whenever possible. If the individual is not affiliated with any organization abroad, using a professional employer organization (PEO) is the next best option.

What information is needed from departments to start the hiring process?

Country of hire

Citizenship of individual

Copy of passport 

Individual’s contact details

Appointment length with start and end dates

Updated CV

Job descriptions with detailed responsibilities

Appointment Form (if a DoF appointment)

Potential salary and benefits, such as health and other insurances, accommodation, travel expenses, etc.
 

Process

Departments should forward the information listed in the above section to Claire Hu. Claire is responsible for sending the information to the Office of the Dean of the Faculty for approval (if a DoF appointment is needed), contacting and working with PEOs for contract signing, and coordinating payments to PEOs.

Payment

PEOs will generally bill the University monthly for a total amount that includes salary cost, service fee (a percentage of the salary), any mandatory taxes, social charges, and insurance for the individual in the foreign location. Our most commonly used PEO bills the University on the 1st of each month during which service is provided. Payment needs to be made to the PEO in a timely manner that ensures that the individual is paid before the end of the month. Claire will work with the PEO and Accounts Payable to process invoices and payments. (Once approved by DoF, purchases using PEOs should occur through a Purchase Requisition that would include the account number, project/grant number, and fund number. Each month, the PEO will provide an invoice from which the Department will need to Receive against to approve payment.)

Which PEOs does the University currently use?

The University currently uses Mauve and local PEOs for France and Chile. The use of a specific PEO is not required. If your department is familiar with or prefers to use other PEOs, please send your suggestions to Claire Hu.

To learn more about PEOs in general, visit the National Association of Professional Employer Organization Website.

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